Isolde, head of Siliquent, was targeting the DNA-sequencing market for hospitals and big diagnostic labs, while Emanuel targeted the research equipment industry for labs and research institutions (like universities).
Isolde explained Siliquent’s likeness to other business-to-business companies, where a classic “razor-blade model” is used, where the main focus (and revenue) comes from the tools that machines and research instruments use, rather than the machines themselves. I think this business model aligns well with Siliquent’s market, as they are focused on consumables that are sold for less than the fixed reimbursements hospitals get from insurers. In this way, Siliquent’s model improves upon a budgetary constraint that the hospitals had. By focusing on consumables, they are also able to be more customer-focused and attentive to the procedures involved in the use of their products and services.
Teomik mostly generates revenue from the high margins involved in the sale of patent-protected devices. I think this model works well for Teomik’s industry because research labs and institutions greatly benefit from sophisticated and hard-to-find devices; it makes sense that the company can profit from their patent-protected and highly desired products.
I think there are several advantages to the structure of a single revenue model; sales practices within the company can be more streamlined, without needing to oscillate between different strategies and methods. I think predicting future success can be easier with a single model as well, as the strategies used are consistent and through analysis of current revenue trends, a company can intelligently estimate how profits will change over time. However, there are also disadvantages–lack of flexibility can potentially lead to stagnancy in revenue generation when the single revenue model falters or when the market evolves. If disaster were to strike, it would be difficult to migrate from a single revenue model to a brand new, updated one, if the company lacked flexibility in this space. While there are advantages and drawbacks to both methods, it was interesting to read about the push-and-pull dynamics of Siliquent and Teomik in the reading.
If I were a PM asked to mediate a merging process, I would keep several factors in mind:
- Keeping a safe and open line of communication. Conflicts and misunderstandings most often arise from poor communication. I would ensure that both parties can openly communicate any ideas and concerns, and that everyone’s voice is heard. This would prevent resentment from brewing over time, and would streamline the merging process by ensuring everyone was on the same page.
- Brainstorm and identify key strategies. Undoubtedly, both parties will have very different ideas of what a successful merge would look like. I would take some time to brainstorm what these ideas are, and how we can come to a compromise so that each side is properly represented in the company’s overall strategic direction moving forward.
- Be open to change. I would not only encourage both sides of the merge to be open to the discomfort that comes with any transformation, but I would also be open to change myself as the PM in this conversation. Maybe both parties have perspectives that I can learn from, and if I was championing a certain process that was not a good fit for the merge, I would be open to change. Often times, adapting to change is a give and take, and I would want myself and both parties in the merge to be willing to “win some” and “lose some.”
