Which markets do Isolde and Emanuel target respectively? How do their respective business/revenue models align with their markets?
Isolde targets the lower-end hospital consumables market: the compounds, tests, etc. while Emmanuel targets the high-end research machines market. Isolde’s revenue model follows suit by ensuring their product prices are fixed reasonably low (even selling machines at cost) while selling the machine’s associated products with a slim (but existent) margin, making revenue from the volume of goods sold. Emmanuel’s revenue model is pricing machines highly since they’re often patent protected and necessary for the most cutting edge research, aiming to sell to the high-end research lab market and getting high margins on the machines.
What are the pros and perils of “imposing the structure of a single revenue model” vs. “letting [the company] continue on its flexible way”?
The pros of a single revenue model are: a unified strategic vision (which limits accidental internal competition/wasted resources), a unified workforce (easier to prevent formation of teams competing with each other since everyone’s roles are much more clearly defined), and much more lean movement (everyone’s already on the same page so mobilizing the workforce is much faster/easier). The pros of flexibility are: obviously flexibility (like was said in the article by Isolde/Emmanuel, it can allow for your workforce to adapt to the market more efficiently), and more natural innovation (since adaptation leads to changes that can come bottom-up, leading to ground level insights defining strategy shifts much more frequently/easily).
The perils of each is obviously the opportunity cost of not going for the pros of the other – for example, one revenue model means leadership needs to make their workforce adapt when things change and carry out constant supervision/potential revision of the revenue model, whereas flexibility means that your workforce will effectively act on its own, but will accidentally produce waste by competing with itself, etc.
Pretend that the CEO has decided the department heads must merge their divisions together. As a star PM assigned to mediate this interaction between department heads, how would you scaffold the discussion to ensure a fair merging process?
This is a particularly unfortunate scenario to have to merge the divisions by force, since the products themselves overlap but require fundamentally different skills across numerous teams to support those products. Just based on watching how these sorts of mergers play out in real life (for example, after Activision Blizzard merged with Microsoft, nearly 2000 employees were laid off across Activision Blizzard and Xbox, likely due to redundancies) layoffs will certainly follow. I think the fairest way to do this wouldn’t be direct profit/revenue competitions (since internal competition can tear a company apart)/ I feel, if the revenues from each department is roughly comparable, I’d push to conduct a study into which revenue model has grown the most over the last 24-36 months and represents the most promising returns over the next 24 months, ideally bumping revenue in the department to enable re-hiring/retraining of employees otherwise made redundant.
