In the HBR case Can One Business Unit Have Two Revenue Models?, it is very clear to me that Isolde and Emanuel serve have two separate markets. Isolde’s business has high-volume, cost-sensitive customers, and her priorities are based on scale, consistency, and predictability. The subscription-based model works well for Isolde’s high-volume market because customers want to be certain about reliability and experience standardization. Emanuel’s business, on the other hand, serves clients in a niche opportunity space who want high-touch engagement, customization, and much deeper engagement. The project-based revenue model provides flexibility in being able to adjust the client’s experience with expertise, rather than having the lowest cost.
So, in these situations I’m thinking about, should the organizations have a broad revenue model ONLY vs. a flexible model? On the one hand, (at least my own personal opinion), the uniform structure, may run smoother with a more fluid form of bureaucracy and ease report/presentation desk. However, it could also hamper innovation and create a mismatch of offerings to clients. My point at the end of the day is that both approaches have their own advantages and disadvantages, but the answer to which direction to support would depend on the company’s tolerance for complexity versus their strategic priorities.
If I were a PM for this situation, I would frame the conversation as a structured dialogue to move toward shared meaning (we all have to agree and work together on this to succeed!) . I would start with each leader stating their business objectives, key constraints, and what makes their revenue model successful. I would use strategies from How to Speak Up When It Matters to create an environment of safety and trust where raising ideas, questions, and concerns is welcome. When tensions begin to escalate, I would intervene to reframe the dialogue toward a common purpose and away from blame (reminding us of our shared goals and that wasting time thinking/discussing about the problem is not the best approach to our goals).
For some reason, working on this assignment reminds me of my experiences coordinating educational projects for indigenous children in Peru, where the intended stakeholders had different desired outcomes, such as one I was involved with as a “PM” working in partnerships with the Quechua students in STEM summer workshops (way before I came to Stanford), classes, and courses while accounting for the institutional expectations as well (the people paying us and giving us training to carry out all of the work we did). In these instances, scaffolding a place for dialogue and having some practices to listen closely and deeply, and having specific structures to give community input, always resulted in more effective shared outcomes rather than enforcing a top-down community decision (we always listened to everyone and took their opinions, concerns, and ideas into account). So, for me, success is a mixture of flexible structured empathy and bravery to deal with uncertainty in mind.
