BUSINESS: One Business, Two Revenue Models? 🤔

TARGETED MARKETS AND ALIGNMENT
Isolde, the head of Siiquent, targets hospitals and big diagnostic labs with gene-based diagnosis technology. Siiquent follows a razor-blade model, making money from the consumables (biological and chemical compounds, test kits) used in their machines rather than the machines themselves. This aligns with her market because these institutions face many budget constraints and are more sensitive to the ongoing costs of consumables than the initial price of the machines. This is also why they offer services like regulatory assistance and a pay-per-test mode.
Emanuel, leading Teomik, focuses on the research market, particularly research labs and universities conducting gene-based studies. His unit generates revenue primarily from selling high-margin research instruments. This strategy works because research institutions, often funded by entities like the Max Planck Institutes, are less worried about the price of the machines (they have money!!!) and prioritize cutting-edge technology for their studies. Teomik also provides expert support for their machines.


PROS AND PERILS OF EACH APPROACH
Positively for the single-revenue model, there will be more strategic clarity when making business decisions. This will also help with customer confusion involving conflicting pricing and service offerings. This could lead to more efficiency of operations and reduce operation costs. However, you would lose the flexibility responsible for Siiquent’s current success – success reflected in things like the pay per test model that keep customers satisfied and coming back. Both companies value catering to their customers’ direct needs and this disregards this.
Conversely, keeping “no-strategy strategy” will continue to allow for adaptability in the customers’ favor and encourage more innovative solutions services. However this ambiguity will make it extremely difficult to properly allocate resources and could create internal competition. We ultimately do not want to confuse customers with a sea of ambiguous offerings and an unclear view of the company image.

IF I WERE THE PM
Here are some steps I would take as the PM facillitating this merge. The first step is to curate a space in which each side can be acknowledged for the successful revenue models that got them to where they are now (unlike Peter who expected them to fight it out). Next you should clearly communicate the risks that both companies will face by keeping it too flexible. Then will help foster a collaborative effort to find what success looks like for both departments. The discussion that follows can review possible strong suits and shortcomings of each model in the event that one company’s model is better in one area. In other areas where both models are successful it can come down to statistics on how each model has succeeded. This approach of constructing a hybrid model will ensure that elements of the flexible strategy remain while reducing diverging practices within the revenue model. If the first step of the conversation goes accordingly, then most decisions will be decided by predetermined values that both companies share and want to prioritize during this merge.