In the Harvard Review Case Study, we can see that both companies mentioned in the merger are prominent companies in genetics diagnosis and research technologies space. Isolde represents Siquent, which generally seems to have a market of large hospitals and diagnostic labs. As mentioned in the article, they seem to have the “Razor-blade model.” as they focus on selling the main equipment (like the razors) at cost, and then profiting from the consumables (like the blades) which, in this case, are the biological and chemical compounds, test kits, and their other such products. Given that the big hospitals and diagnostic labs are under budgetary pressures, providing the equipment at cost and profiting from consumables aligns quite well with their requirements. In this biotech and research space, it is also the support of these big organizations in navigating the regulatory framework. On the other hand, Emanuel represents Teomik, which generally seems to have a market of research institutions, universities, and labs. Profits are made from the initial cost sales of their research equipment. Research institutions like the Max Planck Institutes have budgets to invest in high-end research equipment, so high margins on these machines are acceptable, so the models are aligned in this case as well. Since they both largely align with their target markets, they had been successful individually until the merger.
When we discuss the potential for a single revenue model vs a flexible one, each has some pros and cons. Single revenue models can make internal and external company communication much easier, leading to more effective and easier communication to clients as well. It could also point out operational inefficiencies if teams within the same company target overlapping clients/markets, and it could cut costs in such cases. Some cons may be that the market might have some nuances, and companies and institutions might not require the same solutions, some business could be lost there too. With the flexible model, each team can give more personalized attention to a market and client’s needs. Another benefit is that if a particular model faces issues, the other models can still give the company some stability. However, it could also lead to teams undercutting other teams in the case of a merger between Teomik and Siiquent, which would be very unproductive in the long run.
If I were the PM mediating the merger, I would start by having both team leaders listing out their revenue models, value propositions and business models. I would then use those to discuss any common features we could find between any of these features and start from there. After carefully discussing the commonalities and differences and showcasing data supporting all aspects, I would host a voting process for the executives and team leaders to decide on specific differentiating aspects of the companies, and decide on final values and revenue model details. I would take into account market requirements and possible future trends, to try to understand which aspects of each company best fits the combined vision for the future.
