In the Harvard Business Review case study “Can One Business Unit Have Two Revenue Models?” by Marco Bertini and Nader Tavassoli (2015), a chief of a company undergoing a merger of two business units is faced with the question posed in the article title. Based on real-world company challenges, this fictionalized case study describes that the hypothetical B2B company’s two business units–Siiquent and Teomik, led by heads Isolde and Emanuel respectively–make money via different means. Siiquent targets a market for selling consumables like biological or chemical compounds and test kits (i.e. “stuff”) to hospitals, and differentiates from insurers and the national health service by providing consumables at a relatively lower price. In contrast, Teomik’s target market is the scientists who could use Teomik’s patent-protected gene-based devices (i.e. “machines”) for research, and Teomik earns profits from the high prices of those instruments.
The pros of “imposing the structure of a single revenue model” is that there is greater clarity and potential for alignment, both within the newly-merged business unit, and for the customers who previously had faced confusion at the different offers from the two formerly independent units. However, “letting [the company] continue on its flexible way” enables greater latitude for the company to potentially pivot in a market that is constantly changing, and to respond with speed and care to the needs of both customers and employees.
Imagining this case where the CEO has decided the department heads must merge their divisions together, how would a PM who is assigned to mediate this interaction carve a viable process for ensuring a fair merging process? In my view, it might be important to discuss with each head separately to clearly understand their personal views when not potentially tempered in a group setting. It would be essential to meet with both heads together to build consensus on the next steps for strategy and organization moving forward. In this case, there seems to be great value to the flexibility and innovativeness of each revenue model, which put customers at the forefront of their direction. Additionally, the camaraderie that Isolde and Emanuel exhibit seems to suggest that there can be a path forward that allows for more than one revenue model to work in parallel even after the merger. Ultimately, keeping in mind that there is no easy answer given the situational complexity, it would be essential to emphasize transparency, communication, and empathy in working towards a solution for strategic clarity, balanced revenue and costs, and the mitigation of potential conflicts within the unit.
