Isolde and Emanuel’s Revenue Models
Isolde and Emanuel’s targets are hospitals and the research market, respectively. Emanuel’s model is based on selling machines and is flexible, adjusting prices based on customer demands, internal guidelines, and competition. Isolde’s model is based on selling consumables and maintenance support (“stuff”), and the company is very responsive to customer input. Emanuel’s model aligns with his company since the bulk of revenue comes from selling machines, so the model must be flexible and sensitive to customer demands and accounting guidelines. Isolde’s model aligns with his company since the revenue comes from consumable sales and support, so prices must be lower than fixed reimbursements from insurance and the company must be responsive to customer feedback.
Pros and Cons of a Single Revenue Model
The pros of imposing a single revenue model are knowing exactly what the customer base is and figuring out concrete strategies to deal with competition. There would be clarity with a clear direction provided, reducing customer, stakeholder, and sales team confusion in the merged entity. Also, operations such as marketing efforts would be streamlined, potentially lowering costs.
The perils are that having different revenue models makes the company more flexible to a rapidly changing market, which is important with a dynamic market. Imposing a single revenue model means being less responsive to employees’ sentiments, such as forcing them to provide customer service if service is determined to be a source of revenue. It may also lead to being disorganized because the company might bend in many different directions to respond to customers and competitors. Also, the customer base of each company in this situation is different, so different revenue models would ensure that services are tailored to the diverse customer base and that no customers are alienated.
Should Peter Impose a Single Revenue Model?
In my opinion, Peter should not impose a single revenue model. I agree with Isolde and Emanuel that the market for their consumables and machines is rapidly changing and dynamic, and imposing a single revenue model would hinder the company from responding quickly to this market. Especially considering that the two companies have very different target customers, hospitals and research, having a single revenue model would prevent the company from adapting their services to all customers and generating as much revenue as it can.
Ensuring a Fair Merging Process
To ensure a fair merging process as a PM, I would facilitate open conversation about the strengths and weaknesses of each department and how each can contribute to the merged division, then discuss how existing processes and revenue models can be restructured in the merged division for optimal efficiency and revenue. I would then schedule follow-up meetings to discuss concerns post-merge and define success metrics to analyze the results of the merge.
