First thoughts: a very interesting article and hypothetical! In this case study, Peter, chief of the Diagnostics Division for Scherr Pharmaceuticals is tasks with overseeing the merge between Siiquent and Teomik, a responsibility that includes determining whether or not the merged companies should reduce to a single revenue model, or a proposed mixed and flexible-revenue model that builds upon both companies’ individual revenue models.
- Which markets do Isolde and Emanuel target respectively? How do their respective business/revenue models align with their markets?
For Isolde Kraft, head of Siiquent: Siiquent’s market target are “hospital and big diagnostic labs”, who buy gene-sequencing equipment from Siiquent. Meanwhile for Emanuel Geiger, head of Teomik: Teomik’s market target are research labs and universities who need things for gene-based studies. Both “offered comprehensive services, such as customized training, workflow optimization, and hotline support from teams of PhDs in case of equipment failure”, which the case study mentions are services incomparable to other’s in the industry.
Siiquent’s revenue model is a business-to-business model that sells “machines and stuff”. She says it’s the classic “razor-blade” model, where Siiquent will sell machines at cost, and then make money off of the stuff for the machines. Meanwhile, Teomik’s model is to make money off of the machines themselves. For Teomik’s revenue model, it is less relevant if customers buy Teomik’s or a competitors “stuff” as their revenue is mainly generated by the sale of machines. These line up with their markets presumably because Siiquent’s market requires more constant purchase of temporary goods that maintain or are used by machines in their market. Whereas Teomik likely has a market that is more independent and only requires machines that do not need additional goods and services to be maintained or otherwise operated.
- What are the pros and perils of “imposing the structure of a single revenue model” vs. “letting [the company] continue on its flexible way”?
Pros: 1) “Consolidating their sales forces and operations would reduce costs.” 2) Reducing the fuzziness between the market lines between the competitors, often resulting in a suboptimal transactions between the companies. 3) General flexibility in adapting to an ever-evolving market
Perils: 1) Cannot adapt to market as easily; Isolde argues that a single revenue model would be “stifling” as it would prevent the company from being reactive to the needs of customers or actions of competitors. Otherwise, having a single-revenue model would otherwise reduce a company’s ability to adapt to changing markets, albeit at the benefit efficiency and clarity.
- Pretend that the CEO has decided the department heads must merge their divisions together. As a star PM assigned to mediate this interaction between department heads, how would you scaffold the discussion to ensure a fair merging process?
For me, I’ve found that in my life hearing out all sides comprehensively is critical in ensuring that all needs are considered. This way, no party’s needs are undermined; optimally, solutions can be found that meet the needs of both parties, but otherwise, compromises can be made. Even though compromises aren’t optimal, they are more fair than a lopsided agreement that sacrifices one party’s needs over another. Like Peter, I think it was critical to have a meeting with both Isolde and Emanuel to discuss their insights, and hear their point of view even though it may differ from what I previously believed to be right (for Peter, it was believing in a single-revenue model). After meetings, I would conduct greater surveys to gather data and research on the feasibility of both models and make a cost comparison analysis to determine which one is better. I’d then bring forth my findings to the CEO, and finalize the decision. This way, I believe, is the most equitable, and thereby efficient, solution to the dillema.
