Different Markets and Different Revenue Models
The head of Siiquent, Isolde, targeted hospitals and big diagnostic labs. As a “DNA-sequencing start up”, Siiquent sold the materials necessary for these institutions to perform gene-based diagnosis. On the other hand, Emanuel, the head of Teomik, targeted research labs and universities as this company supplied equipment “needed for gene-based studies”.
Although these products and markets sound similar, they are entirely different and have been run to cater to said markets. After it became clear that Siiquent’s equipment was out of budget for “all but Germany’s biggest hospitals and diagnostic labs”, the company decided to adopt the razor blade business model. In essence, the machine was sold at a price near what it cost to make, and additional products such as biological and chemical compounds and testkits, or as Isolde refers to them, the “stuff” is what is profitable.
In contrast, Teomik sold to research markets that were backed by the “big funders of genetic research” and could afford the expensive devices. In other words, Teomik was able to make a profit off of their “machines”.
Rigid vs Flexible Model
Imposing a single revenue model on the company is the norm, it is almost always the case that a company follows one business plan. This keeps the structure and organization of the company intact. By sticking to one revenue model, the company can focus on one market and can deal with competition directly as a result. However, choosing to continue down the path of two separate revenue models simultaneously allows the continuation of prioritization of “customers, competition, and employees”. These are values shared by both companies that they would like to uphold that would be compromised if one model is scrapped for the sake of the other to take over.
Merging Plan
If I were tasked with handling this merge as a product manager, it would be my priority to uphold the value placed on knowing how to properly care for the customers and the employees as well as handle the competition for the sake of profit as well as appeasing both heads. I would try to implement characteristics from both companies to make sure one company is not forced to entirely rewire their workflow if possible. This would ideally look like taking the best parts from the respective companies and fusing them together in a way that makes sense for the customers and is most profitable. It would also be of utmost importance to me to have a clear market and understanding of the competition, even if those two are not as niche as each company was used to prior to the merger.
