Which markets do Isolde and Emanuel target respectively? How do their respective business/revenue models align with their markets?
Isolde targets customers who are constrained by significant upfront costs. They are unable to put up the cash needed for expensive machines and need to amortize the expenses over significant periods of time. “Realizing that Siiquent had little hope of earning high margins on test instruments, its executives decided to seek sustainable profit from biological and chemical compounds, test kits, and other consumables.” (HBR) By optimizing the cost to be slightly less than insurance reimbursements, they sold their product as a revenue generator. Emanuel on the other hand targets customers who do not worry about high costs. As such, “Teomik was able to earn fat margins on patent-protected devices that helped scientists do their genomics studies and aim for glory in prestigious scientific journals.” (HBR) The consumables were then provided at a discounted rate and did not contribute meaningfully to the bottom line.
What are the pros and perils of “imposing the structure of a single revenue model” vs. “letting [the company] continue on its flexible way”?
Siiquent’s business model has a large amount of flexibility built in. It can quickly modify how it does things based on customer feedback and therefore keep everyone happy. Teomik on the other hand can provide thorough support for its machines given that customers are strongly invested. By having different business models, both units cater to different customer segments and these niches have different product requirements. The issue is that customers can get confused about multiple similar offerings. It can also cause competition between the two units and they can end up cannibalizing each other instead of expanding their market size if not well managed.
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? Note: You are not asked to find a solution, but to find a viable process for finding a solution!
I would start by getting both sides to create a detailed business model description. I cannot have Isolde and Emanuel talking about their different approaches in such vague terms. Once these are thorough and bullet proof, communication can flow between both sides. This should be a fierce conversation with a lot of critical feedback and hard questions. Of course, both sides will be well positioned to defend their choices. Hopefully this conversation will help everyone reach a mutual understanding of the other side and make it easier to reach a common ground. From there, everyone can embark on a road to a solution together.
