Isolde, head of Siiquent, sells equipment to hospitals and big diagnostic labs for gene-based diagnosis. Emanuel, head of Teomik sells equipment to research labs and universities for gene-based studies. Despite selling to different customers/businesses, both Siiquent and Teomik sell similar instruments and supplies (machines and stuff that machines use) and both offer comprehensive services (customized training, workflow optimization, and hotline support from teams of PhDs) to their respective customers. Both units are B2B. Siiquent makes money on selling the stuff that machines use to their users through a razor-blade-type model. They sell machines at cost and then make money on selling the stuff that their machines use. Teomik, on the other hand, makes money on selling the machines themselves and it is less relevant whether customers buy the stuff that the machines use from Teomik or from low-price competitors. Neither unit makes money on the extensive customer service they both provide.
The pros of imposing the structure of a single revenue model are that consolidating the companies’ sales forces and operations would reduce costs for Scherr. In addition, it would limit the internal competition and overlap that may occur as the line between the two units’ markets may grow fuzzy in their dynamic markets. The cons are that the team of PhDs that are critical to maintaining differentiated brand image and relationship building may be swept away or consolidated into one unit if a single revenue model were imposed. In addition, having a single revenue model could be stifling and prevent the company from changing/shifting/responding to changes in the dynamic market.
The pros of letting the company continue on its flexible way are that the company can continue to shift to new strategies and tactics as circumstances dictate, meaning it can be more responsive and flexible to the changing environment and market. The cons are that not having an established revenue model will make things confusing and harder when trying to select customers or when dealing with the competitive landscape.
In order to find a solution to the fair merging of the two divisions, I would first have individual conversations with Isolde and Emanuel to discuss what their respective unit’s mission, goals, and vision is. I would ask them what services, products, strategies are most important to maintain for their unit when going into this merger. Then, I would talk to the head of Scherr to understand the company’s overall vision, mission, and goals for the future. Where does Scherr see itself in the next ten years? What are this merged unit’s goals and mission? What is the purpose or the goal of this merge and how does it contribute to the overall vision and goals of the company? After consolidating the needs and goals for each unit and the company overall, I would make a list of overlapping items as well as the items that were unique to a particular unit. I would outline the discussion as: here are the things we are aligned on and that will continue to be addressed and to progress in the merging of these two units and here are the things/items that are at odds with each other or are unique to one unit. I would then go through and discuss how each item on the list of unique items is relevant or irrelevant (and therefore can be discarded) to the overarching company’s goals and how it can be implemented into the merging process. I may also talk to people at other companies who have gone through the merging process and ask them what their strategy was for mediating a smooth, fair merge.
