At the time of their merger, the business models of Siiquent-Teomik’s two business units stood diametrically opposed. As head of DNA-sequencing start-up Sequent, Isolde focused on a business-to-business model that generated revenue from supplies needed for sequencing diagnoses, using sequencing machines themselves as more of a vehicle to sell these supplies to customers. Emanuel had taken a different approach at Teomik, making money from selling research equipment and losing out on revenue from consumables for this equipment that customers could easily source from competitors.
These two models had taken such drastically different forms as each of the two business units had adapted to changes in their respective target metrics. Siiquent had little scope to earn money from equipment in the highly regulated and strictly budgeted market of hospitals and diagnostic labs, and so Isolde focused on providing affordable consumables to these institutions along with free support. Teomik’s target markets of genetic research labs, on the other hand, was willing to purchase instruments at high price points, leading to Emanuel’s focus on this equipment as a revenue generator.
The use of a single revenue model has a number of potential benefits, including curtailing costs and imposing additional structure. Perhaps above all, it reduces redundancy; Teomik and Siiquent would no longer need to undercut one another to purchase research compounds, and both companies’ customer support and expertise systems could be consolidated into a single, more efficient team. However, this increased structure also brings with it a sense of rigidity. Uniting two companies with a single revenue model reduces scope for adapting a revenue model to each individual target market. If the unique user pain points and competitive threats of research labs and hospitals were to further diverge, for example, a single revenue model would render it challenging to tailor the company’s response to these disparate needs.
If I were to mediate this interaction, I would start much as Peter Noll did – by understanding each of Teomik and Siiquent’s revenue models and the factors their target market that precipitated the formation of these paradigms. I would then focus on commonalities between the two companies, discussing what could potentially be consolidated as the two companies moved forward together. What would be the benefits and drawbacks of using a combined support team? How can we prevent this price undercutting and internal competition between Teomik and Siiquent? Personally, after hearing the united front put forther by Isolde and Emanuel, I think the loss of flexibility for the two organizations to tailor their offerings to their market is a drawback not justified by the increased structure of a single revenue model. Rather than imposing this formal structure, I would concentrate on finding elements of one revenue model that could be adopted or highlighted in the other and resources that could be shared to reduce spend within the merged company.
