Which markets do Isolde and Emanuel target respectively? How do their respective business/revenue models align with their markets?
Isolde targets hospitals and diagnostic labs while Emanuel targets research labs and universities. It is really interesting because their respective businesses and revenue models reflect the values of each of their markets. For Isolde, hospitals and diagnostic labs really value money and making sure they conserve their financial resources as much as possible. Especially taking into consideration how strict and limiting national health systems make their budgets, Isolde had to get around the fact that many of their proposals “were frequently vetoed” due to cost concerns. This is why her team team uses the “razor-blade model” of having a higher initial cost for the machines, but then a pay-by-use method so that hospitals could only pay for how much they need and could see clear allocations of their financial resources. By mainly charging for only what they use, hospitals feel as though their values of being cost-effective are being met.
On the other hand, Emanuel focuses on research labs and universities. The values of these institutions change drastically because rather than serving patients or individual customers, they value the ability to make scientific discoveries. For this reason, his model does not rely on mere affordability, but on providing their target customers with tools that are prestige-driven and competitive so that they are best equipped to make discoveries. For them, “it was less relevant whether customers bought the stuff from [Teomik] or from low-price competitors” which meant that they could make more revenue from the initial cost of the machine.
What are the pros and perils of “imposing the structure of a single revenue model” vs. “letting [the company] continue on its flexible way”?
Having a single revenue model would centralize the company more and give a more cohesive image of the brand to customers. As Peter argues ““select[ing] customers or deal[ing] with the competitive landscape” is hard with a flexible model. It would also allow them to give more accurate offers and estimates. However, because their customers vary so much in needs and values, just having one model can make it difficult to be attractive for all types of users. Being adaptable and innovative is easier with different revenue models, but it can also decentralize the experience in working with the company and may add ambiguity.
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?
If we were to merge the two divisions together, I would scaffold the discussion by understanding the most important “non-negotiables” of each revenue model and also quantify those impacts as well. I would listen for major painpoints of their respective customers and also talk to CEO to understand exactly what we need to be more flexible vs. staying the same. I would take all of these stakeholders’ opinions into consideration before deciding to move forward to ensure a fair merging process without compromising the experience of our customers.
