Pricing, cost, and margin are three powerful words in business. In the next edition of Tekedia Mini-MBA, coming up in Feb [early registration has started], we will dedicate a session on how to price to improve margins. Yet, besides the rudimentary cost-based and value-based pricing, the gold standard of modern business is attaining better equilibrium on marginal-cost pricing, via compounding acceleration of simultaneous reduction of transaction and distribution costs.

As you look at this plot, you can notice one thing: as the world digitizes, margins improve. It does not mean that all businesses are experiencing better margins. What is happening is that those capturing values are improving margins faster than the value-dissipation experienced by the disrupted. So, on average, margin moves northwards.

To make it easier to understand. If you average the profit margin of a digital advertising portal (like Facebook) and a print newspaper, you will notice that the margin is improving because Facebook’s margin is growing faster than any reduction in the print margin. Simply, the improving global margin is as a result of digitization and automation in most industrial sectors.

Debts may not necessarily be bad. But in Nigerian states, there are many reasons to worry. According to BudgIT, most of our states are technically yoyo. Yes, Oyo, Kogi, Osun, Ekiti, Plateau, Adamawa, Bauchi, Gombe, Cross River, Benue, Taraba,  Lagos, and Abia states were unable to fund their recurrent expenditure and loan repayments due in 2019.

Across Nigeria, we spend all the time examining the federal government without knowing that nothing is happening in the states. Lagos state seems to be out of order! I mean, the 6th largest economy in Africa needs recalibration. Rivers state seems to be in charge of its future, surprisingly.

For the full report, please click here.

Update: This report has some errors which the authors have acknowledged.

“Indeed, @followlasg (Lagos State Government) cannot be included in the category of States with a recurrent deficit; thus, not borrowing to pay salaries,” BudgIT said.

“Our metrics focused on NET FAAC and IGR as published by the National Bureau of Statistics due to the disparate nature of revenue framework among Nigerian states.

“We also apologise for including a special debt financing program as part of the recurrent expenditure which might be a total representation of its finances.”

Nike experienced a massive increase, and that is a huge lesson for everyone. The athletics wear leader grew its online sales by 83%, adding $900 million to the company’s top line last quarter. Simply, e-commerce is now 30% of Nike’s sales. It got there three years faster. Two things drove this redesign:

• Nike developed athletic training apps. This is a consolidation – bring the training inhouse, and make sure your users do not need to go out looking for training apps.
• Puts its destiny in its own hand by opening Nike stores, shifting away from wholesalers like Macy’s.

While most brands have simply made their apps and e-commerce sites shopping tools, Nike has long understood that digital tools must do more than just support sales and have to insinuate themselves into customers’ lifestyles to really pay off. Otherwise, e-commerce growth often just means business going from one avenue to another, rather than growing the overall pie.

A few years ago, the sneaker maker launched its online NikePlus program, a membership program with tens of millions of members that has helped the company better understand each customer’s interests and shopping patterns, and ultimately sell them more of its products.

Nike is also benefiting wildly from tools like its Nike Training Club App and a running app that offers self-guided runs. Donahoe said more than half of the training club app members had done a workout using the app last quarter. That fosters loyalty with customers and keeps Nike top of mind—as well as filtering users to its commerce site.

If you check what is happening here, Nike is doing more by itself. Sometimes, in this age where supply is not the core issue (controlling demand matters more), finding a way to build your own consumer tribe could be rewarding. Invest not just on your supply part, but also on your demand part, because if you can influence DEMAND, you can sell more. Yes, as those using Nike’s apps for training congregate daily, the Nike’s logo is seen by them, even though the next shoe purchase may be coming in the next 12 months.

For decades, Nike focused on supply, using department stores to sell its products. Today, while that supply element remains, Nike 2.0 is also about controlling the demand experience. And that is why this firm is elevating the game. Across sectors and industries, a strategy to find a way to stay closer to demand is now critical for survival.