I lead an Advisory Services Practice in my Group. We serve clients in U.S and across Africa. In this business, we do not do rocket science. Consulting, under most circumstances, is someone telling you to do what you could have figured out yourself. Sure, there are very complicated assignments where you have to crack your brain, develop and use frameworks, relying on data to help clients. Those projects task the power of brainpower and the capacity to manage complexity to bring order to a client’s business challenges.

But most times, it could be easy. This week, I helped a small hotelier. I went to a tier-3 Nigerian city for a project preparation phase. My flight was delayed so I landed very late. My client took me to a hotel very close to the airport since I did not want to drive deeper into the city in the night.

When we got to the hotel, I noticed that out of the five bulbs in the reception, only one was shining brightly. Others were dim. I asked the receptionist if I could speak with the Manager. She obliged and called the Manager. I told the Manager that he was not doing a great job. I explained that he could be losing more than 30% of potential customers in the night due to those bad bulbs. I asked him to go immediately and changed them. He was not saving any money for not replacing them.

Interestingly, they have MOPOL and excellent security in the hotel. The rooms were also above average. But they simply neglected one of the most important elements of the business: the reception. I estimate that the 4 bulbs may not cost more than N2,000.

In the morning as I was leaving the hotel, the Manager came and told me that he changed the bulbs in the night. I commended him and also told him to go and buy paints and paint the hotel gate. That may not cost him more than N20,000, He said he would do so. We exchanged business cards. I left for my client’s business location with his driver.

What I did is nothing but consulting. Sure, it is unpaid and unsolicited. The recommendations are possibly what a good consultant could have told that hotel if they have hired one to explore how to improve growth in the business. Little things matter. I will explain how great institutions do simple things to win:

• The Rwandan Development Board (RDB): RDB is one of the finest investment ecosystems you can visit in Africa. It looks like a trading hall. Once you enter RDB, you may think you are in Goldman Sachs. They take care of everything, polishing the tiles and communicating excellence in their physical outlook. The impression is legendary. You will like to do business in RDB: I like going there. Nigeria has not done a good job in this area. We sincerely need to improve how we project the image of our key institutions to the world.
• U.S. Universities: Most U.S. top universities make their schools excursion destinations to create real impressions to visiting potential students. They repaint seasonally so that those students, when they visit, see a spotless campus. That is part of a competitive system: you need to project an image of excellence. Nigerian universities hardly afford resources to keep great buildings in good conditions.

Little things matter in business. And when you work as an advisor to firms, it makes sense to even begin with those little things. Last year, on a project in East Africa with primary focus to boost organic growth, we worked with the client to take outside photos of all its stores. We ran a small comparison and noticed that revenue was nearly correlated to the outlook of the stores. The better stores attracted more customers and performed better. So, even before the real strategic work commenced, the client knew that upgrading/moving stores would be part of the recommendations. And indeed that was a key part of it and within 6 months, in addition to other minor changes, including changing the brand color to entice the market segment, revenue went up.

And when you talk of taking care of little things, it goes beyond being a founder to also when you are leading a unit in a company. One of my best projects was helping a client to model the profitability of all ATM machines and branches in its business. We developed a ranking on which ATM, branch, etc should be brought up first by the IT Group should many be down at the same time. When links go down, IT Group has a technology problem, but it was important that someone transitions that thinking to become a business problem. So, they have a ranking under bounded timeframes on what to do when links go down. It does not make sense to be working to fix an ATM in my village when the link to the one in the National Assembly is also down, when the former generates only less than 1% of the latter’s volume. You do not even need a consultant to tell you to do that. Yet, I am grateful you do!

As you run your startup, I challenge you to be mentally aware of your business. You must develop that spirit of awareness and do all necessary to understand the root cause of issues. Successful business leaders know how to take care of those basic elements. Google spends efforts before adopting a color or font for its products. Yours may be making sure that you have a decent illumination in your reception so that customers would be comfortable to wait, as they explore business opportunities with you. Having awareness should not need consultants, because most times, they simply tell you to do what you could have done yourself.

There is one big problem that can destroy any business, irrespective of the quality of its solutions or products: lousy pricing mechanism. In other words, you have either over-priced or under-priced. Pricing is not magical; you have to work on it. You can start high and keep tracking sales to understand how customers are responding. If they are responding well, it may be that your price is low. You may upgrade the amount a little and check outcome.

For digital startups, it is even easier: you can check how many items were left on the cart to ascertain the inertia to pull the buy-trigger. If there are many items in the cart, you may decide to lower the price and then over time check if the hold-outs in the carts have dropped. By working on that process, you will attain a pricing optimality where the price and the product demand have attained equilibrium.

Yet, in the Internet age, there may not really be anything as optimal pricing because the distribution is unbounded and unconstrained which means that customers can see your competitors’ prices. Even if you are marginally higher, they could be moved to buy from the competitor. This brings a big challenge: how to make sure that you are price-aware and relevant in the age when pricing has become dynamic with software that set them, with instructions to match or beat an authentic price across the web. Your software has insights on the prices maintained by your competitors and quickly looks for ways to beat them. Internet has removed the information asymmetry because everything is available for robots to see online.

To understand the importance of pricing, Amazon during this holiday season will extend its price-matching to even 3rd party sellers on its platform. That means, after merchants have set their prices, Amazon can lower the prices to ensure the items sell. And when the items sell,  Amazon will cover the discounted price from its own money.

That might sound like a technical distinction, but it’s critical to a new discounting technique Amazon is deploying ahead of Black Friday and the holiday season. “Discount provided by Amazon” lets the company subsidize goods sold by third-party merchants on its online marketplace, making prices even more attractive to customers

“Amazon may fund a discount to customers beyond your item price on select products,” states a short message on Amazon’s “Seller Central” forum. “In these instances, you will receive payment for the order and pay referral fees based on the full item price you set.” (Sellers on Amazon pay “referral fees” to the company on items they sell.)

[…] The Wall Street Journal, which reported on the program over the weekend, said sellers claimed they weren’t alerted to the change.

According to the Journal, Amazon has lowered prices from third-party sellers by as much as 9%. For example, the Journal said a Boots No7 Instant Illusion Wrinkle Filler sold by kn9ght had been marked down 6% to $19.99, while a Risk Legacy board game sold by VirVentures was down 6% to $43.92, slightly less than the price offered by Walmart.

This does show that winning in this age of unconstrained distribution channel will require a lot of offering low margin products, if the goal is to attract customers. The alternative will be to create highly differentiated products which will be unique to a specific platform. But even with that, it makes sense to find ways to keep cost low.

I like how Jay-Z has managed to keep its concerts very popular, through cheap tickets to the masses, but extremely expensive pricing for the VIP sections. So, with that, Jay-Z sells a ticket for $6, severely subsiding it from thousands of dollars it charges those that actually have the money to pay for VIP seats. Finding a way to execute such in your product offering will bring success. You still need growth even as you need to boost revenue. That level of balance is catalytic and only possible when the expensive offering can bring value to entice the customers.

The Lesson Here

In the age where we do not have information asymmetry, typical when decisions in transactions are made with one party having more or better information than the other, we have to innovate for the balance between revenue and customer growth. There is the possibility that you can have a product online and after one month, no one has bought anything from you. The problem may not be the product, it is likely that customers have access to information that your pricing is off mark. And in the web, the switching cost is small, and that means they can buy from others without suffering any undue extra pain in the process.

That first customer, for a product or solution, is very critical, and to make that happen, experimentation on pricing is vital. You must find how to make that happen. As Jay-Z pricing strategy shows, the cheap tickets provide the ecosystems for the rich guys to have fun and be celebrated. Those rich guys will not pay the big money if there will not be people in the concerts. So, technically, the cheap ticket holders seed the opportunities for Jay-Z to command that level of price from the rich concert goers. This is a win-win: the non-affluent people get the cheap tickets and provide the buzz for the rich guys to have fun in the VIP sections. At the end, Jay-Z adds more millions in his bank accounts

This is unlike airlines which do not have any major correlation between economy and first class. They can fly the first class people even if they do not have enough people in the economy class. But in concerts, if you have 20 people that paid $10,000 each, without others joining in the show, there is no game. You need the $6 payers to bring the fun in the concerts. Jay-Z is innovating based on this pricing engineering. The $6 is so low that anyone can come to fill the stadium and create an atmosphere for lovers of concerts.

Amazon has already made it clear that it wants all ecommerce shopping destinations to end on its portal. There is nothing again to be written because Amazon is ready to lose money and profits to gain or keep market share. How do you compete against such competitors? The only option is to offer something that is unique and differentiated which cannot be price-matched because it is exclusive to you. I do believe that differentiation will be the new normal, for competitive startups, since big companies are using their sizes as their most important competitive capabilities. When you innovate and differentiate, you put a separation that cannot easily be compared and price-matched.

Go back and think on your pricing, and make it a learning science. There needs to be a number that kicks in the equilibrium for sales to happen, keeping customers happy while the bank accounts grow.

I like it when companies take away pride to make sure they do things that accelerate growth. That Intel could partner with Advanced Micro Devices (AMD) to fight a common enemy is not something you would expect in the highly competitive semiconductor industry. But anyone in the industry knows that Nvidia Corp is eating the cake, and if Intel and AMD hope to have a future in modern personal computing, they must deal with Nvidia.

Intel Corp. and Advanced Micro Devices Inc., archrivals for decades, are teaming up to thwart a common competitor, Nvidia Corp.

Intel planned to announce Monday a laptop-computer chip that combines an Intel processor and an AMD graphics unit, according to a person familiar with the matter. The chip is intended for laptops that are thin and lightweight but powerful enough to run high-end videogames—attributes that lately have been driving sales in an otherwise waning market for personal computers.

AMD and Intel have been fighting for years. But in this business, Nvidia Corp is now the new target. Nvidia emerged as a parallel competitor when AMD and Intel were in the ring, destroying values with AMD getting the worst aspects of the combative onslaught.  Intel was barely wounded.

But recently, under a new leadership, AMD is emerging, introducing new microprocessors which are now better than Intel’s in some categories. The Ryzen series has been well received in the industry, and AMD is looking very great with Wall Street liking what the company is doing. Yet, despite that feat, Nvidia remains a big threat. Nvidia pioneered the GUI microprocessor business and remains the category-king. As computing moves into AI-anchored, Nvidia is well positioned.

There is a lesson here for African entrepreneurs and startups: if we deal with pride, we will find glory. For Intel or AMD to contact the other partner to work together is not something you will consider lightly. But it happened. Intel wanted to destroy AMD and for decades, AMD has been fighting to survive. But today, the fight has moved, and they are coming together to have a future. We need to learn to partner and work together in Africa. Doing so does not diminish your business.

Apple is still learning the core elements of semiconductors. It is never easy because the legends that do this cannot be leapfrogged. They master the nuts with years of understanding atoms and how they relate to what we have come to enjoy as technology via products.

Apple put out a press release notifying the world about the problems with iPhone X display. In reality, Apple was not saying anything in a very serious issue. The iPhone X has been heralded as the best possible phone at the moment and one would have expected that it will be the most advanced in engineering.  It seems it may not really be the best in engineering. Of course, in branding, iPhone remains peerless.

The Super Retina display in iPhone X was engineered by Apple to meet our incredibly high standards. We believe this is the best OLED display that has ever shipped in a smartphone while offering the best color accuracy in the industry. The 5.8-inch Super Retina display has incredible contrast at a 1,000,000 to 1 contrast ratio, high brightness, and a cinema standard wide color gamut. Together with the best system color management, colors are precisely calibrated at all times to deliver an optimal viewing experience.

Yes, Apple has an excuse for something really important: the iPhone X screen is not working optimally.

If you look at an OLED display off-angle, you might notice slight shifts in color and hue. This is a characteristic of OLED and is normal behavior. With extended long-term use, OLED displays can also show slight visual changes. This is also expected behavior and can include ‘image persistence’ or ‘burn-in,’ where the display shows a faint remnant of an image even after a new image appears on the screen.

Get it from me: Apple is not honest in that statement. There is nothing in the design of OLED that makes it permanently to behave that way. I recall when I was in Analog Devices, we were working on the accelerometer for iPhone, the instruction was clear: fix any known problem so that Apple would have the best product in the market. We made that possible. You do not ship a great product with a known industry problem which has been solved, even if that is from your competitor.

The fact is this: the problem Apple is trying to explain away has been solved by Samsung for years. Google also used fancy words to explain the same OLED problem. Samsung, the real semiconductor company, has since solved that issue.

It’s unusual for Apple and Google to experience these problems, because it is an issue that other manufacturers have worked hard to avoid.

Samsung’s Galaxy S8 is one of many Galaxy devices to carry an OLED screen in the last few years, and there is no indication of blue tinting or colour issues on that device.

Samsung has also taken steps to avoid screen burn in by having elements that are constantly on display (such as its ‘virtual’ home button) move very fractionally around the screen during the day. In day to day use these small flaws are not going to affect the iPhone X (or indeed the Pixel 2 XL) but issues that have been solved in other smartphones have returned with Apple’s latest.

That brings me to this simple observation: how can someone spend $1,000 and the world richest company will focus on explaining away a problem other companies have solved, instead of admitting that it failed. OLED is a new technology, but it is not an infancy. Apple could have sourced this product from Samsung and it would spare it this embarrassment of creating a technical illusion to explain out a problem industry leaders have since solved. Humility is what Apple needs. I hope it fixes that via software or ask Samsung to take over the supplies. Reputation chips away with mistakes like this especially when you are a luxury brand.

Tips, you can use iPhone manager to manage iOS content on your iPhone X.

When we work with startups in my Practice, one of the things I put so much efforts is pricing. Besides the cost-based pricing, value-based pricing and the typical marginal cost modeling, I like to look for a costing system that can replicate itself. Of course, there are just few products and services that can deliver such capacities.

Replicating pricing model is a pricing model where the product has a low initial cost-burden for users, making it easier for customers to adopt the product, but with the requirement that over the life of the product, the product will be generating  additional income. The implication is that  you can easily scale the product through faster penetration due to the low initial cost required to acquire it.

However, the product-system additional cost, while largely low, runs for years and will generate more revenue over the lifetime of the product. (Think of a very low fixed cost with a variable cost that is also low, but in continuum.) For this type of product, there is a duality: you have a main product with another supporting product. The customer has to buy the main product, and will then need the supporting one in perpetuity, for the main product to be useful.

Subscription service pricing is not a replicating pricing model because most times the acquisition cost remains the same cost you pay over time. You have a subscription to Tekedia and you pay $20 yearly but that amount does not change year-on-year.  Also, there is no other supporting element to Tekedia. It is simply the same product (access to all contents in Tekedia) with no duality.

Good product examples of replicating pricing model are the following:

• Razor and blade: You pay for the razor and over years you keep buying blades. The guy that pioneered this sales model in the U.S. military gave away the razors for free. He made money from the blades.
• Printer and Ink Cartridges: You make the cost of printer very low and then make money via ink cartridges. Dell at a time was giving free printer with any laptop purchase. The company knew that it would make money on the ink cartridges, over years from the customers to cover the printer giveaway.
• Espresso Machines and Coffee Pods: In most Western cities, people make their coffees at home. The machine to make it is a one-off purchase. They keep it low to make it affordable. But the deal is the coffee pods which someone has to be buying to make the coffee. By keeping the machines low, it makes it easier for people to acquire them. Then, through the sales of the pods, a company can cover discounted espresso machine costs.

As I have noted in the past, pricing is a very important element in any startup. Without the ingenuity of the pioneer of software sales, the industry would not have made so much money. In software, you buy a product, but you never really own it unless you keep paying licensing fees. Once you stop paying the licensing fees, you have automatically defaulted and are now using an illegal product. Imagine if Microsoft and Oracle do not have annual licensing fees from their corporate clients, they would not have made a lot of success.

Also consider if Ford and Toyota had required that to remain having the legal rights to your car, you must service it with them yearly with some fees paid. If you do not pay that fee, the car rights automatically return to them. They could have done that when the automobile sector was at infancy, and the world might have accepted it. This will be different from your typical oil change. Even if they do not need to do anything, you would be required to pay the fees to Ford or Toyota to have legal rights to continue using the car. Annual software licensing does not consider whether you are using the software. Simply, provided you plan to use it, once the license is due, you have to pay. So, you see companies paying for licenses for software that is still inside a package, unopened.  If they do not, they are “storing” that software illegally.

That brings me to the challenges of Qualcomm which has a novel way its mobile chipsets are priced. Today, you can buy a mobile chipset for $10 and use it to make a product that sells for $500. Qualcomm pioneered a model where instead of paying for the chipset, you pay it on the percentage of the final product. In other words, if say 10% compensation, it means they get $50 if the product sells for $500. That certainly gives them a better pricing positioning. Unfortunately for Qualcomm, other semiconductor companies are not interested in that. So, only Qualcomm was pushing and using that pricing model in the industry.

The implication is that Qualcomm has seen resistance from companies like Apple and many governments in some Asian countries where it has competitors. What Qualcomm wants to do today could have been done at the onset of the component and chip distribution industry. I think it is late now. Apple wants to pay $18 for Qualcomm chipset and not a percentage of its iPhone price.

So, as you work your products and services, think carefully on pricing. Besides innovation and technology, you can go far with the right product pricing models.  Facebook has a freemium pricing model, knowing that it can use aggregation to build a huge advertising business. You need to find what works right for you. Pricing is not something you just wake up and do: you must think critically on its implications to growth and scalability of your startup.