Greece and Israel share several commonalities: same area of the Mediterranean, similar historical struggles in late 1940s, an average monthly wage around EU1,400, and football teams that often promise more than they deliver.

Economically, Israel has long ago moved ahead. The Holyland has abandoned many (not all) of the anomalies that plague the Greek Treasury today. For example, there are no special tax breaks for singles. The unions have an important role, but they do not take their opposition to the streets in the form of violence.

Most analysts agree that the direct fall out from the Greek bail out will be relatively limited. Israeli banks are thought to have a minimal exposure of around US$20 million. Annual exports to Greece barely top the US$300 million figure. Thus, at the first level, the damage to Israel will be targeted and limited. And similar stats apply to the commercial relationships with Portugal.

Of more concern are the indirect or knock-on effects. Three specific issues come to mind.

  1. If the Euro collapses, then the shekel will appreciate in comparison, which will make Israeli exports less attractive to Europeans. Ouch! So far, the change has not been significant.
  2. On a parallel theme, if the European economy takes a hit – and there are continued concerns about the Spanish, Portuguese and even the British economies – Israeli goods and services will again find overseas markets harder to preserve.

Exports of goods to Europe, not including diamonds, account for about 29% of all exports, according to the Israel Export Institute. Exports of goods to Europe, not including diamonds, for the first three months of 2010 were 31% of total exports, down from 33% during the same period in 2009.

3.  And there is the psychological element, which cannot be predicted. Investments are often determined by confidence or a feel-good factor. With 3 countries around the Med facing the economic heat this summer, outsiders may not be willing to rush into the Israeli stock market or its high tech sector. Punished for events beyond your control?

You would have thought that a global credit crunch would have ensured that less people would want to start up a new business. In Australia, often associated with sun and sport, a strong work ethic, backed by an investment of  long hours, has led to a glut of new, successful enterprises. And an increasing number are run by women.

This theme of determination is often seen in founders of companies, which have prospered where “ordinarily” they should never have got off the ground. I have just read an article about Dorin Frankfurt. Now in her mid 50s, she left Israel 35 years ago to study clothing design in France. When she returned, nobody would employ her.

Here’s the deal. When faced with despair, DF decided to make her own clothes and sell them herself. (She excelled in female fashion wear). And you can bet that no venture capitalist sunk money into her initial operations. When months previously potential employers had snubbed her, the first shop began to flourish.

A decade into operations, the Israeli government ceased protecting the local textile industry and the market was saturated with imports from the Far East. DF carried on. Even today, when most Israeli companies have moved their sewing operations to Egypt, Jordan and China, she continues to supply her 25 shops from her Tel Aviv based factory,

The interview with DF reveals just how hard-headed she has been. For example, she was one of the first people in Israel to publicise charities, helping those suffering from AIDS. She chastises governments for not providing help to unemployed outside the hightech sector. A lady without obvious fears.

And maybe that’s the point. Be you an Australian in 2010, an Israeli in the 1970s, or even Henry Ford a 100 years ago, what seems to link all these people is a lack of panic when trying something new. That is what affords them the ability (and luxury) and go beyond established frontiers. That is often the origin of their success.

A few months back, I attended a seminar on “engaging employees”. How can a manager obtain the best from his staff? What will motivate them?

I have written extensively of the need to allow a worker to develop in their own space. Payment and smiles are not the only ingredients towards securing a productive employee.

A new article from the Harvard Business Review asks the question “how to keep your top talent”, especially once you have invested in providing them an expensive training programme. Surely, that should be incentive enough?

Apparently, one of the key mistakes of corporations is to assume that “high flyers” are the happy ones. Not so. And when they leave, it can be painful and expensive. In fact, the cost can be a double whammy. Carnegie estimates that it often takes up to 24 months to replace leading members of staff, which then impacts on work flows and revenue.

There is a flip side to this coin. Part of the fall out of the credit crunch has been a slow move towards appraising older workers. Arguably, the recession was partially caused by the enthusiasm of youth. It is an open question if a wiser and more senior commercial leadership in several countries would have led to a different set of circumstances.

In one of today’s economic newspapers in Israel, there is a major feature on how employers are reconsidering the benefits of utilising 50 year olds and upwards. Not so quick, but they give you  a solid, quality performance, often for slightly more money.

Is that enough motivation for the manager, who does he still just want to look at the direct costs?

Crumplers is the wonder “entrepreneur” case study that everybody loves to read about. The founders dropped out of school, started an initial business that outsmarted the mega players, were forced out by a legality, and have moved on to something even bigger.

Crumplers manufacture and sell really good bags, specifically courrier bags. Nothing special there you may think, except for their handsome profits.

And that’s the point. Walk down your average high street, and you will find a least one shop selling handbags and similar attire. And you never find the one you want. Just a coincidence?

Daniel Citron almost won an internet competition worth US$15,000 to set up a new collection of bags. Yup, he too had seen an opening in the market.

A couple of months back, a client was looking for a bag to hand out at a conference she was organising in Jerusalem. Nothing complicated, just something presentable and with a logo. However, it took numerous phone calls and web searches and discussions to find a quality item, of the right size, practical, which did not come with a glaring bring pink backing.

What drives the Crumplers’ team? I do not know them personally, but let’s return momentarily to one of my favourite gurus, Dr Robert Brookes. His latest considerations on motivation is a must read and provides us with some answers. Remember, despite their talents, these people left school with few qualifications,  yet Brookes posits that: –

I have found that in both the business world and in schools, autonomy helps to create “motivating environments.” Affording employees, faculty, and/or students some choice does not minimize the authority of supervisors or managers. Instead I believe it enhances a sense of ownership, responsibility, and accountability in all members of that environment. As I have expressed in previous writings, intrinsic motivation is enriched when individuals are provided with opportunities to have their voices heard. So-called “top-down direction” frequently triggers feelings of resentment, lessening any possible satisfaction or joy associated with the activity.

 Brookes concludes with a very powerful comment from a colleague:

And we know that the richest experiences in our lives aren’t when we’re clamoring for validation from others, but when we’re listening to our own voice—doing something that matters, doing it well, and doing it in the service of a cause bigger than ourselves.

All Crumplers et al want to do is to help people, and they have shown why they are good at it.

Rafa is one of Israel’s oldest pharma companies. This week, I noticed a new sign on a developmental complex in Jerusalem, denoting where the company will build a new US$35m facility for 130 workers.

Just down the road is the Bank of Israel. This is another institution in a happy mood. Its revised predictions for 2010 and 2011 are a metaphor for optimism.

Growth of 3.7%, rising to 4.0% in 2011. Standard of living; 9.2% and 7.4%. Unemployment falling to 6.7%. And exports increasing at a steady 4.5%.

There are concerns if the stock market is too high and if the price of real estate is reflecting a bubble. But neither of these issues undermine basic economic fundamentals.

Next to Rafa is a new biotech centre, close to completion. Obama may not be pleased with Israel’s politicians, but the economy is pressing on regardless.

This year’s Independence Day in Israel coincides with the “anniversary” of Herr Hitler’s birthday.

An irony, perhaps. Where as the failed Austrian painter talked of a Reich lasting for a thousand years, Israel’s Third Republic, despite a constant and continuing existential threat, is in its seventh decade. I will let others evaluate all the reasons for the country’s success, but one of them is the economy.

In the summer of 1986, Israel abandoned the mechanisms of protectionism that had served the country so well during its first traumatic years. It is often forgotten that when Israel was forced in to the Six day War of 1967, it did so emerging from one its deepest recessions.

Leap forward to 2010, and we have an economy based on innovation. The country’s hightech sector is at the forefront of the global cleantech revolution. Many analysts argue that the world is in the middle of a new industrial revolution in communications. Maybe, and at any telecom conference, you will find dozens of Israeli companies.

This push towards new social wealth is not limited to the sciences. I am working with a start up which has developed a prototype to replace printed cheque books. And come Christmas December 2010, you will see Israeli chocs on sale in Wal-Mart

Israel’s economic fundamentals are sound. Adjusted figures show that the economy grew at an annual rate of 4.8% in the last quarter of 2009, which only India and China could beat.

Israel’s population stands at just under 7.6 milion people. Roughly 25% are not Jewish. Despite the real threats of Hamas, Hizbollah et al, the continuing need to incorporate all – new immigrants, minority sectors, hundreds of refugees from Sudan, etc – is a need that works in parallel with the theme of innovation.

Yes, Israel is often criticised by others for not doing enough to help with integration. There is justice in some of those comments, although I have yet to find a perfect county that can preach without fear of being accused of hypocrisy. In parallel, I can proudly say that the importance of integrating all is a strong feature throughout much of society.

Look closely and you will see how innovation feeds off this ability to use the talents of all. The enemies of the people of Israel – from Pharoah to Hitler and on to the present rulers of Iran – have repeatedly tried to eliminate such freedoms and failed. Here’s to the next 62 years, and many more after that.

Last week, I reread the 1990s classic: “who moved my cheese”. Four mice grapple with a new situation; having been used to a ready supply of quality cheese, the source dried up and each one had to work out what to do next.

Ever since the beginning of the credit crunch, I have been singing the praises of the Israeli economy and its stock market. The former is heading for over 3% growth this year. And investors have seen the main index climb over 110%, reaching a new record high this month. In May, the Tel Aviv Stock Exchange (TASE) moves over to the group of developed countries.

The Israeli economy is doing well. Many of the correct economic fundamentals are in place. Even interest rates are gradually returning to realistic levels. Yet, in the same breath, I must repeat what I have mentioned back in November 2009. The new status for TASE will not automatically bring an immediate bonus to holders of Israeli stocks and shares.

Until now, Israel shares have been a great bet if you wanted to hold shares in the group of emerging economies. Now Israeli stocks are competing with the big boys, and it represents a much small portion of a signficantly bigger pie. To quote a recent analysis:

Market sources have long warned of an exodus by foreign investors from the TASE and subsequent delays by new investors not rushing to get in after the upgrade on May 26.

(Meanwhile…) local investors are buying. Foreign investors are selling huge quantities and the public is buying, but this can’t go on, and at some point it will come crashing down. Everyone in the market knows this and they’re talking about it behind the scenes, but they’re keeping quiet outside.”

What is called for is not panic, but a reality check – an adjusted approach. Anything wrong with that simple advice?

 Go back to Dr Spencer Johnson, the author of the cheesy book. His preface includes the truism: “The best laid schemes o’ mice and men often go astray”…….written 250 years ago by Robert Burns.

How long does it take for people to listen, and learn?

Most of us want to be successful, but are never sure what that really means or how to get there. For Maria Bartiromo, CNBC’s top female anchor, one key ingredient is self-knowledge, “…..the ability to define for yourself what shape your life will take, and how you will pursue success.”

Just recently, I have been looking at successful start ups, and what allows them to overcome the multiple obstacles in their path. Australia’s Snowy Mountains Cookies is one such example. The founders looked for an all-year round product that would also allow a young mother time off for family duties.

Significantly, they quickly identified a new need in the biscuit market, left open by one of the big guys. They plugged the gap by creating a quality product. The result is that after three years of operation, they have a client list including some of the continent’s biggest names.

Lone Tree Brewery also makes for a wonderful case study. Whilst I admit to a certain level of bias, because my colleague, Dorit Kosto, and I have been associated with the progress of the team, I believe that many entrepreneurs can learn from their experience.

A little over a year ago, we sat down with four people, who were very excited about creating a boutique brewery. Their philosophy included encouraging employment and tourism in a relatively undeveloped part of Israel. Each had qualifications in their own field. They talked with knowledge about raw ingredients and production processes. They came to us with a file, full of details.

What was missing was an answer to the “what next” question.

And this is where they got smart. First, they sought help. Second, they learned to establish for themselves a realistic set of targets; timelines, budgets, task allocation. Third, while sticking to the overall dream, they moved from trying to succeed big overnight and began to concentrate on implementing a series of small, achievable tasks. 

Dorit and I met up with Lone Tree Brewery today at their new premises. No, it is not a large factory, but they are producing. And they have room to grow. One of the founders has had to leave the group, but the three remaining members seem to have very clear roles. They were hosting an open-house tasting session. No fancy pre-advertising campaign, but bottles of beer were being sold to many happy customers. 

Speak to our heros, and all are looking ahead. Pricing and marketing, investment, marketing strategy – again, they want to define and to break down the next issues into a series of targets, which fit into a realistic timetable. Interestingly, they seem to be setting a high price in order to position themselves as a quality product.

Is that a risk? Maybe, but a taste of the beers on offer more than justifies the initial strategy.

Founded in 1953, the TASE will join the grouping of developed markets in May 2010. This is a very positive step for the country’s economic development.

There are 614 companies listed in Tel Aviv. 53 are cross listed overseas. The current valuation of bonds and equities combined is approx US$400 billion.

2010 has started well for Israel’s stock market. Following the credit crunch, the exchange is now back at its all time high. Average daily volume have returned to 2008 levels. The finance sector now comprises just 25% of the total shares, just overtaken by telecom and technology related companies.

Israel is about to celebrate its 62 annual Independence Day, and this commercial achievement is something to shout about with pride.

Bezeq is Israel’s largest telecommunication company. Privatised, it still has a large control over land lines and other services. For example, my router is from Bezeq.

I wanted to work from home this morning. My refreshingly strong coffee soon lost its taste, when I realised that the internet was down. The usual switching on and off of dusty buttons led to nothing. I phoned up Bezeq.

I had a very pleasant 23 minute conversation with a young man – let’s call him B1 – who tried to help. He told me where to enter lots of numbers, to connect, do double clicks and to stand on my head. But nothing worked.

So, I could either wait 3 days for free delivery of a new router or get one myself. So, off I drove, straight into several lingering traffic jams. One hour later, I was back home. I plugged it all in, I phoned up the nice chappies on the help line, and then I noticed….nothing. Yup, it was “nothing”.

You see, however I played with the new router, there were no lights on the friendly machine. By the way, it’s a lovely box. They have changed the colour from black to white, evidently to express the purity of the service. In fact B2 was really pleased for me. It seemed that I was one of the very lucky few to obtain a dud router.

Could he register a complaint in my name? No, I had to phone another number. So left with the choices of waiting 3 days, driving off again to the Bezeq store or drinking a bottle of whiskey, I chose option number 2, just.

With no traffic jams and having found a new road, I was there in record time. Luck again, heh, and that was after I had filled up with petrol on the way. Keeping Bezeq’s help line busy is a heavy strain on my darling car.

I received another white router, which I insisted they tested for electricity. I do learn quickly. In fact, I was giving a unit in new packaging. Such an honour to be able to work with Bezeq.

Could I register a complaint, I asked rather delicately? After all, this is a Bezeq shop, located in the building of the national offices. Surely, if I use my mobile to phone a special number.

Whistling to myself and trying to avoid the signs to the local loony bin, off I raced to the car, smiling. I suppose the people around did look somewhat concerned. My teeth were protruding over some extremely raw lips. Actually, there were not much flesh left, but I was trying to smile through it all. I really was

Back home. On the line to B3, a most delightfully helpful person, he really is. We sailed through the procedure together. Press enter, he told me. Is the internet button now flashing? No, says me. I thought not, said B3.

I tell you what was lit up; the red danger sign inside my head. Just let me check something, says B3, who passed me on to Bezeq’s latest piece of boring die-while-you-wait musac. He returned in a jiffy to tell me with great gusto that he had detected a problem on my line. This will take up to 2 hours to fix.

B3 would not be drawn if the original router was faulty. He was most sorry to hear that I had already spent 4 hours on cordially chatting to half of Bezeq’s support group. And as for a complaint, he suggested something, but my yawn hid his answer.

With nothing left to do, I phoned 166, the complaints line. I pressed 1 for Hebrew, 2 to confirm my phone line, and several other numbers until I most inconveniently got through to B4, who could handle the issue.

She took my details. And then: “One minute sir, could you hold a moment. There is a fault with the system.” A few seconds later I heard her ask me to call back in half an hour, as the fault apparently was a very annoying fault, that would not go away – much like Bezeq’s management I thought to myself.

Could B4 call me back, when she was ready? No, that was against procedures, evidently designed so as not to help clients with a complaint! I assume that B4 heard the click, as I put the phone down.

The two hours did eventually pass by. Nothing happened. When I called back and spoke to B5, I was told that the problem was fixed, but Bezeq policy is not to call you back and confirm. But Mrs B5, I plead, my internet is still not working. Oh, and B5 discovered another problem, which required a technician to be sent out.

B5 calmly told me that a technician would turn up tomorrow, and I told her in a very uncalm manner that he was coming today. “Well, I don’t think you need to use that tone of voice,” responded B5.

In fact, I did have to. And I screamed again, several times, in order to get a manager, who spent over an hour with me and a rep from the server company. Together, nearly 9 hours after the initial panic, they sorted out the problem.

For the record, it is probable that the router was fine, but that there was a fault on the line. Once the router had been exchanged, everybody forgot that this would render as useless an existing password. Simple, no?

And also for the record, it is very probable that I will be moving to another internet supplier. Do you want to know why?

Bezeq also failed to hear that I am a licensed business mentor with local and international clients. Bezeq is not one of my customers, but now features on this blog site. I invites others to comment about Bezeq or to add their stories about so-called customer support from large organizations.

Friends and colleagues have mentioned that the Israeli and Palestinian economies are going through a quiet period. No sensational news. No major international investments.

Nothing could be further from the truth.

Look at the stock exchanges in the region. The Palestinian market, located in Nablus and in Ramallah, is being plugged by Barings. In Tel Aviv, the market has climbed over 100% and is back at its previous all-time high of November 2007.

The West bank economy is clearly benefitting from a decrease in local violence. Tourism is up 50%. A new industrial park near Bethlehem is being supported by the French government. And Israel has admitted that it owes the Palestinian Authority hundreds of millions of shekels in back payments – a nice unexpected windfall.

In parallel, local consumption in Israel has been on the move. H&M recently opened large premises in Tel Aviv and in Jerusalem, with queues for the changing rooms taking over 30 minutes. IKEA’s furniture shop in Netanya is one of the most successful in the corporation, and their second Israeli outlet is proving just as popular.

The export market has also taken on a new aspect. While Israel is noted for its innovation and hightech applications, several Israeli retail chains can be found overseas. Clothing, fast food, cosmetics – Israeli shops are pushing themselves into new markets. And Israel’s film industry has been represented at the Oscars for the past three years consecutively. There is life beyond the conflict.

American and Israel may be having a spat. The PA and Hamas may be arguing over who is responsible for Gaza’s power shortage. And quietly, millions of people are trying to put the violence behind them and get on with their own lives – good for the economies and good news for investors.

One of the effects of the global crisis has been the near incessant cry in recent months for businesses to rethink or reinvent themselves.

I am a great fan of several of the Financial Times columnists. Yet they have been plying this theme until it has nearly lost its meaning. According to the newspaper, HMV, the CD retailer, is at it. So too is the trendy named New Covent Garden Soup Company. Even the French President has been talking about reinventing the world economy.

Dan Kennedy is another favourite of mine. In his latest posting, he also refers to the need of “continual frequent rethinking of what your business is“. Boring.

My own take on this is slightly more cynical. This afternoon, I read an old story about Procter & Gamble. In 1967, the makers of the successful “Formula 409” learned that P&G were about to launch a competitive product on a trial basis in the Denver area. To cut a long story very short, they changed their strategy overnight.

  • They withdrew their product from Denver, thus insuring that P&G recorded inflated and unreliable stats.
  • Then, when P&G’s product was launched nationally, they sold Formula 409 at unbeatable prices.

Clever, and the multinational backed down. And why was it clever? Because they were able to process new commercial info quickly, rethink, and then revamp the way their main product was sold……….over 4 decades before we have become subjected to these latest buzz words from current managerial gurus.

Bottom line: Don’t get lazy or complacent. Ensure you have the resources to keep you one step ahead of the game. Some people pay thousands to earn an MBA in order to learn this obvious piece of commercial common sense.

In the first quarter of 2010, the Tel Aviv Stock Exchange rose by over 7%. It is now less than one percent off its peak of October 2007.

If you consider the country’s balance of trade, the figures for January and February 2010 show that the downturn of the same period last year has been largely made up. As Israel begins to develop its own natural gas supplies, the balance of payments figures will swing sharply positive over the next decade.

When measuring income, the GDP per capita has broken the US$30,000 level. In dollar terms, this is a 50% change within a decade. (12% when measured in the local shekel currency).

Yes – there are those who see that the stock exchange will level off for the rest of the year. The shekel is overvalued for the likes of Israeli exporters and is likely to remain that way for the near future. That will hit profitability of many companies.

However, whichever way you look at it, the three factors above are very potent. They clearly highlight the current strength of the Israeli economy.

Read about an Israeli share portfolio, and very quickly you will meet up with Teva. It is Israel’s third largest global corporation. Once Obama’s health legislation kicks in, Teva is expected to benefit from a “stampede” of new customers. And so on.

In Hebrew, the word “teva” means nature. Just what is so special about this company? What has turned it from a hick-town importer of drugs in to the world’s eleventh largest pharma in just four decades?

One answer has to be leadership. The CEO is Shlomo Yanai, one of the few top generals to have crossed over successfully from the military to the private sector. For health reasons, Eli Hurwitz has just stepped down as President, after who knows how many years in the job. And the swop over has been managed smoothly so far.

A second reason has been an ability to grow through acquisition. Teva specialises in the generic drug market. Identifying new opportunities, from operating 18 factories in 1990, Teva now has 59 plants.

Clearly, growth has enabled it to secure a greater international standing. Teva operates in over 120 countries. Estimates register that every day, 2,500 prescriptions are issued with one of its products.

Another factor is the way Teva relates to human resources. For example, during 2009, when the average wage in Israel fell 2.8%, the Teva salary bill rose by 7%. 6,000 of its 40,000 employees are located in Israel. 

The bottom line is that during the 2009 credit crisis, total revenues climbed by 29%. Annual sales are worth around US$59 billion.

I do not have a position in Teva, but you can understand why the share may be a ready alternative for many investors.

Like myself, Mike Southon seems to have fallen into business mentoring by accident. Having spent hours giving out free advice, he took it on as a paid profession.

Gradually he began to realise that the skills required are varied; an appreciation of business, an ability to look ahead, accepting people for who they are and appreciating them, and much more. And yes, the fun is realising how you can benefit from your own advice, if you are prepared to listen to yourself.

So, having contemplated the words of Mr Southon, I found myself flicking my wife’s copy of “Good Housekeeping”. Usually, to preserve my male ego, I only read the recipe section, but for some reason I became engrossed in an interview with Ruby Wax. She is a larger than life American, who filled British TV screens for a decade from the late 1980s.

I would watch her interviews, find them funny, yet feel annoyed by them. Why? In effect, Ruby discusses this in the article. She was so desperate to make the show entertaining that she never truly related to those on the other side of her microphone.

Ruby is now a psychotherapist, teaching companies how to manage the emotional side of their business. She explains how she uses curiosity to capture the trust of her client. She also refrains from first judgements, which I assume that the speed of the media world does not encourage.

What really caught my eye was a box with her 4 key tips:

  • Be genuinely interested in what people are saying to you
  • Take time to be in the shoes of the client
  • Use your skills from the home and place them in your work environment
  • Check your own emotions before starting out for the day

A couple of weeks ago, I was asked by a friend to go round for a chat. In his business for 15 years, he now feels that he is missing a couple of tricks.

I listened. He is fun to be with. He likes his work. His website looked fine. We discussed his competition. He has some clear unique selling points. And yet…. it did not add up.

I was about to leave, when he showed me some correspondence, which had led to a rejection by a potential client. And right in front of him was his answer, or at least part of it. He had forgotten why he liked his work, and he lost the knack to impart that joy to others.

I guess that is why I like mentoring, and that is what Southon, Wax and others are also saying. We are helping people to assess if the original vision is what interests them today and how to obtain it.

Stefan Stern’s recent blog in the Financial Times asks if there is a better way forward for managers? Why are they so often part of the problem as opposed to the solution? Why don’t managers help get “stuff” done?

Think about it. Surely, it’s obvious. A manager is chosen because he / she has demonstrated specific skills relevant to the position; leadership, human resources management, knowledge, initiative, etc.

The reality is often very different. Promotion may be the result of politics or family intrigue, rather than ability. Alternatively, the job description may change over time, while the individual has proved incapable of adjustment. Whatever, the organisation reveals an inability to “deal with” the bottleneck.

Bottom line: Potential disaster, unhappy staff, poor output, negative knock-on effect with other departments. Funnily enough, the issues can often be sorted out by investing a few thousand in a training programme from the Carnegie Institute or similar.

But that requires somebody in authority taking responsibility. They will have to openly recognise the problem and then handle it. Very awkward!

Stern discusses a book by Julian Birkinshaw, “Reinventing Management”. 

…Prof Birkinshaw says we should recognise that businesses also have management models. The problem is, the models that many employers use – whether consciously or not – are failing. “The harsh reality is that today’s large business organisations are – with notable exceptions – miserable places to spend our working lives,” he writes. “Fear and distrust are endemic. Aggressive and unpleasant behaviour is condoned. Creativity and passion are suppressed.”

….. When the economist Richard Layard published his book Happiness in 2005, his research revealed that managers were the last people most of us want to spend any time with. In fact, most people would rather be alone than with the boss.

Why has the vital practice of management become so discredited? …. We have lost sight of the basic point: that management is about “getting people together to accomplish desired goals and objectives”. In different settings in the early 21st century, different management models will be required.

I know of one multinational where the centrality of the decision making has crushed local initiatives to create new profit centres. But the reporting is now effected on time. Whoppee! Apparently that makes the top team happy.

One of my mentoring colleagues has reported that the senior management of his client is spread very thinly over a string of new projects. Core activities appear to be suffering. Thought out strategy has been replaced by the “fire brigade model”. That is to say they rush from one issue to the next, as quickly as they come up, controlling that crisis. Success is difficult to measure, while satisfaction escapes most. The long term effect on the company is not positive.

Alternatively, one of my clients has a small company. The CEO has clearly designated tasks for each person. Growth is perceived, and everyone knows how they will fit into the expected changes. Predicted sales towards the end of 2011 are looking positive.

Evidently, this is a place where everyone knows the stuff which needs to be done and is pleased to play their part. Which begs the question:If this SME, lying on the outskirts of a dusty city in the Middle East, has got the message, why have other – often more sophisticated set ups – missed it by a mile?

So President Obama and Prime Minister Netanyahu are not friends this week – at least not on the diplomatic front.

Turn to economics, and Obama’s ears are carefully tuned to what is coming out of Israel. It is an accepted fact that Israel’s financial planners read the credit crunch correctly. Stanley Fisher, governor of the Bank of Israel, has long been a mentor of Ben Bernanke, his American counterpart.

It turns out that one of Bernanke’s predecessors, Paul Volcker, is also a big fan of Fisher. This is all the more intriguing, when you consider that Volcker is one of Obama’s main fiscal advisors.

Sever Plocker, a leading Israeli financial commentator, recently attended a function for an Israeli bank, when Volcker was present. To translate and quote Volcker’s reply to a question:

During the crisis, you (Israel) did all the right things. And now you are reaping the rewards. But before the crisis, a long time beforehand, you realised that you needed to invest in r&d, in education and in knowledge……..You have a wonderful central banker….and I admire the budgetary capability and management of your Finance Ministry…..Don’t squander your successes.

Volcker is known to be very impressed by the way Israel had imposed controls and supervision on its banks, after previous local failings. Apparently this is one of Obama’s next important policy moves, and he has been advised by …..Paul Volcker.

Looking for an irony? Take a joy trip to the Middle East.

Two weeks ago, the Jewish Chronicle newspaper (UK) featured a story where computer giant, Dell, was suspected of operating a boycott against Israel. Bottom line – the call line made a gross faux pas, and the Dell customer in Israel eventually ended up a happy person.

And today? A complete change around. The Hebrew daily, Yediot, has reported that Dell intends to open an r&d centre in Israel. It will employ around 100 professional, mainly engineers.

The speculation follows a visit to Israel last week of VP Kim Thomson. The focus of the discussions was data storage, an area where several local companies have excelled in recent years.

Talk about the rights and wrongs of the Palestinian economy, and you automatically get caught up in the crossfire of Middle East protagonists.

The story of UN Secretary General, Ban Ki-Mon, is a great example. Visiting Gaza a few days ago, he condemned Israel’s blockade of the territory. In parallel, it could be asked why he did not condemn Egypt’s blockade from its side of the border? The Jerusalem Post newspaper, quoting UN stats, questioned if there is a true humanitarian crisis in Gaza.

And so on. However, there are certain facts, which cannot be disputed. The West Bank under the control of the Palestinian Authority had a boom year in 2009, even when international economies were in free fall. The World Bank suggests 8% growth in just 12 months.

Is there more potential to be released? Surely. And the Palestinians have finally realised: Israel relaxes the security measures when there is less violence, ensuring greater freedom of movement. Everyone benefits. Simple.

Move over to Gaza, and the Hamas regime has not delivered economic prosperity. In fact, the local authority has now even began to control who will receive a haircut and by whom.

Meanwhile, Israel continues to allow the transfer of cash to international organisations operating in the Gaza Strip and the transfer of shekels to pay the wages of Palestinian Authority employees (about 70,000 in number).  And it continues to supply around 70% of the electricity needs of the area. 

The bottom line is that the Palestinian economy is split in two. The West Bank is replacing violence for higher income levels. In Gaza, the intensity of the official hatred for Israel is matched only by the high levels of unemployment.

Meanwhile: I have added a series of selected facts taken from the World Bank report and official Israeli sources.

  • Trade between Israel and the West Bank dropped by 4.05% in 2009 as compared with 2008, and constituted 70% of all the trade of the West Bank. The volume of trade with Israel stood at 13,594 million NIS.
  • The total trade of the West Bank grew by 2.75% in 2009 as compared with 2008. The total trade (including Israel) stood at 19,310 million NIS in 2009.
  • Palestinian imports from the world (not including Israel) registered an increase of 25% in 2009 as compared with 2008.
  • Palestinian exports to the world (not including Israel) registered a drop of 2.3% in 2009 as compared with 2008.
  • In 2009, Israel transferred to the Palestinian Authority (after deduction of payments owed by the Palestinians) 4,272 million NIS as compared with 3,918 million NIS in 2008. The increased amount constitutes another indicator of the growth in the Palestinian Authority’s economic activity.
  • Other indicators point at the growth of economic activity: an increase of 41% in truck movement between Israel and the West Bank; an increase of 29% in fuel consumption and of 7.6% in diesel fuel consumption in mid-2009 in comparison with the parallel period in 2008. The significant rise in automobile imports into the West Bank is also continuing.
  • A survey undertaken by the Palestinian Bureau of Statistics among businesspeople in the West Bank and the Gaza Strip in December 2009 points to an increase in optimism among manufacturers and businesspeople.

 Steps Taken by Israel to Support Palestinian Economic Activity

  •   Increasing the hours when the Allenby Bridge Terminal is open to the passage of goods and pedestrians
  • Upgrading the Gilboa-Jalameh crossing point in the northern part of the West Bank for vehicular traffic (opened on 13 October 2009). About 1500 cars enter the West Bank through this crossing point every weekend. Since the crossing point was opened to vehicles, the economy of Jenin has grown by 30-35%. The income deriving from the entry of Israeli Arabs into the towns of Jenin, Tulkarm, Jericho, and Bethlehem is estimated to be around 8 million NIS every weekend. In November and December, over 30,000 vehicles entered through the Gilboa crossing point alone. The permit for Israeli Arabs to enter the West Bank with their vehicles through various crossing points constitutes a significant contribution to the local economic activity.
  • Removal of roadblocks and barriers: Since 2008, the number of major checkpoints was reduced from 41 to 14. From April 2008 until today 209 roadblocks were removed. Ten of the barriers that were removed this past January are on Route 60, the major north-south artery in the West Bank.
  • This past year considerable sums of money were invested in upgrading the crossing points for goods between Israel and the West Bank, so that they could manage the movement of trucks in short periods of time and with efficiency. During 2010, 8 million dollars have been invested (with USAID funding) in upgrading the Gilboa and Shaar Ephraim crossing points for goods.
  • Beginning in January 2010, the hours of operation at the Tarqumiya crossing point for goods were extended, a measure which enables Palestinian merchants to increase the number of shipments which are sent on a daily basis to Israeli ports.
  • The quadrilateral dialogue headed by Japan to establish an agro-industrial zone in Jericho is continuing. An additional meeting will be held on 17 March.
  •  Israel is acting to assist the French initiative to establish an industrial zone in Bethlehem and is acting in full cooperation with the French President’s envoy to move the project forward.
  • Israel maintains close working ties with the Quartet’s Envoy, Tony Blair, and his team to handle and promote economic projects and measures that support economic activity, including the issue of the access road to the town of Rawabi.
  • The Israeli security network maintains close ties with General Dayton and is doing all that it can to assist the process of building the capabilities of the Palestinian security forces. Israel participates in a quadrilateral monitoring forum which convenes pursuant to the Berlin Conference and discusses subjects pertaining to the development of Palestinian capabilities in civilian security as well as in building capabilities pertaining to the law and to the judicial system.

The Gaza Strip

There is no shortage in the Gaza Strip, due in part to the flow of goods and raw materials through the tunnels.

  • Recently, the entry of glass into the Gaza Strip began, to enable the repair of homes that were damaged during Operation Cast Lead against Hamas. More than 100 trucks carrying glass have entered thus far into the Gaza Strip and this is continuing.
  • Israel has advanced contacts with the UN Secretary-General’s envoy, Robert Serry, to approve the carrying out of humanitarian infrastructure projects in the Gaza Strip, with emphasis on water and sewage.
  • Israel enables strawberries and carnations to leave the Gaza Strip for markets abroad.
  • Israel enabled in recent months the entry of cement and construction materials for the reconstruction of buildings and for various humanitarian projects. From May 2009 through January 2010, 1,352 tons of building materials entered the Gaza Strip. Israel approved the entry of an elevator for the maternity hospital al-Awad (15 February).
  • Recently, Israel arranged the matter of transferring social security payments to beneficiaries in the Gaza Strip.

Just over 20% of Israel’s population is not Jewish. Legislation unambiguously protects the rights of religious and ethnic minorities. And yes, you can see more and more non-Jews represented at the top of professions, such as medicine, the law and even in the diplomatic corps.

Yet the painful truth is that equality before the law does not ensure equality when resources are handed out. It is an open secret that many communities have been starved of budgets by successive governments.

So, it is pleasing to report on two initiatives that will break this pattern. The first emerges from the private sector.

Pitango venture capital’s co-manager, Nechemia “Chemi” Peres (son of President Peres), credits…. the next economic breakthrough in the Arab population. Pitango has won a tender for a joint government-private sector fund to invest precisely there. He foresees the fund, Al-Bawadir (“buds” in Arabic) repeating the success of the government venture capital fund Yozma, which nurtured high-tech and created a breakthrough not only in deed but also in awareness.

The initial combined value of the new fund is around US$45 million. It has received the support of two prominent investors in the Arab Israeli sector, Jimmy Levy of the Jewish-Arab company Galil Software and Habib Hazan, a former manager at McKinsey & Co.

The fund also has the blessing of the Minister for Minority Affairs, Prof Avishai Braverman. The former chief of the Beer Sheva University, is also sponsoring a government initiative to invest 800 million shekels (about US$220 million) in 14 targeted cities and towns covering Druze, Muslim, Circasse and other minority groups.

The money will be devoted to specific economic and social projects, such as encouraging SMEs, subsidising new homes for young couples, youth enterprises, etc. In each municipality, the mayor will set up local coordination committees. Milestones will be set. Hope will be installed.

In an interview with the Hebrew newspaper Yediot Ahronot, Braverman explains that he is under no illusions. The money is but a drop in a vast ocean. It cannot make up for years of neglect.

However, the professor also makes an interesting observation. Most Israeli Arabs have consistently proved their loyalty to the country. For example, the Bedouin are historically known as the best trackers in the army. The two initiatives are a public and significant way to show that there is demonstrative change in the air. Israel’s neighbours can learn from this example.

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