Afternoon Tea in Jerusalem Blog

Life in Israel

tea
Israeli commercial life and society

In addition to my work as a business coach, one of my interests is blogging about life in Israel. This is a country full of contrasts – over eight million citizens living in an area the size of Wales. You can see snow and the lowest place on the globe in the same day. Although surrounded by geopolitical extremes, Israel has achieved a decade of high economic growth. My work brings me in contact with an array of new companies, exciting technologies and dynamic characters. Sitting back with a relaxing cup of strong tea (with milk), you realise just how much there is to appreciate in the Holyland. Large or small operations, private sector or non profit, my clients provide experiences from which others can learn and benefit.

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3 amazingly useful postings for small businesses

I often have the feeling that when I sit down with a client for a session of business mentoring or coaching, they seem to expect that I am going to click my fingers and their worries will disappear into cupboard – just like in a Mary Poppins film. Add in the magical spiritual air of Jerusalem, where my office is located, and surely it has to be as simple as that?

They may sound a little arrogant, but that is how life can appear from my side of the table. Naturally, the truth is very different. However, what I do like is to post occasionally on twitter eminently helpful blogs from alternative sources that can inspire the CEOs of the small-to-medium sized enterprises (SMEs), who form an integral part of my working day.

What follows are three typical examples of what I mean:

Let us start with Facebook. First, the scope of this medium often escapes leaders of SMEs. They do not have time for the game. As I am used to hearing, cash flow and problem solving come first. What they are missing was succinctly explained to me yesterday by an Israeli expert in just one case study. By carefully defining the target market and launching a new video, he has provided over a dozen quality leads for a single Jerusalem restaurant in less than a month.

The changing rules of social media in 2018 were set out in a blog by Adam Hutchinson a couple of weeks ago. “Share all” on face book or a few extra stats no longer cut it. Paid ads, although the “P” word can sound painful to those on a tight budget, are the clever and brave way to go.

My second pick comes from Spencer Waldron, one of Israel’s marketing gurus. He has just written a worringly obvious blog entitled “6 storytelling mistakes to avoid“. As I commented back to him, what concerns me is the fact that while none of the points are spectacularly new, business leader after business leader repeat these faux pas. After all how many of us set off for a conference, expecting to be delivered a sleeping pill?

Here lies a clear takeaway for a business owner. Whether in a one-on-one session or addressing a larger audience, have something interesting and personable to say. Ensure that you stand out!

Finally, there is that well-worn adage that we must expect to fail in order to succeed. It is astounding how many people think that the opposite of success is failure, when that linkage only applies in a narrow context. Nick Foles, who led the Eagles to victory in the Superbowl, took the subject of failure one notch higher in a post match interview.

When you look at a struggle in life, that is just an opportunity for your character to grow…..If something is going on in your life, embrace it.

Just about every owner of a small organisation knows that leading and managing present a wealth of daily challenges. It is tough. However, as Noles has demonstrated, that is your very chance to do your best and to triumph.

Israel’s economy doing well, and here’s why

Exports jumped 6% in 2017. Inflation hovers at around 1%. Unemployment remains low at under 5%. GDP growth pushes 3% or more. These are great overall indicators for the Israeli economy.

It is not too difficult to find stories of good news about what is happening in Israel vis-a-vis commerce and industry. For example, last week Prime Minister Netanyahu met with Chairman of the Board of Mitsubishi Corporation, Ken Kobayashi at Davos. According to the press release afterwards:

Israel is a major player on Mitsubishi’s map and added that they are now starting to consider investments in cyber and other areas. He noted that he intends to send a delegation to Israel soon in order to evaluate possibilities for investment and cooperation.

Looking at investments, 2017 was an excellent year. The US$5.2 billion figure represents a 9% upturn on 2016. Interestingly, Israeli venture capital was at its highest level since 2013.

Specific sectors are recording some spectacular growth.  “420 Israel-based cybersecurity companies raised $815 million in 2017, up 28% from 2016.” In the medical arena, 13 of the most significant breakthroughs of 2017 were based in Israel, as reported by Tom Gross.

However, what I find most encouraging is the continuing development of the Jerusalem economy and how it strives to become more pluralistic. Labs/02, a startup incubator operated by Jerusalem-based equity crowdfunding company OurCrowd Management Ltd., plans to invest in around 100 early stage startups.

More significantly for me is how more and more Arabs are gradually integrating into the greater economic basin of the capital city. According to Bloomberg, this is one of the prime reasons why there was relative calm in the Jerusalem following President Trump’s recent declaration on the Middle East. While everything may not be perfect as yet, salary gaps are narrowing.

It is this acceptance and transparency that is at the heart of the success of the concept of the start-up nation. Unfortunately, and in contrast, American diplomats were violently chased away yesterday from a meeting held at the Bethlehem Chamber of Commerce.

Once Israel’s neighbours learn mutual acceptance and embrace it in full, then peoples of all backgrounds will be the direct beneficiaries.

The art of setting up a new business: Making the impossible possible

Over the next few weeks, I have been asked to give several talks in the Jerusalem area on the theme of setting up a new business. And as I have put together the presentations, one strong central theme comes through. Can you make the impossible possible?

Psychologists teach us that starting anything new is not easy. However much you plan ahead – market strategy, cash flow, team recruitment, et al – a new enterprise is full of unknowns. One single unforeseen event, such as an unexpected change in government policy or a new local competitor, and all that prior effort could be seen as irrelevant. Time to give up?

Well, not necessarily. This is when we are all required to recall the theory of “the second wind”. Yes it really does exist. Coined by William James and described in fascinating terms by Maria Popova, we can learn how to transcend our perceived limits.

Compared with what we ought to be, we are only half awake… We are making use of only a small part of our possible mental and physical resources.

There is a sporting equivalent. Matthew Syed, writing this week in the Times of London, discussed how we can become so much stronger, almost ironically, at the moment when adversity is striking us (literally?) in the face. Arguably like a new commercial enterprise, Syed states that:

When you walk into an arena, you are naked. If you have weaknesses, they are likely to be exposed. If your resolve is lacking steel, it is likely to fray just when you need it most.

Syed goes on to cite specific cases of sporting heroes who initially dived, such as Andy Murray who was humiliated by Roger Federer at Wimbledon in 2012. And Michael Jordan made a video of his defeats, so that he could succeed even faster.

As a business coach and mentor, I am often called in by those, whose ventures are struggling in their initial stages. I find that very often, they know what needs to be done to alter course towards achievement, but they lack that extra layer of confidence. I would suspect that some call this resilience. And that is where an outside voice can show them that they have what it takes.

However, they have to learn to dig oh so deep to find it. That is the point when they stop allowing the seemingly impossible to get in their way and when the business begins to thrive.

Setting yourself a goal for the new year

The first week of 2018 has been a challenging one for my clients. Several of those who have braved to venture into my office in Jerusalem have been forced to come up with some specific targets for the coming twelve months….and then create an action plan to reach the goal. Not so simple as it sounds.

While this is a fairly common strategy for us business mentors and coaches, I was prompted into enforcing this line approach by two very different items that came my way recently. First, Dr. Robert Brooks wrote a fascinating piece, arguing that it is never too late to set ourselves challenges. Although he did not say so, I could add this is something we should be able to apply as managers and business owners.

And then I was privileged to watch an mazing documentary entitled “Impossible Dreamers”. It revealed how pensioners in the USA, right into their 90s, wake up every morning to run, walk, or swim competitively. They seek to break records every time they hit their sporting arena.

Back in my office, I have offered these inspiring stories to my clients. Set a target. If the target is too timid, I encourage them to raise it significantly. No excuses permitted.

What is interesting to observe is the frequent push back that I receive. It is a sense of panic, almost as if they have been “instructed” or conditioned never to go beyond what others had once defined as acceptable. Yes, you could have once cast me in that category as well.

A typical objection is the ‘what if’ statement. What if I reach that extra level of sales, then this, that and the other bad thing will happen. Of course they might be right, but I explain to them that those problems can be solved downstream, not today. Either you stay where you are with low sales and thus poor profits but relative safety – the proverbial comfort zone, or you can move upwards. CHOOSE!

To be practical, let me suggest the following four steps. First, identify what income you really want to take out of your business. Second, calculate those sales that are required to drive that income. Third, create the resource model – staff, hours, advertising, etc – that will deliver your target. If the business model is sound, investing in additional equipment or whatever should not be a problem.

Finally….do not be put off by the challenges involved. Only you are the one who can define the meaning of the word “possible”. May 2018 be a year of success, health and happiness for you and those around you.

What Lorde revealed about the Israeli economy

Last week, Lorde, a talented singer from New Zealand, cancelled a trip to Israel, fearing it would be seen as an act that supports the actions of the Israeli government against Palestinians. In an ironical twist, she actually ended up highlighting just how open Israeli society is.

Lorde’s justification of her decision, encouraged by BDS – the campaign which supports a boycott of Israel – is filled with hypocrisy. For example, she is still committed to travelling to Russia, whose leader has sent war planes to massacre thousands in Syria. In fact think about it. Can you imagine artists of any kind refusing to perform in …well let’s say France, because of that country’s policies in parts of Africa? And what about the UK or the USA or……? Hypocrisy!

At the same time that Lorde was speaking out, it emerged that the Israeli economy had grown by 3% in 2017. This achievement lies in parallel with the OECD average for the period. Estimates for 2018 expect a slightly improved result.

Nothing specifically remarkable in that, except when you begin to look at two of the key growth sectors. I shall start with exports, which shot up 5% in the year and topped the significant mark of US$100 billion. Two interesting facts emerged from an analysis of the figures. Israeli companies have made a massive return to the European scene, an area where BDS is historically strong. Second, of that US$100 billion, 3.5% includes items sent to the Palestinian territories.

In other words, the very people that Lorde feels she is helping are doing the opposite to her. They are sticking with the old adage that peace is usually achieved when two sides find a way to cooperate.

The other sector, which I wish to highlight is tourism. 2017 was another boom year for the industry with over 3.6 million overseas visitors to Israel. Over 50% as ever were not Jewish, and nearly 60% were first-time visitors. That is a lot of people not just rejecting the calls of BDS, but then also then sharing their stories back home afterwards. Just as pertinent is the fact that around 200,000 locals are employed directly by the industry, a relative large proportion of whom are not Jewish.

Less than three decades ago, Israel economy was relatively insular, protected by tariffs. Today, it is a start-up success, whose model is copied by France, the UK and others. Artists from all over the world continue to perform in the country, happily and openly, including the group Queen, Bryan Adams, Culture Club. Lorde’s misguided gesture only emphasised these positives, while ensuring that she remains bound up in an argument of hatred.

Is Netanyahu guilty, of the Teva syndrome?

Israel’s Prime Minister is currently under police investigation in at least four different cases. In parallel, Teva, until recently the largest company in the Holy Land, has seen its power melt away in a sea of corporate debt. Although there is no substantial connection, the two subjects are connected, unfortunately.

Let me start with the Parliamentary scope. In recent years, several Israeli politicians, including a former Prime Minister and a President, have landed up in prison. Now the fact that the serving PM, Benjamin Netanyahu, has been questioned may be seen as the new norm. His party’s rating in the polls has barely dropped, for now.

Bibi, as the PM is known, claims innocence on all counts. And there are still no recommendations to press charges, to date, even if he has been visited several times by the police. In no order of preference, it is claimed that:

  • he received favours from a local press baron.
  • he received favours from people of wealth, possibly in return for legislative support.
  • his lawyer and other confidants ensured a submarine was bought from Germany, when it may not have been needed and this then resulted in substantial commissions paid out.
  • a friend was able to run Bezeq, the national telephone company, while he remained as acting Minister of Communications.

In addition, his Likud party has pushed through, although not always succeeded, a welter of legislation that is heavily biased towards key sectors of the electorate. And that sectorial effort had been led until two weeks ago by another confidant, David Biton, who himself is now being investigated for possible financial misdemeanours in his home city of Rishon Lezion.

I have no idea if Bibi is or is not guilty. At the very least, he seems to be surrounded by advisors, who have evidently slipped over the line of what is acceptable in public governance. In my view, that is equally unacceptable . This demands his immediate acknowledgement of responsibility, which has yet to be admitted.

Teva is (was?) the largest generic pharmaceutical company in the world. It grew from modest beginnings. It was to hit on a wonder drug called Copaxone and made a fortune from it. Based solidly in the Tel Aviv and Jerusalem areas, most of its workers and profits are located overseas. Shares in Teva were considered “shares in the State”. You could not go wrong!

When no replacement was found for Copaxone, the directors decided to expand through acquisition. After several successes, they approved the takeover of Allergan for over US$40 billion, and thus draining most of its US$5 billion reserves.

That debt has proved too much to bear. The company is to lay off 25% of its workforce, which will include the closure of two flagship factories in Jerusalem.

And who are the directors? A small group of leading industrialists, who have grown up together in the business world, many of whom have no experience of the pharmaceutical industry. They are the ones who made rash decisions, impacting on the lives of thousands of relatively poorly paid workers, while they received payment for their services way above the average wage. And this privileged group will apparently face no payback for their recklessness.

My point is as follows. Both those elite politicians and those secretive leaders of finance felt that they were so elite and secretive that they had the right to do what they want, and that they could not be touched. Ironically, in an electronic age when we have heard of news before it is made, they all simply felt they could “get away with it”.

Greed, avarice, lack of care – call it what you want, it is generation of leaders that have simply misunderstood what leadership really means. Alternatively, they knew but power corrupted their decision making. They all need to go – both lots of them – and go now.

Small businesses in Israel: How many and just who succeeds?

It is an accepted fact that in most countries, small and medium sized enterprises (SMEs) make up over 95% of the economy. Israel is no exception to that rule. What makes Israel a case study to analyse is many a successful high-tech starts up has emerged from this grouping.

Just recently there have been several articles on the subject in the Hebrew press. I have pulled the numbers together and they reveal much.

According to CofaceBdi, of the 0.5million enterprises in the Holy Land, 51.5% are self employed or 1-person companies. A further 172,000 have up to four employees. Barely, 3,582 employ over 100 people.

To show how emphatic is the role of the small operation in the economy, 110,625 set ups have annual revenues of under 100,000 nis (almost $30,000). By way of comparison, the average wage is about 9,000 nis per month.

There are probably two key areas where small businesses suffer. The first is the level of bureaucracy and / or paperwork. Here the banks have made big improvements in recent years. And last week, the government announced that receiving a business license should become an issue of weeks rather than 12 or more months.

The second issue concerns local taxes. Most municipal authorities fix rates without any due consideration for SMEs. They are seen as fair game rather than a way to generate life into a suburb. For example, a business may have to pay for a sign outside their shop, fire license for the premise, and even a security tax. And if you are a food outlet, you have to add in the costs of supervision from “both” the Ministry of Health and the local rabbinate. There is even a by-law, still enforced, not allowing to prepare dough and bake on the same premises.

It is worth considering that Israel is a country of immigration. Many entrepreneurs were born overseas. Thus they have a problem with both the language and also a lack of understanding of the local corporate culture of mentality. This will be especially true in centres such as Jerusalem, where the sector of business mentors and coaches is rightly prevalent.

A positive note was struck by a report from the department for small businesses within the Ministry of Economics. In 2016, there was a 28% increase in the number of SMEs reporting an increase in profits. Just as significant, there was a 2.6% increase in the total number of businesses, an encouraging indication of the future growth expected in Israel’s economy.

Do you have a goal for your business?

In recent weeks, I have come across an interesting pattern with some of my clients. They do not seem to have a set goal, a financial target. When challenged, they even show resistance to the idea. As a business coach and mentor, I have been intrigued to find out why.

First, let me take a step back. The Facebook page of Goalcast often throws up some inspiring videos. A classic example is the boy who stuttered, grew up, left England for Los Angeles without a penny, and is now a billionaire singer by the name of Ed Sheeran.

However, the caption that captured my imagination is “I said yes, when I wanted to say no“. The video clip refers to story of a lady who has been physically abused.  What intrigued me is how I see her catch phrase inscribed – so to speak – on the faces of many of the people I meet. As I listen to them speak, whether in the comfort of their own businesses or challenged in the presence of my Jerusalem office, I see them holding back.

These are people with all kinds of backgrounds: educated or otherwise, experienced or less so, financially literate or not. What links them is a fear to set tough yet attainable monetary goals. And the key one here is a revenue target.

For example, assume you want sales to grow by 10% in the next year. In order to achieve that you have to identify potential new customers. This requires resources – time, manpower, materials. Creating that effort requires dedication, teamwork, extra coordination. And so the chain of events unfolds, as you commit yourself to the target. You begin to “own” it.

And hidden in the back of the minds of many a person is that nagging phrase “what if I do not succeed”? (One client twisted it and asked what would happen if they over-achieved?)

As I explain, there are at least three outcomes:

A) The organisation stagnates. At least you tried something.

B) You reach say 6% instead of the full 10%. That is still progress to be proud of.

C) Nothing much is sustained, but new and bigger opportunities emerge.

Given that set of potential opportunities, there should be no problem for a CEO to agree to the challenge. So why the push back? Reasons vary. What I am finding is that there can be a mismatch between intended vision and true commitment. Thus, the CEO never really intends to follow through, because they “just do not want to be there”.

To prove the point, I can relate to one young client, whom I met this morning. I told them about this posting that I was preparing. He had been asking me to set him stiff targets, because it fits directly with what he wants to do. “Yes”. He is up for it!

Business is burning brightly in Jerusalem

President Trump’s statement over Jerusalem seems to have caused those European and Arab countries, who are seen as friendly towards Israel, to shiver in their diplomatic pants. And the near-jerk reaction has been to take out their frustrations on the politicians in the Holy Land.

All Trump said was that Jerusalem is the capital of Israel. No change there. He went out of his way to say that he is not fixing the final borders. Why so many countries have a problem with that goes towards the heart of the Arab-Israel conflict. Why they have reacted coldly to Israel, when this is at the first level an internal American issue, is also beyond me.

However, I am more interested in how this will impact on commercial links between trading partners? For example, I was supposed to moderate this morning a networking session, hosting a delegation from New York. The overseas participants were officially warned by the State Department not to leave their 5 star hotel.

Somehow, I think that all countries concerned are far too interlinked to go round boycotting each other. Just look at recent economic news emerging from Israel.

Amazon

It is barely two weeks ago that Amazon announced that it is to open a large warehouse in Israel. This is on top of other investments in Israel, such as the purchase of Annapurna Labs in 2015 for US$360 million. Yesterday, the Hebrew newspaper “Yediot” described details of Amazon’s collaboration with the Swedish company Assa Abloy, the key supplier of products for the Amazon Key project. In order to meet Amazon’s specifications, Assa Abloy established an r&d project with Multilock in Israel, which has resulted in a sophisticated smart lock for the home.

Israeli gas exports to Europe

Yesterday in Jerusalem, the Israeli government approved the laying of a subterranean gas line. It will stretch along 2,100 km and cost around US$7 billion, with financing led by the European Bank. The aim is to take the natural gas from Israeli’s newly discovered fields into Cyprus, Greece and eventually Italy. From there, it can reach the rest of mainland Europe.

European cars in Israel

Just looking around the streets of Israel, you can see how people are gradually shifting towards cars of greater complexity and value. To date this year, 165 Porsches have been sold, along with 21 Aston Martins and 9 Ferraris. Not much compared to other countries, but a massive revolution for the desert nation. Joining in from 2018, Bentleys – German owned and British made – will be seen on the streets of Jerusalem and Tel Aviv.

Clearly Trump’s words are not going trading between Israel and the rest of the world. If any recent political angst has resulted in a commercial shift, I did observe a comment this week that European banks have reduced their exposure to the British market by 20% since the Brexit vote. Can Israel also be blamed for that?

Israel’s medical system: The Palestinian interface

During the month of December, the UN is expected to pass 15 resolutions condemning Israel. This is five less than in 2016, when the UNGA did find the time to tick off four other countries. Just how fair is this castigation of the modern Jewish state?

To answer the question in depth would take a book, of several volumes. So let us concentrate for three minutes on the medical sector.

In the past, I have written extensively about the Wolfson Hospital in south Tel Aviv, which hosts the Save A Child’s Heart scheme. Offering high level medical services for thousands of infants around the globe, roughly 50% have come from the Palestinian territories. For the record, the aid includes training for local doctors and hosting families of the children on site.

In the north of the country, Israel has treated a similar number of refugees from Syria since 2013. It is an operation that has no equivalent for all the world effort that has been distributed to tackle this humanitarian disaster. And it is even more remarkable considering how the two countries have no diplomatic relations.

And then there is little-known and near heroic story of Dalia Bassa. She is the health care coordination officer of the Civil Administration in the West Bank and Gaza (COGAT) , and is one of the few officials of either side to win the praises of just about everyone. Now 66 years old, Dalia has been working in this field for 47 years.

It is estimated that she is responsible for coordinating the medical attention received by around 5,000 Palestinians every year in Israeli hospitals. These are mainly life-threatening situations. Just as significant, COGAT makes strenuous efforts to ensure that Palestinian doctors are also trained. Hundreds of training sessions take place annually.

To make the point, the Israeli newspaper “Yediot Ahronot” was allowed to accompany Bassa last week on a visit to a 150-bed private hospital just outside Ramallah. 14 floors high, Istishari was opened in 2016 and has treated such notables as President Abbas. A further 850 beds are planned.

During the trip, Bassa sought to help a doctor extend his visa. She also looked for ways to extend cooperation. After all, the hospital lists several doctors who have been trained in Israeli hospitals, such as Hadassah in Jerusalem. Its PGD unit is so advanced that a few Israelis have found their way there to test the state of difficult pregnancies.

And meanwhile, this week, you can expect further condemnation of Israel at the UN. Makes sense, don’t it?

Evaluating success in business mentoring

In theory, it should be relatively easy to discern the level of success in business mentoring or coaching. Sales – or some other key performance indicator (KPI,) such as production – has improved. However, what happens in a case when the client has not achieved the results originally dreamed about? Has the effort boiled down to a resounding failure?

I have several clients based in the Jerusalem area, who are classic one or two-person businesses. They are the boss, the chief of sales and also clean the floors. They are desperate to up the tempo of sales, but are still spending half their work days putting out irrelevant fires – which are frequently ordinary domestic problems.

Dena is a typical example. She came to me with the idea of exploring how to set up a new service enterprise. She certainly had solid background knowledge. Explaining her pitch to others would not be a problem.

However, circumstances have combined to foil Dena at the set up stage. To be blunt, all the initial targets have been missed, mainly as a string of personal issues that have forced Dena into unforeseen and time-consuming activities. The debts have mounted. Sales have remained minimal.

So has Dena failed? Is there any hope left?

Admittedly, Dena has not succeeded, but that does not mean she has failed. Certainly, much of the initial set up is in place, ready for a launch at a future opportunity.

There is something more. Regular readers will be aware that I encourage my clients to develop hobbies in parallel to their new commercial challenges. I usually look for a physical response like running. Dena, though, took to poetry, a former passion of hers.

I asked Dena to come up with two new poems. She wrote four, and now cannot stop writing. Today, she read out two of them to me. On completion, she then did something that I had not seen her do in all of our prior sessions. Dena laughed, out loud, almost embarrassed by her own triumph.

Shortly afterwards, Dena left the room. She strutted out with a nervous confidence, determined to find that new level of success.

The one big generic mistake when starting a business

Next week, I am onboarding in Jerusalem a new client, as their business mentor and coach. My role as ever will be to identify core problem areas that they have missed and then to help them to learn new skills. As ever, I will base my initial work around the questions:

What is the question that you do not wish a business mentor to ask you,……and why?

This particular company was only recently set up. Initial sales are coming in. However, there are a string of inconsistencies. These include no cash flow planning, lack of clear strategy, poor communication with contractors and much more.

Ironically, this subject relates to a talk I am preparing – 10 mistakes a CEO makes when starting out. I will not only refer to the above issues, I will also consider procrastination, the ability to choose the correct staff, and time management. These and other challenges impact directly on accurate decision-making, which is so critical in those early stages when you cannot afford mistakes.

However, if there is one core mistake that I see repeated by so many CEOs from the outset it is that they try to do things by themselves. For reasons of pride or maybe they are too embarrassed to ask or possibly becasue they do not know any better, they seek to act (and rule) on their own. If they would just open their eyes, that should never be the case.

The fact is that any commercial organisation is dependent on a bank, accountant, suppliers and more. Further, fewe of us are experts in all of these fields. And when you factor in additional demands of each individual set up, this creates pressure on the CEO. If they cannot manage, what is the solution?

A business mentor (or consultant) guides you through those initial stages, challenging you to ask the right questions and to seek out alternatives. They provide a strong and valuable shoulder to lean on.

I admit that this sounds self-promoting, but just consider my new prospect. Just as a result of our phone conversations, they have already begun to set up new controls and take a different approach to a core service provider. These moves will significantly improve the running of operations.

There is nothing wrong in asking for help in business, even if you are a CEO, and especially when you at the beginning of your commercial dream. Actually, it is oh-so the right thing to do.

Reviewing Israel’s hightech economy, November 2017

Having been away from my desk for much of the past two weeks, it has been an interesting experience taking a peak out at how the Israeli economy has been performing. The bottom line is that despite the enforced rudderless approach of Prime Minister Netanyahu, the numbers are still looking healthy. How and why?

Primarily, tax collections continue to be way ahead of expected levels. This is enabling the government to hand back around 15 billion shekels through reduced corporation and individual taxation, without impacting on the deficit. Foreign currency reserves continue to improve, while the levels of car imports – an indicative sign of consumer confidence – remain high. The customary issues of non-involvement of the ultra-orthodox Haredim in the workforce and also sectorial restrictive practices remain as unwanted abnormalities, but still the economy grows.

It is the high-tech sector that is leading the growth. Multinational car manufacturers such as Toyota and Seat are continuing to source their latest techs in the Holy Land. Start-ups are raising much larger sums that ever before. And Corephotonics is even suing Apple for alleged infringement over its lens tech.

The story of the week for me belongs to Compass. It has raised US$100m, effectively doubling its valuation to  to around US$1.8 billion. Founded in 20,13 by Dr. Uri Alon and Robert Rifkin, the company now employs around 3,000 people in Israel and in the USA. In a nutshell, Compass provides a tech platform to enhance the buying and selling of real estate, a product that has been around for thousands of years.

The message here is clear. The Prime Minister has not created an impression on the economy, but entrepreneurs are not waiting for him to emerge from the welter of police investigations. In parallel, the Finance Minister seems inhibited by the weightings of coalition policy, but there is no reliance on significant change. For me, local innovation is overriding the meanderings of the typical Israeli politician in Jerusalem.

Palestinian economy; and the good news is…….

The World Bank’s latest report on the Palestinian economy points describes 2% growth rate in Gaza, trying to support an unemployment rate of over 40%. Clearly this is unsustainable. What can be done?

The recent moves of reconciliation between Hamas and  the Palestinian Authority (PA) offer some hope. According to Doron Peskin from Concordmena, The agreement should lead to an extra US$165 m of support from the UAE. This will be in addition to the current annual payments of:

  • US$140 m from Iran
  • US$120m from the PA, primarily for salaries and electricity
  • US$100m from Qatar
  • US$50m from Turkey

Tax revenues are rarely revealed but Hamas leaders clearly find a way to finance their own lavish life styles, assumedly from willing local contributions.

Clearly all of these amounts are fickle. For example, the UAE contribution is apparently dependent on former Gaza bully and aspiring successor to President Abbas, Mohammed Dahlan, being handed some level of power in the territory. So, what other revenue sources can emerge?

One possibility is the extraction of the estimated 32 billion cubic meters of national gas just off its coast line. There are rumours that an agreement has been signed with a Greek developer and a contractor called CCC. However, concrete details remain sketchy.

A second source of relief could come from “impact investing“. For example:

A project to produce tablets for schoolchildren and their parents, a company that reduces the need for pesticides, an IT development centre in a crisis-ridden location and a bond to fight type 2 diabetes….They are all cited by investors and entrepreneurs as examples of impact investments in Israel and the Palestinian territories.

Yet again, the question remains if political stability will allow enough such entrepreneurs to come forth? There are already reports of the PA arresting Hamas representatives.

Another angle could be a hoped for relaxation of central control of the Palestinian economy. One small indication of change is entrance of a second mobile provider in Gaza. The hope is that prices will drop, service will improve, and thus improved corporate taxation will allow the exchequer to benefit.

The reality is that Gaza needs open borders with its neighbours. This is unlikely to happen so long as Hamas considers Israel to be a pariah state and wages war against it. This policy was most clearly indicated last week, when the Israeli army destroyed a tunnel from Gaza. Those Palestinian soldiers killed had crossed the border, underground. (It should also be noted that it takes considerable investment and raw materials to construct such tunnels.)

The unfortunate bottom line is that the Palestinian leaderships can always blame Israel for their woes. With a willing international community and a supportive set of UN institutions, this stance absolves them from any form of responsibility. Hoorah!

And meanwhile most people in Gaza will continue to be dependent on handouts.

Coaching and leadership – the workplace and at home

In a brilliant article in the Harvard Business Review “turning potential into success“, the three authors succinctly detail why so many large companies fail to nurture a culture of leadership development.

The paper details eight levels of competence that an organisation may look for in a potential leader, the importance of each variable depending on the type of business in question. Crucially, each variable is then measured against four additional factors: curiosity, determination, engagement and insight.

With this information, the paper discusses how to turn potential leaders into the true drivers of their companies. As they note from one survey, only 13% of executives have confidence in their own rising leaders.

I suppose the reasons for this are many. They can include:

  • lack of training
  • lack of ability in the top levels to perceive the talent just underneath them
  • a desire to maintain power – to keep control of the existing hierarchy

A fourth factor is what I call ‘the benevolent dictator’ syndrome. That is when a ruler – a.k.a. a top executive – is dominant. He or she believes that only they can do things properly, and that includes most tasks. Assignments have to be carried out their way, as it is for the best, at least according to their logic. They cannot let go. They have to be involved in all aspects.

This is a process I see so often during my mentoring and coaching in Jerusalem, Israel. Yes, sometimes the same top CEOs do possess genuine and multiple skills for running a corporate. However, their overall outlook stifles, if not crushes, innovation. An employee will cease to question, as their motivation has been destroyed.

And the ironic result? Quite often more work and confusion is created. The dictator fails to appreciate all the angles of the project, and there is nobody to update them.

What so many of us fail to appreciate is that we often become that proverbial dictator back in our own homes. For me though there is a subtle difference. Up to 6.00pm, clock out time, the pain can be measured in the lack of growth in the corporate’s bottom line. In your own house, the fall out can be heartbreaking.

When you need to let go of a valued client

Frequently, one of my first requests as a business mentor is to help my client ‘sort out’ one of their own customers. And the reality is that this is a customer that they do not need. Thus my issue becomes one of explaining why they need to let go of something that is supposedly the proverbial jewel in the crown.

In a classic case study a few years ago, I was asked by my client in Jerusalem to meet with his customer. The aim was to convince them to keep working with my client and to pay a higher price. And as the discussion progress, it was clearly evident that the customer had no loyalty to my client. For him, it was a cheap ride.

The core of the problem was that my client has made the classic mistake. He had been so determined to take on the customer that he had ignored some basic rules of running a business. And as he himself knew only too well, you cannot get away with that play too often.

However, there is the opposite scenario. What happens when your customer starts out as a ‘fat fish’, but implodes? Typically, this arises in a long-standing situation. Personnel on both sides may change. The deliverables alter, even if this has not been officially documented. Externalities, such as regulatory issues, creep in. Maybe the remuneration becomes fixed for too long.

In other words, the joy of that once special relationship has evaporated, and without both sides comprehending how or when. Such a situation is known as the ‘golden cage’ scenario. It looks like a great deal for one or the other side – maybe both – but actually you are trapped.

This is a story that many of my clients face. One area where it comes up is in support services for digital media. Payment is determined by a fixed number of monthly hours. However, these are rarely sufficient. The work is carried out and the revenue seems healthy. At the same time, my client wakes up to the fact that they have less resources for more lucrative contracts. Ouch!

It is at this point, where a business mentor steps in and forces the service provider to answer a painful question. Is the effort truly worthwhile? And the determining factor may not just be financial reward. Other elements, such as brand creation, interest, training of juniors, and more may come into play. Yet, whatever the issue, hard decisions do need to be made.

And sometimes you just have to let go, for the peace of mind of both sides.

(Dedicated to my mother, who passed away this week).

When the business mentor practices what he preaches

Yes, there are differences between a business mentor, business coach and a business consultant. And yesterday I was offered a wonderful opportunity to illustrate them.

I was asked to deliver a presentation near Tel Aviv to the 9th Annual gathering of the Israel Small and Medium Sized Business Association. It was a surprisingly wide variety of 700 people. For me, one of the highlights was the panel featuring Jamilia Hier, a Druze lady whose soaps are now sold in dozens of countries around the world.

Jamilia started from next-to-nothing, in a society that does not necessarily enhance the status of women. As she explained to a captivated audience, 95% of her staff are female. And she employs Druze, Christians, Jews and Muslims, and nobody checks to see who is who.

My own talk featured six key reasons why people should seriously think about engaging a business mentor, as a person who sees what is not said or is overlooked. This outlook is neatly surmised in the following two questions:

“What is the question that you do not wish a business mentor to ask you,……and why”?

Yes, a mentor is a person who sets out to challenge; to drive beyond the accepted boundaries. He looks for an entrepreneurial spirit.

In contrast a business coach, can be compared to a sporting analogy. He is looking to improve core skills. And the consultant has a more hands-on role, often becoming involved in the decision making process.

Preparing the presentation proved an interesting challenge. Most of my work is with those who were born in English speaking countries, usually in the Jerusalem region. This time, I was confronted by a more natural Israeli audience, where a Jerusalemnite was the rare exception.

So, I had to mentor myself by considering: –

  • What was going to be the wow factor?
  • What is the hook to the main point?
  • What would make them laugh?
  • How could I deliver something new?
  • What would be the closing punch line, and how to deliver it?

It was a fascinating process. In each instance, the differences were not huge, but subtle and important enough to force me to change my patter. And I had to practice, repeatedly, my delivery, exactly as I encourage my clients to do so.

If there is one tip I can leave you with, it is as follows. The talks that appeared to be more successful – and I hope that includes mine – included a personal element. The presenters hid the boring commercial message behind a story that contained human insight.

Guess what? In those cases, I believe that fewer people in the audience were “just checking their mobile phones…..yet again”.

Hate negotiating? Try this tactic

So, me, business mentor and coach in the Jerusalem area, had to enter some quick, hard core, negotiations the other day. I could see it coming up. I had prepared my tactics in advance.

When it comes to negotiating, many people just cringe back with the very thought. It touches on all their vulnerable emotions. I used to be in that category. Nowadays, I play the game very differently.

The background was ostensibly straight forward. My wife and I needed the help of a third party in order to carry out some necessary work on the household. The unofficial guidelines used to say that the fee was  – let us call it – 10%. We had done our homework, and we knew that the market allowed for as low as 2.5%.

After the general chit-chat, the moment of truth drew upon both sides, ourselves, junior salesperson (JS) and senior salesperson (SS). Nothing was going to happen, until we had signed a paper saying 10%, or otherwise.

My wife opened the bidding. Softly and encouraging, she argued that the market rates demanded a figure lower than 10%. She was politely rebuffed by SJ. She pleaded again, and again firmly but politely she was told that a lower fee would not be possible.

My wife than upped the emotional talk. She announced that she was prepared to sign, but felt she was being made a fool of. To that, SS jumped in. He assured us that we had the backing of his whole team and this was of considerable value to the project. To be blunt, this is an extended version of the gambit called “blame the higher authority”.  In other words, I do not make up the rules, and therefore YOU have to agree to them.

It was only at that stage, once both of our opponents had played their best cards, did I step in. I initially played to their ego, saying that I was sure they had heard all the excuses in the past, to which they agreed.  I let them know that I am a business consultant, and I can argue their side just as eloquently as they can. I also reminded them that they too are familiar with market conditions.

Bottom line, as I said to them, stop fobbing us off with irrelevant comments, that superficially appear so compelling.

In effect, we were hoping to save ourselves a lot of money by applying three rules:

  • Formulating an effective tactic in advance.
  • Letting them assume they are winning
  • Not blinking when you do not have to.

In the end, both parties compromised in the middle.  In other words, we won.

If Israel is for the many, why is its government only looking after the few?

Yesterday, I witnessed a wonderful sight in Israel. A leading team of civil servants from Washington toured a public institution in central Jerusalem. They were impressed by the skill-set of the employees, the passion of the core management, and the deep level of coexistence both from the side of the receivers and those who delivered the sophisticated services.

The Americans concurred. They had rarely seen such professionalism and all round devotion in their site visits in dozens of other countries. And for me, this microcosm of a story represents what is true about so many other parts of life in the Holy Land. Below the radar of the international media and despite all the shouting in the Mediterranean heat, people really try to get on, whatever their background.

However, more and more, I feel the one key exception to this is the government itself.

Just look at these three incidents:

First, this week all the ministers turned up for a vote, which would allow them to install political friends more readily in key public sector jobs. At the same time, one of the saddest annual ceremonies was taking place, a memorial service for those who fell in the 1973 Yom Kippur War. Apparently, the government was not represented at the event, a major break in protocol and an insult to those bereaved families.

Second, for months there has been an effort to promote a parliamentary bill that would restrict how Israeli companies sell financial binary options. It is public knowledge for over a year that many of the companies are fronting a scam. So, the question is why was an already watered down piece of proposed legislation, designed to regulate the industry, opposed in August 2017 by Netanyahu’s Likud, the main component in the coalition government?

As an online newspaper reported: “… family prominently involved in SpotOption are leaders of the Georgian faction of the Likud Central Committee”. (To dummy that down – that means votes and money). A few weeks later, to what I assume was the embarrassment of Jerusalem, the FBI arrested an Israeli CEO, who leads an options company. And this week, Canada banned the industry, as Israel continues to drag its feet (and thus people lose their savings).

Third, there has been the most disgraceful handling of state support for hundreds of thousands of people with physical impediments. It has been known for ages that these people receive less money than the minimum wage, and that is despite the fact that many require expensive medicines and equipment. Proposals to change the system were effectively parried by the Prime Minister. For months, there have been spontaneous demonstrations by the handicapped, blocking key road junctions. The police were powerless and the government’s efforts were reflected in its inertia.

Last week, after the head of the Trade Unions’ movement intervened, an agreement was reached following 24 hours of talks. What had it all taken so long? Why did these people need to be treated so humiliatingly by those who sit in power?

It would be easy for me at this stage to consider how these three instances reflect a method of governance by the few for their own select few. It would be even easier to compare that thought with what I had seen during the visit of the American officials. Here, we saw professionals actively looking embrace a culture of inclusiveness.

However, there is worse. And it needs to be said.

The police are currently involved with at least five files that concern directly or indirectly the Israeli Prime Minister, Binyamin Netanyahu:

  • His wife is about to be charged with abusing the public purse –  inflating private expenses and then receiving reimbursement from the Treasury.
  • His own lawyer (and relative) and other associates are linked with an investigation where they may have received kickbacks for securing the purchase from Germany of a submarine, which the military may not even have required.
  • His former Chief of Staff, Ari Harrow, is being charged with bribery and fraud.
  • He is being investigated for receiving gifts in exchange for political favours.
  • He is being investigated for manipulating the press.

Jews around the globe are about to commence the festival of Succot, the Tabernacles. A core theme is that families and friends come together in booths (Succot), leaving aside for a week the mundane matters of the world.

For too long, the Israeli government – and especially its core leaders – has left aside vast swathes of society. Their raison d’étre appears to be: let us govern in a manner so that we and our friends can stay in power. And thus it is the few well-connected members of society who benefit, as the others have to make do with the crumbs thrown at them.

I do not know who is or is not guilty of what in those five investigations. I do understand the common theme between the first three issues. And thus it is easy for me to find the moral link between the two sets of stories. Sadly, I find this totally repugnant.