Last June, I was thrilled to meet up with the rep of Teeling’s Distillery at Whisky Live Tel Aviv. Based in the heart of Dublin, Eire, this brand of alcohol has a very welcome place amongst the growing whisky connoisseurs in the Holy Land.

With this still in mind, I was perplexed – to put it politely – to read that the Irish President, Michael Higgins, has just met Omar Barghouti, the founder of BDS. Ostensibly, BDS is a campaign to promote a cultural boycott of Israel, until it changes its policies over the Palestinians. Practically, this is a hate campaign directed against the Jewish state.

So is the praise of Higgins for Barghouti going to result in his boycott of all things Teeling? Well, somehow, I think not.

And then I begun to wonder. Intel has announced that it is about to expand its workforce in Israel by another 1,500 employees. (Remember – Israel is the country where for years Intel’s chips have been developed and then end up in computers all over the world….including Ireland). However, this is the same Intel that employs over 4,000 people in the Emerald isle itself.

Surely, Mr. Higgins is not about to throw out all of his computers? His Foreign Minister, Simon Coveney, seemingly finds this approach unhelpful, as expressed during his visit to Jerusalem this week.

And that is my point. BDS is a misnomer. Again, ostensibly it is about boycotts and sanctions. Every now and again, an artist does not visit Israel. What the campaign is really about is denigrating the one democracy in the Middle East and the one country in the region where the Christian population is actually growing. BDS is the antithesis of peace and rapprochement, whatever face Higgins may pull on that statement.

Is there a way out of this hypocrisy for Higgins? On his next trip abroad, he is hardly likely to fly Ryan Air, because of their expanding operation in Israel. Maybe he could try Wizz Air……that is before they too open up a full operations’ base in Tel Aviv.

As far as Israelis are concerned, Syria has probably hated them longer than any other member of the Arab League. So, when you look at the new exports sent from Jerusalem into its northern neighbor, you have to take another peep at what is going in.

By way of background, the ruling Alawites in Damascus consider about half of Israel to be a central part of Greater Syria. It is Syria that for decades hosted former Nazis. Before the 1967 war, Syria would regularly shell the farms and kibbutzes from the protection of the Golan Heights. Yes, a state of permanent war.

However, come the civil war in Syria, it is as if somebody has magically presented Israel with an opportunity to wipe the slate clean. First, as extensively reported in the world media, about 3,000 Syrian casualties have been treated in Israeli hospitals.

That level of aid is about to be stepped up significantly. Israel is to establish a field hospital on Syrian land, but within the Israeli side of the demarcation line between the two countries.

Further, it appears that Israel is now exporting large amounts of essential products into Syria, directly:

These efforts included transporting about half a million liters of diesel fuel, 360 tons of food, 77 tons of clothing and shoes, as well as dozens of generators and water delivery systems.

The humanitarian aid is provided to some 200,000 Syrian citizens living in 80 villages and towns in the Syrian Golan Heights and controlled by rebel groups not affiliated with ISIS. It is a strip of land 15 kilometers deep into Syria and 40 kilometers long, from the Syrian village of Jubta al-Hashib in the north to the Tal Saki area in the south-central region.

Yes, I admit, ‘exports’ may be a bit of an exaggeration, but it makes the point. These actions not only reveal the true human face of Israel. They show how Syria could have achieved peace with Israel decades ago, if only it had chosen that path.

And meanwhile……….

Just have a look at what is happening on one of Israel’s southern borders. A report from Reuters detailed how the political haggling between Hamas and the Palestinian Authority is impacting adversely on the health of many critically ill people in Gaza…….as the world continues to blame Israel for the depravation in the enclave.

It makes you think. Funny how Hamas refuses to accept Israeli exports to Gaza………. just like Syria’s policies of yore!

Describing the role and importance of a business coach or mentor is never very easy. After all, why should a non-expert in your field be able to create extra value for you, your department and your company?

Let me try to explain through a case study. Last month, I completed a fairly intensive set of sessions with a doctor, seeking to build up his practice in the Jerusalem area. I have to admit that my knowledge of the medical world is such that I hate even having the simplest of inoculations. That said, when we started working together, my entrepreneur had been in the profession some time and was barely taking home a salary.

We stopped meeting a couple of weeks back right on schedule, and yesterday he sent me a summary email of progress since then. The bottom line is that he is frantically busy with several revenue streams. In fact, he has now opened up additional premises outside the Holy City.

In one of our final sessions, he kindly described me as a “magician”, a thought I have been bouncing around in my head for a while. I had asked for an explanation. What was suggested was that I have an ability to see through the clouds and excuses of procrastination, carefully cajoling a person towards a better commercial future. I am able to keep the client focused on achieving new and more profitable sales.

Flattered that I was, this blog is not just a subtle exercise in self-promotion. It is an lesson why so many more people can benefit from business mentoring for the same reason.

Let me take the argument one step further. I was interested to read a blog from the Harvard Business Review as to why CEOs and planners should “beware of spreadsheets“. Your detailed excel map simply be too linear, just adding up to meet a predetermined number.

I faced this syndrome last week, while sitting down with a group of sophisticated executives, trying to overcome a downturn in their market place. They came up with a predictive model for 2018, which they felt comfortable with but which was still underwhelming. So I challenged them to raise the target of a specific revenue stream by 50%. After the initial kickback, the ideas began to flow in. (Tackling the other revenue lines afterwards proved less difficult).

No, not all my clients love me. In the middle of June, after some preliminary meetings, a CEO gave me the boot. He claimed that we had not made any progress. My wife compared his behavior to somebody walking out of a doctor’s surgery, before the medic had offered a diagnosis.

On reflection, I disagree. I think he could feel that direction that I was going to tackle, which was to require a massive change from the owner himself. How I was going to spring that trick, I was not sure. There again, for all their fun and how they make you think, not everyone likes magic shows.

Israel’s political map could be about to implode. In countries, such as the UK, the hatred of Israel is actively encouraged in some parts on mainstream politics. However, for all of these and other worrying issues, something beautiful is also happening.

What brings all this together was a little known stat released by the Bank of Israel this week. Their original projection for economic growth in 2017 was 2.8%. This has now been revised upwards to 3.4%. That is a significant leap forward, benefitting many. And one of the key factors for the improvement must be the continuing openness of society, as described in the points above.

For the record, the position should be maintained throughout 2018 as well. This should be led to an increase in exports, despite the relative strength of the shekel.

I was left asking where else in the world do you see such potential being fulfilled, especially for such a small country which is surrounded by hostility?

The numbers of tourists visiting Israel has reached an all-time high. Compared to the first six months of last years, 2017 has recorded a 26% rise in visitors to 1.74 million in total.

The majority are not Jewish. A 76% increase to 57,000 from China. A 30% rise to 160,000 from Russia. And a 20% leap to 400,000 in Americans entering the Holy Land.

The question is why the change. Somewhat ironically, many believe that the answer has to do with terror. The fact that this inhuman horror has struck main centres such as Paris, London and other European hotspots means that Israel is seen in a new light. In other words, visiting Jerusalem is relatively safe, compared to the past and compared to similar international tourist attraction.

Is this a slap in the face for those who suggest that you must boycott Israel? As I noted a couple of months ago, the number of new airlines landing in Israel continues to impress. Easy Jet has just announced a new line from Tel Aviv to Venice and to Napoli. Wizz Air is due to launch regular flights to Britain.

Yes, the skies are gradually opening up. Even “The Independent” newspaper from the UK, which for years has lambasted most things to do with Israel, featured Tel Aviv as an ideal place to spend a long fun weekend.

If there is one dark spot on the horizon, it is Israel’s own national carrier, El Al. I have written extensively about this in the past, as have others. It is just a shame how senior management consistently fails to ensure that service and prices do not remain competitive.

The improving position of Israel as an international tourism centre is being achieved despite the strength of the local currency. And looking ahead? Next year, Israel will be the starting point for Giro dÍtalia, one of the main events on the cycling calendar. Clearly, more and more people are finally coming to learn that the Israel ‘beyond the headlines’ has so much to offer.

Has the Israeli start-up juggernaut ground to a proverbial standstill? Exits in the first half of 2017 were valued at just 20% for the whole of the previous year. The value of an exit at US$34 million was considerably less than the past five years. To be blunt, the number of deals and the amounts are way down. Surely time to panic.

However, it would seem that there are explanations. New trends are emerging. The facts on the ground indicate much more.

First, the report was released by IVC. They point out that there is currently a general ‘hold-off’ globally in large investments. Second, and as confirmed by a senior partner in Ernst & Young, Israel is seen as a great place for new tech. However, there is a move to purchase for strategic reasons. Israel is not quite seen in that category, for now.

On the other hand, look what has been happening on the ground.

  • “International cyber security giant Symantec Corporation announced that it is acquiring Israeli cyber security company Fireglass. Media reports in Israel say that Symantec will pay out $250 million.” For the record Fireglass was set up only 4 years ago. To date, it has secured US$20 million on investment.
  • Narendra Modi became the first sitting Indian Prime Minister to visit the Holy Land. He came waving a very large cheque book, seeking to learn about innovation.
  • As Prime Minister Netanyahu was finishing off with his Asian counterpart, he had to rush off to host the head of J. P. Morgan Chase, the largest bank in America. Jamie Dimon’s financial giant purchases around US$10 billion of technology annually. He announced that the he is looking to set up an r&d centre in Israel with about 200 employees.
  • On a quieter level, a powerful delegation of ‘women leaders’ from Australia recently visited the country.  In a very telling summary, Bernadette Conlon summed up what she had learnt from her tour, especially in regards to promoting innovation:

Israelis understand the power of diversity, and how it adds value in the business world. Companies looking to launch international operations can easily find skilled labour in a matter of days. The country is packed with native English, French and Russian speakers. Gender diversity is also prominent, with around half the startups we visited led by women, many of whom are young and have families.

Measuring the trend amongst exists is useful. However, the numbers must be analysed in context and over the long term. For now, Israel’s journey as a start up nation is progressing very handily, and the country is open to all to learn from its achievements.

At the end of 2016, Amazon super-boss, Jeff Bezos, made a swift and secretive visit to Israel. Why invest in Israel? Well, it is the start-up nation, and Amazon has seen the number of its new patents rise from 7 in 2009 to 78 in 2016.

This  move was initially expected to generate an additional 800 jobs. Well that has all changed for now. Utilising two enormous facilities in Tel Aviv and in Haifa, Amazon will employ around 2,500 Israeli geeks, who will be developing technologies for microprocessors and for the cloud. By all accounts, the Israeli teams will also support Amazon’s venture into supermarkets.

Its been two years since Amazon purchased Annapurna Labs for about US$360. And more acquisitions are expected. It is an innovation and entrepreneurial landscape that Amazon cannot afford to be away from.

To give an idea of the impact Amazon, consider the following rental stats, drawn up in today’s issue of the “Calcalist” (The Economist).

(Sq m) Amazon Microsoft Apple Google Facebook
Tel Aviv 25,000     14,000 5,300
           
Herzylia   13,000 16,500    
           
Haifa 12,000 7,400 4,000 1,700  

Apple and Microsoft employ about 1,000 people. Google has taken on around 600, while Facebook has recruited 100 members of staff in the Holy Land. It comes of no surprise then to learn that there is somewhat of an inflationary bubble in high-tech wages this year.

In a week when Visonic is moving a 400 strong person factory from the periphery southern desert area to China, the news from Amazon is more than welcome for the Israeli economy. It is sure to generate a knock effect on the service enterprises located close to tis vicinities.

Who will be next to follow Bezos’ move in Israel?

Another hot summer afternoon in Israel. Another client who has botched a wonderful opportunity to make an important sale. Why do people not learn? And why do I have to start explaining the issues when I am parched?

So, there I was sitting with a very decent, educated team, just outside Jerusalem, who could not understand why their presentation had been well-received but remained unaccepted. They had talked about their team, the corporate background, their technology, the size of the market, and eventually why they had entered the market.

As I pointed out, that last phrase was their big, maybe their only, mistake. What I call the ‘wow factor” resonates around the ‘pain’ or the core of the issue, which is why the seller is there in the first place. Just how many people will not be satisfied if you do not buy a key food item? How many companies will continue to lose income if they do have access to a new technology? They are suffering so to speak, and are looking out for the cavalry.

My clients had unwittingly elected to talk about the ‘pain’ only near the end. Therefore, their own prospective clients had not fully grasped what was so ‘wowish’. In other words, there had been a lack of empathy, however unwittingly. The result? No deal.

The importance of the issue was rammed home to me a few hours later, when I dropped in on the annual meet up of Tech Crunch in Tel Aviv. Guest panelists featured the mega successful co-founder of Waze, Uri Levine. And he was asked a very simple question: What do investors look for?

To sum up his answer, Levine noted that investors want to see that the entrepreneur has identified a real problem. Unfortunately, too many innovators value their solution more than the pain of others. Significantly, Levine showed off one of his favourite t-shirts, which shouts out the slogan “fall in love with the problem and not the solution”.

My role as a business mentor and coach constantly returns to this theme. Whether you are pitching to an investor, selling to a shop owner or offering a service, the message is clear. Before saying how wonderful you and your product are, understand why the prospect is listening to you. At the core, the primary answer has little to do with yourself. Internalise that fact, and your selling power should improve.

Yesterday, I was talking to a client in Jerusalem, an expert in mobile and app development. We discussed the importance of the role of leadership – the motivation of teams – when considering the successful outfits he has been associated with.

I contrast this reflection with three pieces of news emanating from Israel this week.

First, the results of a Dan & Bradstreet survey were published. It revealed that there are  just over 300 international r&d centres operating in Israel, which employ around 71,000 people. This is the equivalent to about 25% of the high-tech community. A further 91 multinationals are considering a move into Israel. And there is a considerable positive knock on effect to the local economies, whereever these companies are located in the Holy Land.

A separate survey from the Bank of Israel analysed how:

Israel is the global leader in the proportion of people employed in high tech – 9%, more than double the medial in the OECD countries; in venture capital investments as a percentage of GDP; and in the ratio of the added value of the information technology sectors to GDP – both goods and services.

Around 60% of the high-tech sector, including those overseas corporations are located around Tel Aviv and the costal plain. The problem is that the other 90% or so of workers are employed in relatively low paid occupations.

The question is does this matter to the government? What can it do about the situation in terms of creating long term strategic plans?

For an answer, I refer – with disappointment, if not anger – to the third piece of news. On Monday, the government decided to capitulate to two demands of the ultraorthodox factions in the coalition. The result has caused a swift and wide rift with about a 50% of American Jewry and with the diaspora in general. This is something the country can ill-afford, but the decisions do help to sustain the unity of the government.

Meanwhile, the tragic comedy continues, featuring those children supposedly being treated for cancer in a Jerusalem hospital. Following a dispute between the management and the medical team, the latter have left their posts. The Minister of Health has dismally failed to bring the sides together. And the Prime Minister has shown no ability nor will to interfere, if only because his health minister is from an ultraorthodox party.

And that is called national leadership? And you then expect the government to help traditional sectors of the economy, where most people are employed? Thank goodness that Israeli high-tech is generally kept out of the hands of local politicians.

Find your KPIs! This is a standard call put out by business coaches and mentors to their clients. These are your key performance indicators that are supposed to tell a senior manager if they are producing enough or selling enough or doing whatever correctly. And magically, if it is the right number, then the world is doing just fine.

Or is it?

A few weeks ago, I commented on an article by Dr. Robert Brooks. In a nutshell, he stated that the exam results of children predicted little about their future in the world. I took this logic a step further and applied it to adults in the workplace. They tend to be motivated by many emotive factors, and not just the need for a ‘better statistical performance’ in their unit.

Brooks has just gone on to develop his argument. Reviewing the work of a developmental psychologist, Susan Engel, he looked at “seven abilities and dispositions that kids should acquire or improve upon—and therefore should be measured—while in school”. These could include reading, inquiry, conversation, flexible thinking, engagement, well-being and collaborations.

Interesting, but once again, let me transpose that theory into the work environment. Instead of just examining production performance against bland numbers, often curiously measured by some smart software that few understand, maybe there is an alternative way of thinking for managers to consider.

For example:

  • How often does an employee come up with an innovative idea?
  • How often does a person go out of their way to help a colleague?
  • Are non sales officials encouraged to bring in clients?
  • Who forgoes sick leave when they are unwell or when their is a crisis assignment to complete.

Consider your own set up. Think what would happen if all of these items and more were to improve by 5%. How would that impact on the bottom line?

I have see this so often in the past from my work in Jerusalem and Israeli organisations. The top team looks at the stats, analyses and concludes. They often miss out on the micro issues, which the computer cannot print out. And quite often these are built around the stories of individual people.

So, just as in schools, where exam results have a limited use when predicting the destiny of a child, similar restrictions can be placed around the importance of KPIs. Businesses need to think differently.

Back in 1973, prompted by the Yom Kippur war, the Arab boycott of Israel really took off. One of the most notable effects were those Japanese car companies, who with the exception of Subaru, refused to do business with the Holy Land.

And today in 2017? BMW, Volkswagen, Toyota et al either have r&d centres in Israel and / or have incorporated Israeli tech into their engines. In other words, the boycott is rapidly becoming irrelevant, as Israeli services and products penetrate the heartlands of the members of the Arab League.

Let us consider Saudi Arabia, the largest country and the richest and arguably the most conservative in that political block. It is common knowledge in Israel that for years the kingdom has accepted Israeli goods. (Quite often they have been repackaged in places like Cyprus.) Secret meetings between the two countries stretch back at least a decade, if not more. Back in February 2017, Bloomberg detailed how Israeli high-tech companies were cooperating with Saudis.

As is to give this a rubber stamp, the London newspaper, the Sunday Times published an article, which claims that these ties are about to become more official. At a first level, El Al could fly their planes over Saudi airspace.

Maybe, but I urge caution. I was more struck by an item in Hebrew by Doron Peskin. He noted that Saudi Arabia really does not consider Israel as a source for widening its economic growth, as the Kingdom looks for new and alternative streams of revenues. In other words, the breakthrough – if and when it is to come – would be more of the political and strategic nature, as opposed to a commercial upheaval.

Certainly, there have been rumours of the Saudis purchasing Israel’s “Iron Dome” system against missiles. And if that is not ironic enough, all these stories come during a period when Saudi Arabia is leading the boycott against Qatar and when Israel is planning to sell some of its gas reserves to Jordan.

Yes, times are a changing in the Middle East. And even the slow moving desert kingdom of Saudi Arabia is signaling that it is prepared to consider playing a role in the revolution.

Vision, goals, live your dreams – all these beautiful catch phrases seem to be bounced around freely, almost to the point of meaningless. So, when it comes to running an organization, why do business mentors and coaches like myself harp on about smart goals?

I was drawn to this question by a post from Lisa Earle McCleod: “Why smart goals don’t work and what to do instead”. She reveals that she no longer stresses the importance of smart goals. Instead, “for inspiration, you need to think bigger”. She prefers to concentrate of strategic issues. That requires measuring impact and engagement.

McCleod suggests that smart goals are task orientated. Strategic goals can be complex and definitely require creativity. And up to this point in time, I fully agree. But now let me throw back into the ring what she appears to downplay.

In a commercial world where entrepreneurship and innovation dominate – often infused by large doses of ADHD – it is easy to play up strategic issues. They are fun and have less boundaries. However, there are few organisations that survive without defined guidelines. Enter the mnemonic ‘SMART’, not just a glib phrase.

S – Specific

M – Measurable

A – Attainable

R – Relevant

T – Time bound

I have started working with a company in Jerusalem, which has been floundering. One internal complaint is that they are unable to finish projects on time, easy distracted by conflicting concepts. When I first asked what happens when work is delivered late, there was a bemused silence. Eventually someone mentioned that this impacts on revenues. So, I then asked if each project has a timeframe, to which I was treated to several embarrassed looks.

Or consider another Jerusalem-based client, who runs a start up. Life is manic. All fun, meeting loads of exciting people with incredible ideas. However, the CEO has a unique habit of not moving ahead. Why? Because they have no rules to deliver the new tech on time. So, for all the hype, at the core of the business is inertia, and the proposed sales timetable recedes into the distance.

It is essential for a company or unit to focus on sales. However, push back or ignore those boundaries and you cease to have a clever business model.

Israel, the ‘start up nation’; it is phrase so often repeated that it almost loses its significance. So it was refreshing to read about three pieces of news this week, which illustrate just how dynamic the Israeli economy remains.

  1. We learnt that the Chinese government is setting up the first of three funds, which together will have a value of more than US$1 billion in capitalisation. They will focus on investing in Israeli high-tech.
  2. Peter Thiel, the initial investor in Facebook, returned to the Holy Land. His keynote talk covered a wide range of subjects, in particular stressing the need not to imitate the Zuckerbergs and Gates of the world. What I found interesting is his analysis of what sets Israel apart from the USA. The country’s learning structure ensures that students can mix fields of education if they wish. This approach encourages and enhances entrepreneurship.
  3. Moving further afield, the newspaper “The Calcalist”, translated as “The Economist”, has begun to advertise its next conference in London. Headlined “The next game-changers”, it will consider how industries are transformed. And this is at the essence of what Israeli innovation has been about for the past three decades.

I am reminded of a story told by an Israeli, who is VP in sales in a multi-national. He explained how as a naval officer, he was sent on a course to a British academy. One Sunday evening, the participants were given some time off and they all huddled into a small TV room, which was tuned to a boring wildlife programme. ‘All’ in the sense of all bar the story teller and another Israeli. They simply showed some initiative, snuck out, went next door to another room, and sat in quiet comfort watching something they opted to choose.

Everything seemed fine, when in burst a senior British commander. The gents from Israel began to smell a strong punishment in the offering. However, the local officer burst into a broad smile, and said: “Now I know how you Israelis always win your wars”.

On Thursday night last week, the UK Labour Party under Jeremy Corbyn failed yet again to win a British General Election. However, his jabs at his rival, Theresa May, secured a few broken ribs, despite her starting out the campaign with all the heavy gloves.

What happened and why is this a dangerous case study for the managing of brands?

May fought the battle on two fronts. She determined that she is a better leader and that the managing of Brexit was to be the main issue. However, the proverbial ‘u-turn’ on pensions showed up core elements of incompetence. It also highlighted how for many Brexit was not the pressing matter on people’s minds.

Take the 20 – 35 year olds. Many can neither afford to rent nor to buy. May offered them no hope, none whatsoever. Hope is a key factor in any election in any country. In other words, sections of society felt abandoned.

So, Corbyn, depicted as the lover of terror groups, financially incompetent, and a poor performer in the House of Commons, suddenly found himself in a position where such weaknesses were perceived as secondary. That he has sucked up to brutal dictators like Assad, praised the IRA during its days of murdering British civilians, and is surrounded by anti-semites – all fundamentally spitting in the face of core British values – were factors to be seen as irrelevant. Corbyn was of the hook. he had been transformed into a ‘breath of fresh air’.

Let me be clear. To adapt the words of an old Rowan Atkinson sketch, I would not trust Corbyn to sit the right way on a lavatory seat.

But there is something far worse about Corbyn. I am currently reading a masterful book, written over 20 years ago by Professor Alan Bullock: “Hilter and Stalin – Parallel Lives“. I have just finished the section on 1917 to 1923 in Russia, and I felt that I read it before. Here is why.

First, I refer to Bullock’s review of Lenin and internationalism. When Labour launched a document three weeks ago on how to tackle racism in the UK, including anti-Semitism, it was built on three planks, one of which is internationalism. And what does that long word mean in this context?

Briefly, people should be allowed to practice their religion in freedom. However, when it comes to the Jews, then ‘we’ have a problem. Because 99% of all Jews see themselves as a nation. They pray to Zion and face towards Jerusalem. That individualism is not allowed under internationalism!

And that is why, when the Labour document referred to the evils of anti-Semitism, it could bear to mention even once the connection between hate crimes against Jews and what is happening in the Middle East. This in turn explains how Corbyn is known to encourage talks with Hamas, dedicated to the violent destruction of Israel and in cahoots with ISIS. In other words, terror is better than a democratic country like Israel, which allows all regions to pray openly. That is what Britain wishes to prefer?

Second, Lenin was a Bolshevik. Between the first and second revolutions of 1917, his role was to create disruption. A strategical genius with little grasp of true governance, he fully understood the implications of a weak central authority. And when others were looking in the opposite direction, he seized full power overnight and then wrapped the claws of the party around it tightly.

Note how Corbyn has progressed in the past two years. And observe his actions over the next few months against a badly wounded Prime Minister. Theresa May started out as an all-conquering, smiling brand, accepted (but not worshipped) by many. She opened the door for the ‘other side’ of Corbyn to walk through, and he has not stopped strutting since.

It is not just she who has been warned. This is a message that goes out beyond her own party.

There has been much good news this week about the Israeli economy. Writing in the Financial Times, Sir John Reed observed how the success of  ‘Israel Inc’ has defied isolation.

The OECD’s latest analysis is incredibly optimistic. Growth will remain strong, if a little lower, at around 3.25% in 2017. Unemployment is to remain relatively low at about 4.5%. while inflation will stay under 2%. It is interesting to note that private consumption will be the engine the drives the economy, as stats on the average wage continues to show overall growth.

One sector of the economy that in the past couple of years  has really taken off – pun intended – is aviation travel. The Israeli Aviation Authority has released figures illustrating how average prices for travel have dropped between 12 and 30% over the past three years. In parallel, the number of airports operating flights to Israel has risen from 110 in 2012 to 138 last year.

Judging from the mass of people at Ben Gurion airport yesterday, that pattern is set to continue. This means far more jobs for the travel and local tourism industries.

Where is the catch? Well, I have written countless times about structural problems – vested interest blocking urgent reforms in the ports, Electricity Corporation, import monopolies on food items and cars – to name but a few. I want to concentrate here on something more unusual; the ugly word called ‘debt’.

First, it emerges that banks have been lending so brashly to the home sector that individuals have taken out 23% more in loans than they did just three years ago. These levels are not yet dangerous, and as noted above the economy can bear it. However, the numbers show similar trends to those leading up to the sub-prime collapse of a decade ago.

That is very worrying. The question is why have the banks gone down this path?

Consider the ‘super defaulters’. Since 2010, seven of Israel’s wealthiest individuals have run up massive corporate debt. This is when the banks are forced to wipe off billions form their financial statements. The latest such incident involves Eliezer Fishman.  The current rescue proposal would allow him to walk away from nearly 1.5 billion nis (close to US$0.5 billion) of his debts to the banks, mainly Bank Hapoalim.

This has led to a public outcry. Why? Because the people who will have to take up the slack are those who have been allowed to or encouraged to take out extra small loans, paying lots of unnecessarily high interest. In other words, the banks quietly pass on their mistakes to the average person, and the Bank of Israel appears powerless to stop this evil.

In other words, the Israeli economy is doing well. The problem is that the Israeli economy is being propelled by private consumption, which in turn is fed partially by those troublesome bank loans. That might suit short-sighted politicians, but not the long term prosperity of the country.

In a series of articles on Israel, CNBC television has noted that “Hightech makes Israel dream of other industries”. Quoting Avi Hasson, the former head of Israel’s Innovation Authority, they reported:

Traditional definitions of high-tech and low-tech are out of date. Everything is getting technologized. There’s not a single sector that’s not being disrupted, or that doesn’t benefit from innovation.

As if to prove the point, CNBC went on to highlight Israel’s move into space tech, a field previously confined primarily to the ‘big nations’. This is after Israel has set the standards in mobile tech, accounts for around 15% of international investment in cyber security, and with some irony – considering the oil price wars of the 1970s and 1980s – is now a pioneer in car technology.

However, Hasson makes a important point. Israelis look for the opportunity to innovate, and this is not restricted to high-tech. Here are three brief case studies to illustrate what I mean.

ITEM 1: Sitting in my office in Jerusalem last week was a team from a small private company, closely involved in social services. Established for some years and with a clear set of revenues, they are trying to create a new strategic plan. To put this another way, they are prepared to rip up their existing business model and start again.

ITEM 2: About a week and a half ago, my son asked for a ‘free consultation’, as I bought him brunch. He wanted to know how he should combine his studies, while also developing the concept of his start up. I encouraged him to look at the bright side.

Over the past 18 months, he has set up an NGO for a subject that he is passionate about. This has involved defining the potential market of the NGO and what content it can provide clients. Further, he has recruited a team of volunteers, who are now motivated and dedicated to the cause. Last month, they held two successful events. As he clearly understands, this process is very similar to that of a start up. In other words, with some patience and a great deal of determination, there is a good chance that he will come through on all levels.

ITEM 3: Israel has a biblical connection to wine. A bunch of grapes is the symbol of the country’s tourist industry. But whisky, well, that is another story. It is now evident that “Milk and Honey” is now longer just another phrase from the time of Abraham. It is the name of the Israel’s first distillery. It was established as the result of a chance conversation between some young entrepreneurs about five years ago.

The factory is located in southern Tel Aviv, which bears few similarities to the glens of Scotland. And yet the team has raised money via a crowdfunding campaign and it had secured the services of one of the industry’s prime tasters. Israel’s first ever single malt whisky – over three years in a cask and released at 46% strength – is soon to hit the shops.

And whilst this latter form of innovation and entrepreneurship may not be to the accord of everyone, these anecdotes go to show how the Israeli economy has emerged. As described above, in Israel even the most traditional of industries are today part of the world of high-tech.

Israel has spent a week marking 50 years since the onset of the 6 Day War. A pre-emptive strike saw a tiny country change overnight. Jerusalem was reunited. The West Bank and the Golan Heights commenced on a period of unprecedented economic growth.

It is difficult to ignore the negative publicity that Israel has encountered since then. Putting that noise to one side, a series of Israeli economists posed the question if the country has benefitted commercially from the military miracle of June 1967. The financial newspaper, ”Calcalist” summarised some of the numbers and the observations.

As a starting point, Israel’s fledgling economy invested 9.9% of its GDP in defense in 1966. A decade later, that number had soared to over 35%. Over the past decade, the ratio has steadied at around 6-7%, of which nearly a quarter is devoted to pensions and similar indirect outlays.

And how were those expenses financed? Simple; badly, via printing money, an exercise that imploded in mid 1985, when prices and wages had to be frozen.

It is worth noting that the immediate period after 1967 was marked by an economic recession and high unemployment. It was only by 1972 that the economy began to see a marked improvement, which was nipped in the bud a year later with the Yom Kippur War. The real boom only followed a remodeling of the economy in 1985, which fortunately was to coincide with the high-tech era.

Israel’s current population is approaching the nine million level, of whom about 400,000 live in the West Bank and the Golan Heights. Around two-thirds classify themselves as religious or observant Jews.

  • Even though there are 14 industrial zones in these areas encompassing about 900 businesses, they contribute less than 1% of the total value of the country’s exports.
  • Per person, the government invests around 3,000 nis in these regions, compared to about 2,00 nis for other peripheral towns in the country.
  • One estimate puts the total government investment in the West Bank and Golan Heights at 826 million shekels in 2016 – about US$225 million – down from 990 million shekels in the previous year.

This is not a judgment paper on what could have been and why. This is not to say where resources could or should have been invested. As every first year economics student learns, economics is the science of making choices – the allocation of resources.

Today, Israel is a full member of the OECD. It hosts over 300 leading multinationals – Porsche is the latest member of that club. There is freedom of worship for all. It shows how much can be achieved, if you concentrate on peace rather than looking for war.

Israel is known as the ‘start up nation’, a wonderful compliment for a country which is 50% and whose economy was effectively bankrupt back in 1985.

And today? Just look at the news for the past week alone:

A) Hexadite, a cyber company set up in 2014 and which employs 35 people, was bought out by Microsoft for US$100.

B) NSO, which is contracted by governments to protect mobiles, is now valued at around US$1 billion, after several high profile contracts in the past year or so.

IVC Online, which has been tracking investments in Israeli corporates for some years, released in April a fascinating survey of the progress of the ‘start up nation’ over the past decade and beyond.

According to figures prepared by the high-tech research firm for ‘The Marker’ (newspaper), 653 start-ups that had been in business for at least four years closed up shop in Israel in 2014 – the latest year for which there are figures – up from 630 in 2013. By comparison, the number of companies started was 1,290.

Now, it must be said that these ratios are similar to other countries like America. But I would like to summarise some of the other findings:

Just under half of all start ups are located in Tel Aviv. And over 90% of the entrepreneurs are male.

In 2005, 553 starts ups set off on the path to glory, where as 236 closed down. By 2014 as noted above, the respective figures were 1,290 and 653.

Of the approximately 10,000 companies created since 1999, 54% are still in operation. A further 6% have been bought out. Of the later, just under half were sold at a loss.

Looking solely at 2016, 54% of the exits were valued at under US$5 million. A further 9% at over US$100 million.

And where did the money go to in 2016? 35% – software; 18% – telecomm; 17% – life sciences; 16% – internet; Much of the rest went to cleantech.

What are the takeaways from all of these and other statistics? Naturally, everyone has an opinion on what could have been and what still needs to be done better. However, I think there is another way to consider the situation, viewing it as a ‘work in progress’.

Last week, Israel hosted its annual Biomed conference in Tel Aviv. In the first week of June, Geektime will be operating a major Techfest over four days. ISDEF, one of the world’s most prominent HS conferences, will also be held in Tel Aviv. And Techcrunch are hosting a ‘pitchoff’ on 27th June.

In other words, the party is nowhere near over. There is more to come. And it is not too late for others to learn about Israeli society’s box of innovative tools.

Readers will know that I am a big fan of Dr. Robert Brooks from the field of clinical psychology. His latest newsletter considers how for decades schools globally have probably incorrectly measured the development of children. And he quotes a colleague, Susan Engel, who wrote:

Most tests used to evaluate students, teachers, and school districts predict almost nothing except the likelihood of achieving similar scores on subsequent tests.  I have found virtually no research demonstrating a relationship between those tests and measures of thinking or life outcomes.

In other words, if you are the dumb one in class, it does not mean you will fail in your career. Apply that to yourself, back whenever. Or what about your kids today? And then Brooks goes on to state about his own work:

In what has been labeled in the fields of psychology and education as the duality of “process vs. achievement,” I found that understanding the process by which each child learned proved to be more beneficial than the test score achieved. 

That last line made me pause for thought.

What happened if I was to transfer that same conclusion, but apply it to adults. After all, I am a business coach and mentor. Indirectly, CEOs and managers often ask me to judge them and / or their teams on the basis of results – sales figures, production levels, or otherwise. Is this actually the best way to go about things?

For example, I was visiting a client this week in the Jerusalem area, who demanded that I set specific targets for a group of workers. If they achieved these figures, they are to receive a bonus.

I responded that their is significant literature, which confirms that motivation is not just based on numbers and a few extra dollars. Adults are equally likely to react positively, when corporate leaders play to five key feelings:

  • Creating a sense of belonging
  • Finding a sense of purpose
  • Realising that an employee can achieve
  • Being happy
  • Being excited about their tasks

My takeaway for my profession is clear. I should not be concerned solely with what people achieve. Just as important is to consider the process and trail of how they got there. Find the chinks and the strengths, and then I can find how to help the client even further.

Israel’s economy is a study in contrasts“. Thus headlined “The Economist” magazine a few days ago.

The article is wide in its scope. For example, it highlights the desert city of Beersheva as a world leader in creating cyber technology. And that is just for starters. The economy grew at 4% last year. Unemployment resides at a lowish 4.3%. Public debt at 62% of the GDP is one of the best ratios in the OECD. The shekel currency has appreciated by 13% against a basket of leading global currencies. And so on.

The magazine does feature the weak side of the Israeli economy. Restrictive import and licensing practices keep the cost of food unnecessarily high. Productivity stats are poor. And with boring predictably, the authors cites Israel’s defense policy for the main cause of the a weak Palestinian economy. Thus, in real terms, “Gazans are about 25% poorer today than they were at the time of the Oslo Accords”.

This is an argument that sounds politically powerful. However, it bares up, neither in the numbers game nor against the facts on the ground. First, as I have mentioned in the past, when the World Bank examined the Palestinian economy prior to 1994, when it was governed by Israel, “the annual growth rate (for the period 1968 to 1999) establishes itself at 5.5%.” As the author Sebastian Dessus observed, this was one of the highest rates in global terms, even allowing for substantial population growth.

The point is that this begs the question as to why the Palestinian politicians refuse to allow cooperation with Israel.

And then there is 8200, renowned as Israel’s high-tech unit in the army, whose geeks produce software and hardware that James Bond filmmakers cannot even dream about. In parallel, for some years, many of the alumni of this elite group have struck out in the start up world. And it is no secret that against what might be considered assumeded norms from around the globe, they have been openly seeking cooperation with the Arab sector in Israel.

Well the 8200 “Hybrid Accelerator” has just initiated its latest round of intakes. They include SAF, Brainkos and Shareshipper to name just three of the seven involved. One cardinal condition for acceptance into the programme is that each team must include at least one Arab member on its staff.

It is this form of contrast which sets the Israeli economy apart, especially from those of its neighbours. This approach, embracing the views of all religions and backgrounds, that is one of the key reasons why Israel has become known as the start up nation. And that is why “The Economist” is able to report on such positive economic stats for the Holy Land.

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