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Business mentoring – a cure for ‘all’ commercial problems?

20 May 2013
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Categories: Afternoon Tea in Jerusalem, Business, Israel

My work as a business mentor brings me in contact with many different people, in all kinds of commercial fields. Young or experienced, retail or non-profit, financial issues or failing sales campaigns – I have the fun and honour of working with them all.

My aim is to make my clients aware of their surroundings, enhance their self-belief, and then empower them to take responsibility. The results should be seen in a balance sheet shower higher value.

Seems simple enough, although the process is rarely that smooth. The reasons vary enormously – the commercial environment changes, personal issues need to be resolved, technological problems emerge. However, progress is achievable.

So, if it is that straightforward, why do some customers just miss out?

Just recently, I was faced with the pained expression of a Jerusalem-based customer, who has really gone through a rough patch. That said, I threw out a couple of seemingly innocuous questions, which were designed to ram home the extent of his dire situation.

  • What had he done to date?
  • What specifically did he intend to do?

The fact was that despite vague commitments, vary little had moved in his business over the past months. There had been a few cosmetic alterations and some small additions to the purchasing policy, but very little more than that.

As for future moves, the client muttered about swopping premises. So, when I told him to just do it, he merely sighed. And when I asked him more sympathetically if such a policy would truly make the difference and how, I was greeted with more silence.

The sad fact is that this person neither wants to change nor is capable of changing under present circumstances. Defeated by a combination of his own surroundings and those of the market place, it is most unlikely that something new and creative can emerge from our discussions. The ‘olympic flame’ of perspection required has been reduced to glimp flinders.

Whenever I take on a new mentoring client, after an initial mapping session, I ask them if they are prepared to change and if they realise what it takes. Not everybody is able to be truthful enough with themselves.

Leadership by example; politics, commerce and religion

17 May 2013
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Categories: Afternoon Tea in Jerusalem, Business, Israel

Blogs and literature are full of responses to the question ‘what skill-set is required to turn you into a born-leader’.

Many will recall Churchill, Steve Jobs, Pope John Paul II from Poland, and maybe even Bill Clinton. However, in an age of globalisation, where information is everywhere along with cynicism, there is an increasing popular feeling that fewer and fewer politicians meet standards of the voters. The people we tend to admire come from the world of sport or the arts or commerce.

In recent months, I have quoted items from Dr Robert Brooks and from Daniel Pink. Both discuss the issues of credibility and the challenges we face when encouraging others to believe in our methods. And both of them quickly move on past the subject of empathy. Instead, each with his own approach, talks about the need to understand sincerely what a person is thinking and why. I pose that few politicians do not have time for such a manner.

This week, I read an article by Charles Harary, a clinical professor of management, who developed the theme one stage further. He was commenting about the Book of Ruth. By way of background, I should mention that leadership is a strong undercurrent in this biblical story – the role of Naomi, the character of Ruth, and how this lineage runs through to the future King David.

Harary argues that what made these female heroines different and what also separated Moses from the rest of his family was the characteristic of “humility”.  And in one powerful paragraph, he observes that:

  • Humility comes from the Latin word which means ‘grounded’ or ‘close to the earth’.
  • Humility is not the same as meek, but it is an dynamic quality.
  • “Humility is appreciating our talents and focusing them on the needs of others”.

Harary concludes:

To be great leaders, we have to examine the motivation behind our actions…..To be real leaders, we have to think about the needs of others…..(And thus) Humility is a true form of strength to be used at every moment of life.

Now, when you tell me where you can find humility, I will point out that there might be a real leader of people lurking in the area. And I suggest that you do not start looking in your legislative assemblies.

Two pointers on the Palestinian economy – May 2013

14 May 2013
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Categories: Afternoon Tea in Jerusalem, Business, Israel, Palestinian Society, Palestinians

Gross Domestic Product (GDP) in Palestine witnessed remarkable growth of 5.9% during 2012, Palestinian Central Bureau of Statistics (PCBS) said in its report.

That is certainly progress for an economy that was set back for a decade by the Intifada. Accordingly, there are encouraging signs in multiple sectors. Government revenues have risen marginally.

In parallel, some international aid is having a positive impact. For example, last month the UK’s International Development Minister Alan Duncan announced to an audience of the Hebron Chamber of Commerce the details of a new £15 million Palestinian Market Development Programme. The previous grant had “helped hundreds of businesses turn over £80 million in sales and exports, enter 87 new export markets, develop 129 new products, create 3,400 jobs and increase their exports by 52%.”

That said, all is not rosy. Just look at the unemployment rate that seems pegged around 25%. With a young population, that raises ominous social questions for the immediate future and stability of any governing party in Gaza and in the West Bank. So here are two suggestions that should help to make a positive change and relatively quickly.

First, to paraphrase a detailed report from the International Monetary Fund, ‘better governance’ would make fundamental difference. In fact, the report makes for more depressing than the official Palestinian stats I have cited above.  The key recommendations are hidden on pages 17 and 18. While it no longer blames Israel for all the economic woes in the Palestinian territories, there is a demand for halting pay rises to a bloated public sector, implementing better tax revenue collection systems, and reducing capital outlays on dubious public sector projects.

However, second, in order for this to happen, the Palestinian people will need a leadership that is…….well, capable. Unfortunately, after weeks of internal haggling, the Palestinian Prime Minister, Salam Fayyad, resigned on April 24th. Texas-educated, IMF-trained and one of the few that was determined to introoduce transparency in the system, Fayyad had had enough.

According to some observers, Fayyad could see that the Palestinian economy under President Abbas may be heading for a dive. Not only has substantial donor aid from Arab countries effectively dried up. Just as pertinent is the fact that corruption and graft amongst the leaders in Ramallah and in Gaza have rarely seen better times.

An analysis prepared by a Gaza journalist, details how money is leaking out of the official Palestinian financial system, which lacks accountability . It is near unbelievable to read how “the report criticised the murkiness surrounding the PA’s security budget, which  accounts for nearly one third of the Palestinian public budget, because it was  comprised of only one figure, without details….”

The truly worrying aspect is when one links that statement with the policies of Western governments. Less than two weeks ago, on May 6th, the European Union released a further €20 million to help fund the payment of the April salaries and pensions of nearly 76,000 Palestinian civil servants and pensioners in the West Bank and the Gaza Strip. Totally funding in this field has reached around €1.5 billion since 2008. If the corruption is so widespread, you have to ask what has European taxpayers money actually been spent on?

There are countless micro examples, which illustrate the lack of open government, at least from the point of view of Western standards. Even when the UN is supposed to hand resources and aid out to Palestinian refugees, the money slips away unguardedly from the hands of those who need it.

The Palestinians deserve a better economy. For that to happen, they require a true leadership, neither laden by the demands of corruption nor beholden to violent ideologies.

Serial entrepreneur – not what you think?

10 May 2013
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Categories: Afternoon Tea in Jerusalem, Business, Israel, Jerusalem

Blog sites are full of articles on ‘how to spot an entrepreneur at birth’ or ’10 things great entrepreneurs do’. You have the feeling if life is so obvious, then we could all be doing it.

The fact is that many of these comments are written ‘after the fact’. They often seem to be full of lines that are readily adjustable as the entrepreneurs keep moving the goalposts.

Take the example of Israel – a.k.a The Start Up Nation or Silicon Valley of the Middle East. Yossi Vardi has long been heralded as one of the local kings of high tech. By way of proof, he has a prime listing on Techcrunch.

According to a recent interview in Hebrew, Vardi has invested in over 80 companies. It is over 15 years since AOL bought his first ‘biggie’, ICQ for US$407 million. ICQ was one of the first of its kind for internet chat.

However, Vardi goes on to say that only 20 of the same 80 have resulted in a decent exit. In other words, while the man has made a very healthy fortune over the years, he has also bet on what turned out to be losers.

And, there is a third part to his story. Vardi has also missed opportunities. He openly admits to passing on a chance to invest in Waze, which is currently being targeted by Facebook for around a cool billion dollars.

Bottom line. It takes many factors to be a successful entrepreneur – skill, luck, uniqueness, right market at right time, management and leadership skills, etc. To do that several times over is exceedly rare.

Is there one characteristic that links the Vardis, Gates, Jobs of this world? Walter Isaacson referred to “an ability to focus”. I wonder if it just boils down to the old thing of some people have just ‘got it’ and you have to respect and understand that.

Why Israel caught Buffet’s eye

4 May 2013
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Categories: Afternoon Tea in Jerusalem, Business, Israel

It’s official. Warren Buffet has set aside an additional US$2.0 billion and thus bought outright Iscar Metalworking in northern Israel. It’s rumoured that his first deal, worth $4.0 billion, took ten days to conclude. This one was apparently sealed up in ten minutes.

As I recently observed, foreign direct investment is still entering Israel at a reasonable rate. The new finance minister, Yair Lapid, may not like the concept of budget controls, but he will enforce them. The estimate for the reserves of gas off Israel’s coast has just been raised by 10%.

Israel has fostered another new industry in the past five years, capitalising on the app bonanza. For example, Glide Talk Ltd. was a finalist in the “TechCrunch” Disrupt New York event. The app records and sends brief video clips. Funtactix (Jerusalem and Tel Aviv) and its Hunger Games Adventures has seen over five million downloads in the past years. And of course, WAZE with its traffic reports is rumoured to be discussions with several megas, including Apple.

And the connection between Buffet and apps? I have no doubt that Buffet is not going to throw any of his extra cash at the mobile industry or its software derivatives. However, he recognises the vitality of the Israeli economy. Iscar started in the backyard of its founder and grew to become an industry leader in a few decades. Israel’s app and internet successes – see above, Conduit, Wix and others – have displayed similar versatility.

To quote Buffet:

Israel is a great place to invest in because of the people in it. There is no other place in the world where you can find people with the kind of qualities and motivation and the ability to focus like the people at Iscar.

Assessing value of total investment in Israeli high tech – 3 pointers

29 April 2013
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Categories: Afternoon Tea in Jerusalem, Business, Israel, Jerusalem

It is turning out to be another good week for Israelis who like to show off the country’s ‘start-up nation’ status. The Chinese group, Fosun, has just bought out Alma Lasers with their special cosmetic surgery applications for a cool US$240 million. Happy days!

Israel continues to reap the rewards of being a Middle Eastern version of Silicon Valley. Only last week, I met up with a group of London-based merchant bankers, many of whom were visiting the Holy Land for the first time. So used to learning about Israel from the BBC or similar, they were each positively stunned at the economic and scientific miracle they were presented with.

So, here are three basic stats to reiterate just how much Israel is placing itself at the forefront of new technologies and how in turn this is attracting inward investment.

First, “Preqin’s Venture Deals Analyst shows that since 2008 there have been 403 venture capital financings in Israel, with an aggregate value of $2.53bn.” Significantly, in 2012, a year noted for the economic malaise in the Mediterranean Basin, there were 79 deals. Within the first four months of 2013, a further 23 had been completed.

Perqin claims to hold data on 83 Israeli VCs, which have raised over US$10 billion in the past decade. JVP and Fimi are considered two of the world’s best performers in their field.

Second, a new survey released today indicates that “57% of Israeli venture capital executives expect foreign investment in Israeli start-ups to increase over the coming year, and 43% expect that the number of high-tech exits will grow”. As Siemens, Microsoft and others continue to strengthen their accelerator programmes, this trend is likely to continue.

A third interesting stat is that during the first quarter of 2013, Israeli high-tech firms raised $474 million despite the continuing global slowdown. Within two days of this news being published, Fitch reaffirmed Israel’s A credit rating.

In other words, for all the abnormalities (such as import monopolies and the unions at the ports), the Israeli economy is essentially sound. Let us hope and pray that the vested interest groups keep it that way.

How a business mentor can help you live your dreams

28 April 2013
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Categories: Afternoon Tea in Jerusalem, Business, Jerusalem

When people come to live in Israel, they do not just bring with them their version of zionist-religious ideology. They often turn up with a commercial concept for implementation. Something new or the transfer of an existing business – either way, the question remains: how to make it work in a foreign land, where they do not speak your language? Dreams and reality never seemed further apart.

A few days ago, I gave a talk to the AACI, a non-profit organisation that provides services to new immigrants to Israel from North America. The theme was how to set up a business in Israel.

The audience cut across a wide platform; new apps, classes for children, internet selling and more. In many ways, much of my talk could have applied to setting up in any country. You have to be prepared for many rough bumps along the way. Cash flow needs to be managed and over the long-term. Know your market. etc etc.

One issue that I stressed was the need for a business mentor, and I mentioned how I could have saved lots of money (on headache pills and more) if I had found somebody years ago. Let me give two recent examples of clients of mine.

Today’s case study first came to me when he was at a crossroads in his professional career. Could I tell him what to do? Actually – no!. However, I did ask what he ‘wanted’ to do, a seemingly innocuous question, which is rarely so easy to answer. Why? Because it forces us to be honest with ourselves and then take responsibility for the answer.

We spent some time going through the responses and beginning to work out what resources were required. Then he was presented with a potentially frightening moment – a dream opportunity came his way. Should he go for it?

So, stage two was all about evaluating the pros and cons. Textbooks call this a SWOT analysis. I look at it in much broader terms – ensuring that the client is aware of both his personal and commercialchallenges. My aim is to ensure that  they are not glibbed over and nothing is taken for granted.

Just recently, the client opened his enterprise. As I pointed out, now the hard work starts.

A holy lesson in high-flying openess

21 April 2013
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Categories: Afternoon Tea in Jerusalem, Business, Israel, Jerusalem

Last week, London buried former Prime Minister Baroness Thatcher. Her beliefs hauled Britain’s economy away from disaster in 1977 and towards prosperity by the early 1990s. Since then, Thatcher’s methodology has been copied by numerous other macro financial planners, usually with success.

For all the benefits of sweeping privatisation and free economies, specific communities in Britain were devastated by the changes. they were never cared for in a fair manner. This created a hatred that was sadly still evident decades later at Thatcher’s funeral.

Thatcher was a great friend of Israel. The Holy Land’s economy has also seen a massive transformation since 1986. However, it continues to suffer from key structural restraints. One is the old-fashioned and expensive labour practices at its ports. A second is the ludicrously high cost of air travel. And in order to tackle the problem of airplane tickets, today, Sunday, the government in Jerusalem is expected to ratify an open-skies policy with the European Union.

To give a very simple example of the problem: A few years ago, I flew 50 minutes from Tel Aviv to Cyprus, paying hundreds of dollars for a return flight. At the time, I noticed last-minute one-way deals from the UK to Cyprus available for as low as 6 dollars. Enough said!

The benefits of the change will be sweeping and immediate. Holidays and business travel will become cheaper at an instant. Easy Jet has already announced that it is poised to lay on several more flights to Israel, and not just from the UK.

And the down side? Very simple. Up to 17,000 local jobs will be placed at risk. The unions are furious and the strikes have started.

As somebody who needs to travel overseas for commercial and private reasons, I have long been furious with the amount I have had to pay for each ticket. However, I am deeply sympathetic to the unions. El Al and its sister companies are rightly forced to incur heavy security costs, because of Israel’s geopolitical situation. (Just consider why there was no point in targeting an Israeli aircraft on 9/11)! These are overheads that none of its overseas competitors face.

So what can be done? Yes, we all know that the unions are replaying a game to see how much they can screw out of the system before they lose power. For all that, they have a very reasonable argument. Why the domestic airline companies, unions and government cannot talk this out is beyond me. It goes back to some basic practices of ‘good business’, sorely lacking here.

Sooner or later, the revolution will come. The question is whether the government can show enough competence to ensure that the suffering – immediate and longterm – is reduced to a minimum.

Mentoring, humans, communicating – a treasured skill

20 April 2013
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Categories: Afternoon Tea in Jerusalem, Business, Israel

We are taught that what separate the human and animal worlds is our ability to communicate. This is a precious skill, which must not be abused.

In mentoring sessions, I am accustomed to explaining to people how they can use their words more pertinently and how they can understand others through questions rather than assumptions. In parallel, I have to encourage my clients to look beyond the barbs which they may receive from their own customers.

In modern parlance, social media has become an excellent platform for attacking somebody without having to show your face. Sad, cruel, but nothing new. For example, two thousand years ago, a leading rabbi of the period, described the biblical phrase of ‘love your neighbour as yourself’ as a summary of the Bible. And yet tens of thousands of his own students were later to die in a plague, because they were unable to respect each other. (Was it a coincidence that they were reported to have died through some form of throat constriction?)

Last week, I read a fascinating anecdote in the paper, which featured two of Israel’s leading retailers, the CEOs of the clothing chain, Fox, and of the super stores, Hamashbir. To cut a long story short, they found themselves in court suing each other, due to a dispute affecting who had rights to a lucrative space in a large shopping mall.

Surrounded by lawyers and in the heat of the moment, they fortunately had the good sense to listen to each other. At one point in the arguments, the gentleman from Hamashbir departed from his spin or ‘script’ and spoke from the heart. Unwittingly, what he ended up doing was to abandon legal drivel and to talk in a manner that allowed his rival to understand him.

Within a few minutes, the lawyers had been told to stand down. The opponents are now good friends, while remaining competitors for the pockets of the public. By talking to each other, they have learnt what each other is thinking, and by definition this promotes understanding.

We are too quick to use our tongues to lambast and to criticise. Those same physical abilities are better employed to ask, to praise and to encourage customers, suppliers and our own colleagues.

What we can achieve in 65 years

17 April 2013
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Categories: Business, Israel, Jerusalem

Yesterday, I had the honour and privilege to attend a ceremony at the President’s residence in Jerusalem, where 120 soldiers were presented awards for outstanding service. This is an annual event, traditionally held on Independence Day.

Israel has come a long way since it was founded in 1948. The population has multiplied ten fold. The economy is no longer renowned for Jaffa oranges but the technology behind the production of fruit, medical devices and clean energy. It is the one country in the Middle East with a growing Christian population.

Yes, after 65 years, all is not perfect. Just look at the continuing problem of football violence. Every winter, strategists fret if the Holy Land will receive enough rainfall. And, of course, neighbours such as Iran,  Hamas and Hizbollah still look to remove the country from the world map.

However, these 120 soldiers showed a country which strives for excellence. Just look at the composition of the group

  • Despite the macho environment, around a third were female.
  • Around 10% were born in other countries
  • One was confined to a wheelchair, but remains determined to do “their bit” for their country
  • The religious make up ranged from ultra orthodox Jews to irreligious to Druze.
  • While some served in front line units, others were developing capabilities to secure the defence of the civilian population.

As President Peres reminded the audience in his address, the official name of the army remains the Israeli Defence Forces (IDF). It is based on strong humanitarian principles that cannot be hidden by the weapons of its enemies.

And how does this ethic enter Israeli society? Sodastream has seen tremendous success over the past decade. Trading on NASDAQ and with recent adverts at the Superbowl, Sodastream has never hidden the fact that it has a factory on what Palestinians see as their land. That said, I encourage you to watch this video, prepared by Sodastream, which shows how despite 65 years of continuous threats, Israel continues to improve its model for successful integration and pluralism. Happy Birthday!

Enchanting, Pink, Sales

16 April 2013
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Categories: Afternoon Tea in Jerusalem, Business, Israel, Jerusalem

A couple of years back, I discussed Guy Kawasaki’s book, “Enchantment“. This sales and networking guru spent 200+ pages discussing how people can charm, delight and enrapture others to buy products and services. The techniques results not in a one-off sale, but a long-term and mutually beneficial partnership.

I still recommend the book to mentoring clients. And I have just added to my hit list “To sell is human” by Daniel Pink. Now Pink’s last official job was back in 1997, employed at the White House. By 2011, he was rated as one of the most influential business thinkers . So what makes Pink’s book a natural follow-up to the writings of Kawasaki?

Pink also discusses how to influence, to persuade and to convince others. He moves beyond the usual blurb of empathy and encourages us to understand what and why others are thinking, even while we talk to them.

And when Pink says ‘talk’, he means “move”. After all, as Pink observes, even teachers and medics are in sales, asking people to change how they go about their lives. We are all doing it,most of the time.

There are many fascinating anecdotes in the book. Rosser Reeves, the man credited for inventing the phrase ‘unique selling proposition’ (usp), is given an honourable mention. He noticed a beggar struggling to receive handouts, based on the sign “I am blind”. Reeves added four words – “It is springtime and I am blind”, and the beggar went on to make a fortune. Why? By using the technique of contrast, the sign became much clearer – understandable and with a direct message – to the target audience.

My favourite story refers to Dr Turner and his team of radiologists at a Jerusalem hospital. Turner initially attached a photo of each patient to each file and then he asked his colleagues to submit their reports – who had broken a limb, contracted a disease or whatever. As Pink wrote, a good cardiologist do not confine themselves to the obvious, but search for the hidden.

Three months later, Turner submitted the same files, but without the pictures. 80% of the extra comments that had appeared in the first round did not find their way into the second group! The conclusion? If you remove the personal aspect and restrict the opportunities to understand your target group, you are unlikely to succeed in making a connection. In other words, no sale!

And one final tip on how to move people: My wife bought me Pink’s book. She did not force me to read it. As she handed it over, she implied that I could benefit from the insights.

260 overseas research centres in Israel can’t be wrong

14 April 2013
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Categories: Afternoon Tea in Jerusalem, Business, Israel

Last week, I wrote how GE is upping its involvement in the Israeli economy. To paraphrase the words of William Ruh, vice president of the company’s software and  analytics centre, the conglomerate cannot afford to miss out on Israel’s technological capabilities.

OK. Very complimentary. However, GE is not alone, according to the group Israel Advanced Technologies Industries, GE is just one of 260 overseas centres operating in Israel, employing around 20,000 people and who-knows-how-many others indirectly. For example, Microsoft announced just today that it is looking to Israel as a junior ‘Silicon Valley’ that will help it to boost future revenues. Over the past 15 years, the gates team have made at least 11 key strategic decisions regarding its position in Israel.

Who else? Well, here is part of a list that I saw printed in the newspaper recently:

Apple: 3 centres, 500 employees. Software for iPhones and iPads are is developed in the Holy Land

Intel: 5 centres with 8,500 employees. Previous, current and next generation of chips have started out in the labs of Jerusalem and its surroundings

GM: 60 workers in Herzylia. They are working on a design for a car without a driver and also converting side car windows into inter active computer screens.

Samsung: 250 employees in north Tel Aviv are producing technology for the camera on the Galaxy phones.

And the list goes on.

This week, Israel is celebrating its 65th anniversary since it was founded in 1948. Readers of this blog have the option of supporting the enemies of the one democratic country in the Middle East and boycott these amazing technologies and capabilities, or they can go out and celebrate the freedom and pluralism that they represent.

 

Israel’s economy – taking a hit, but still packing its own punches

12 April 2013
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Categories: Afternoon Tea in Jerusalem, Business, Israel

Israel’s new Minister of Finance, Yair Lapid, is putting together a package of tax hikes and budget cuts. He will seemingly break many of his election promises and those of his Prime Minister despite being in office barely for eight weeks. However, the country’s coffers is short of around 14 billion shekels (around US$4 billion) and so something has to give.

It will not be pleasant. Opposition parties will have a field day, pointing out with much justification how the average citizen will suffer. However, that does not mean that all is gloom and doom with the finances of the Holy Land. With growth still forecast at about 3% for each of the next two years and unemployment remaining steady at the 7% level, Israel is not sinking like other Mediterranean economies.

In fact, Israel has much to shout about to the rest of the world. For example, this week, the vice president of GE’s software and  analytics centre, William Ruh, was in town. As he said:

the world of industry is on the brink of an  Internet revolution that will transform it in much the way Internet has  transformed the world of retail, music and social networking. Industries from  rail to aviation are moving from “unintelligent” machines to “brilliant”  machines, which are able to harness massive efficiencies by taking in real-time  information and adjust accordingly…………Israel is probably the best place in the world  to do cyber security (which will protect those new systems).

Ruh’s comments came in the same week that Avago (Singapore) purchased a small Israeli start up called CyOptics for US$ 400 million in cash. The company’s optical components enables the high-speed transmission of video content, currently a major stumbling block for mobile receivers.

In fact, while Israel’s economy has chalked up a number of achievements in recent weeks, what caught my eye was a survey from MIT. Analysing 120 universities, the report cited the Technion in Haifa as the 6th most suitable centre for innovation and entrepreneurship – one of only two non American establishments in the top ten places.

Very impressive, but the question is why or how does Israel manage to compete despite being a small country and being surrounded by violent enemies? One answer was provided by a new ‘social progress index’.  This covers “fifty-two indicators in the areas of basic human needs, foundations of wellbeing, and opportunity show relative performance in order to elevate the quality of discussion on national priorities and to guide social investment decisions.”

Of the 50 countries tested, Israel came 16th, leading the Middle East block by far. Specifically, “Israel excels at providing building blocks for people’s lives such as Health and Wellness and…..of issues covered by the Opportunity Subindex, Israel outperforms in providing opportunities for people to improve their position in society….”

Why your profit is stuck in your stock

10 April 2013
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Categories: Afternoon Tea in Jerusalem, Business, Israel, Jerusalem

“From surf wear to Chinese food, innovations in inventory management are helping businesses reduce their bottom lines.”

Thus opens a recent blog on the Forbes website by Lisa Wirthman. Her observations are not revolutionary. Earlier this week, I was talking to an accountant from one of the UK’s leading auditors, which specialises in creating corporate rescue plans. He reported how time and again their initial evaluations of a client in financial distress indicate that bloated stocks are a prime cause for the meltdown.

Let me spell it out. If you buy stock and you do not sell it before you have to pay the supplier, then your cash flow is transferred from your bank account to your shop shelves or the warehouse. You are generously paying the wages of your suppliers rather than saving for your next holiday.

This is a rule that applies to all businesses around the world. The good news for a small business is that it does not necessarily need to purchase a complex piece of software to get on top of the problem. Here are two examples from Jerusalem to illustrate what I mean.

Sometime ago, I was invited to the offices of an exporter of gift items, manufactured in Israel. To paraphrase the discussion, I was asked fairly early on in the mentoring sessions: “Why do we have a hefty red sign on our bank pages, when orders are pouring in?”

As I was preparing my answer, I noticed a large number of boxes on the floor. In response to my question, I was told that this was stock waiting (yet again) to go out, but were all delayed for the lack of solitary items. Here is the key: While payment to my client would not be made until delivery had been completed, my client was about to commence handing over cheques to his suppliers. Case solved, Watson.

Story number two takes me to a small shop in the heart of Jerusalem. The owner was surviving via large short-term loans from relatives. One look at his shelves indicated the core of the problem – he had no idea what he was selling of which items. In paralle, he was purchasing new stock by ‘rule of thumb’. He had so much stock that in some places the customers could not reach the shelves because of so many items had to be placed on the floor.

A new rule was introduced; All new supplies were to be cut by 50%, and this has been in force for several months. In addition, the shop has introduced a very simple tracking system of customers and their tastes.

And the upshot of these changes and greater awareness? My client has given up his reserve warehouse. And I am pleased to report that interest repayments to the bank are dropping significantly every month. Elementary?

How much does procrastination cost your board room?

2 April 2013
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Categories: Afternoon Tea in Jerusalem, Business, Israel, Jerusalem

Procrastination is a common problem in life. We all put off doing something. One common cause is simple old-fashioned laziness. The other? Well, the task in question may appear to lie way out of our comfort zone.

Actually, more often than not, the project turns out to be the perfectly doable. Only last week, a CFO told me how three subjects had been waiting in their in-box for weeks. Fortunately, the employer did not suffer, as the issues were of a mainly personal nature. In fact, a few days after our discussion, everything was completed……with no noticeable pain or trips to a doctor.

But what happens to the CEO who just refuses to deal with something and keep up this position for the long-term? This is a common problem faced by business coaches and mentors.

For example, I know somebody near Jerusalem, who hates technical problems. At home, they always leave do-it-yourself jobs to their spouse. However, in a commercial climate of globalisation, we have to be savvy with ever-changing technology in the work environment. Unfortunately, this business owner is not and will not change readily.

Now my CEO has a ‘super wow’ mobile phone, but barely knows how to use it; very few downloads, little music and minimal extra content. In fact, they have refused to learn how to receive e-mails on the phone.

This means that they can only keep up with important messages once they return to their office. By definition, that is slow. When people often require an immediate response, our friend keeps them waiting for hours or more. It would an interesting exercise for an economist to calculate how much work has been delayed by this procrastination – the deliberate avoidance to find out how to receive messages in real-ime.

Today, the CEO called me. They read a book on the weekend on the importance of mobile marketing and the technology of apps. BINGO, as they realised how they are missing out big time. Apparently, it took them ten minutes to tackle what had been put off for two years!

What a business coach can learn from an ancient biblical story

29 March 2013
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Categories: Afternoon Tea in Jerusalem, Business, Israel

Around the beginning of April every year, Jews recall the Exodus from Egypt at the festival of Passover. The importance of this tradition, dating back thousands of years, was brought out during the Nazi Holocaust. There are stories of unleavened bread (matzah), proclaimed in the Bible, being smuggled into the concentration camps.

As a business mentor, I continue to find that the stories, anecdotes and explanations of the rituals and laws of the festival have meaning in a wider context. Specifically, they can be applied to our every day commercial lives.

This point was driven home as I was reading a series of articles about the late scion of American Jewry, Rabbi Yosef Soloveitchik, and his commentaries on what happened way down in Egypt all those years ago. Three examples:

1) Crying out

We read that the Children of Israel ‘cried out’ in pain. We assume that the pain was caused by the stressful workload imposed on the slaves. However, the question remains was this the only problem? Was it the real issue? More recent discussions reveal that the Jews were actually more troubled from the law which prohibited marital relations. It was only  a ‘higher and external authority’ who could understand the true underlying need and resolve the issue.

In modern parlance, I am sometimes approached by companies that ask me to find new them export markets. Fair enough, but why? It is not so much that they believe that they can make more money overseas. A common reason is because they have spare capacity to be exploited. Meanwhile, they have often ignored the issue of the costs of new marketing channels.

In other words, they have reached an operational decision based on a restricted understanding of their problems. It is the responsibility of a mentor to point that out and to encourage them to reflect on the basis of their decisions.

2) Living with your decisions

Rabbi Soloveitchik was an orthodox rabbi. For all the demands of his religion, any religion, he fervently preached that Judaism was something to be tasted and seen. To paraphrase, it should be felt as a comforting hand on your shoulder.

Similar words can be used for our own commercial environments. We cajole employees. We are desperate for the next client to sign up. We rush around trying to accomplish so many tasks everyday that we tend to lose sight of our vision.

My point is that work should be something that you want to do. Even when there is pressure, we should be able to understand why it is there and the potential benefits at the end of the assignment.  The day-to-day issues should be items that we want to liaise about with colleagues, below and above us. If not, well like any religion, life and work become a meaningless set of restrictions, which foster hatred and discontent.

3) Leadership

Moses is considered one of the great leaders of all time. However, with some irony, he is barely mentioned as the Jews leave Egypt. In contrast, his prime moment comes at Mt Sinai, when the 10 Commandments are imparted and eventually passed on to hundreds of thousands of eager followers. What we learn from this is that more than a leader, Moses was a teacher. He possessed talents to influence others.

Entrepreneurs often confuse titles: leadership, management, strategy.  Many a CEO believes that they are good at all three, when they rarely have the abilities to deliver on one of these separate skill sets. Moses was a modest person, acutely aware of what he was and was not good at. He never shirked to bring in help via his brother (Aaron) or sister (Miriam), or even to reach out to consultants’ such as his father-in-law, Jethro! How often does that happen in modern business? How many times to you hear of people being proud to accomplish things all by themsleves?

As a concluding thought, I am always encouraging friends and clients to keep up-to-date with new literature and alternative approaches in business. However, sometimes we have to remember that many of the best points have already been passed on to us several millenia ago.

1 decade, 772 exits, 8 million people

27 March 2013
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Categories: Afternoon Tea in Jerusalem, Business, Israel

Earlier this week, I referred to a survey of Israel’s VC industry for the past decade, as reported in the Hebrew newspaper “Calcalist”. When you consider that you are dealing with a society of barely 8 million people, surrounded by geopolitical issues that have befuddled world diplomats for nearly a century, few natural raw materials (until recently) and an economy that in 1986 went in to ‘shutdown’ mode, the statistics below become even more impressive.

So how has Israel. affectionately known as the start-up nation, fared over the past decade in terms of spinning off its success?

1) There have been 772 known exists in the high-tech sector, which have a combined value of US$41.6 billion.

2) 200 of these deals had a net worth of over US$200 million each.

3) Two deals are of particular note: In 2006, HP purchased Mercury for US$4.5 billion. Last year, Cisco took over NDS for a cool US$5 billion.

4) Of the 772 exists: 233 involved software companies and 185 related to the communications industry. The bio sector clocked up 117 ownesip transfers, but cleantech measured a mere 24.

5) In terms of value, US$12.9 billion went to the software companies and US$10.2 billion to telecom.

6) The average length of period to an exist is just over eight years, a figure which varies from sector to sector. For example, bio companies generally only see a buy out towards the end of their second decade.

The survey records the names of individual successful serial entrepreneurs, such as Yair Goldfinger and Lior Tal. I did not see a mention of how much money remained in Israel nor how many jobs were lost after the sell-offs were completed. And yes, I wonder how much money ended up with the ordinary employee.

What I would have beena fascinating exercise is an assessment of by how much this wave of success has raised Israel’s GDP and the net impact it has had on the economy as a whole. Let’s face it; something has to explain Israel’s ability to maintain 3% growth in 2012, as opposed to the strugglers like Greece, Spain, Cyprus or even Britain.

Israel’s Prime Minister finally admits (after the election) his economy is not performing

25 March 2013
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Categories: Afternoon Tea in Jerusalem, Business, Israel, Jerusalem

European economies are hiding their economic dismay by claiming that they can relaunch growth while consolidating. Seems a nonsequiter to me.

Now try this. The Israeli government, regional economic powerhouse and boasting a record of 4% annual growth for much of the past decade, has spent the past 9 months preaching that its fiscal deficit is under control. The spin was that ‘we know we have a budgetary gap of 14 billion shekels and it is planned for’.

As I have written for much of the period, this was irresponsible tripe – another non sequiter. As if to prove it, Yair Lapid – new to politics and new to economics and new to the position of Minister of Finance – has declared that the overdraft is worse than feared. VAT looks set to rise. Corporation tax will join the trend. Payments to large families will be chopped. The army will have to make do with fewer purchases this coming year. Quelle surprise that many of these issues take on former ‘untouchables’ of the Prime Minister and political allies of his previous government.

The recent British budget tried to kick-start growth by providing aid to small business. In Israel, this has been available in various forms for many  years. And there has been a heavy emphasis on help for entrepreneurs in high tech. The result? According to new figures, the average value of exists per year for the past decade is over US$4 billion, involving a total of 772 companies. Very praiseworthy.

The down side is that the banks have been making a fortune on the rest, who simply struggle with their cash flows. An analysis of Israel’s five leading banks, which was published in Hebrew this week in the “Calcalist” newspaper reveals that their profit on loans to small businesses reaches 23%. And all this while some of these hand outs are backed by the government.

To clarify – as opposed to a non sequiter, this is a rip off. It is a hindrance to growth. Add in to that the guarantees which the banks demand and the paperwork to be filed, you have to question if the banks are really interested in helping new customers succeed. More pertinently, you wonder why the mandarins in Jerusalem have allowed this system to thrive. Undeclared conflicts of interest?

The lesson is simple. If Mr Lapid really wants to reset the economy, do something for budding artisans and entrepreneurs which will impact positively on growth, he needs to address quickly the needs of small business….which makes up over 95% of most economies around the world.

 

You are a CEO and you think you know your problem

24 March 2013
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Categories: Afternoon Tea in Jerusalem, Business, Israel

A well-tweeted article on LinkedIn last week by Michael Lazerow pointed out the crucial need for business leaders to be able to focus. “If an entrepreneur (or CEO in general) can’t name their top 3 priorities without hesitation, how will the rest of the company know?”

I think most of us can agree on that. But how to focus? How to identify what is the problem?

I would like to tackle the subject from another angle. All of us cry out in pain. It can be physical pain. It may be a pain that something – in life, in business – just ain’t working right. Either way, this is leading to some hard, internal grief, which we do not like.

However, quite often, if we are truly honest, we become so tied up with the immediacy of what is going on around us, the plot escapes us. We lose sight of the key issues. We run about putting out fires rather than making long term decisions. And how true that is in commerce and business.

Everything has to be done at once. Cash flow pressures throw us around that we do not know whether to rush to cajole a client, appease a bank or ignore a supplier. Production lines need maintaining, but you need to spend money on raw materials. A new sales person has to be trained, but your car has broken down. And so the list goes on.

How to list the issues in terms of importance and what to deal with first? For all the horrendous problems of difficulties, has the CEO identified the key issue? In the case above, it was an inability to manage their time efficiently.

Yesterday, I was reading about the biblical story of the children of Israel as slaves in Egypt. In the book of Exodus, it describes how they called out in pain. It would be simple enough to explain that the cry was due to the physical tasks that had to be performed. Yet, commentators teach us that it took a “Higher Authority” to listen to them and realise that the true pain was the fact that the men were no longer able to have marital relations with their wives. To such depths they had fallen, but could not pinpoint their agony.

In a modern sense, this “Authority” is a mentor. As we know, a business coach is somebody who can listen and see the whole picture and then suggest a way through the dirt. Obvious? Maybe, but how many of us, when facing some serious troubles reach out for help?

Is Israel’s new Minister of Finance an economic hero?

21 March 2013
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Categories: Afternoon Tea in Jerusalem, Business, Israel, Jerusalem

Israel has a new Minister of Finance in Yair Lapid. His father was a political journalist, who ended up in politics and entered government. Lapid himself was also a senior journalist. He created a pressure group, converted into a political party and is now the second largest group in the Knesset (Israel Parliament). Does this mean he will be able to look after the country’s accounts?

Lapid has no government experience. In an interview a decade ago, he admitted his ignorance on economic affairs. He is wealthy, although he advocates a platform for a more equal distribution of the burdens of society. Contradictions abound.

The job of the new boy is not helped by Israel’s economic structural problems. The previous government worked up a black hole of around 15 million shekels – say US$4 billion. Yet, as the calendar ticks over towards the end of March, no budget has been prepared for 2013.

In addition:

  • The government urgently needs to find a replacement for the internationally respected Governor of the Bank of Israel, Professor Stanley Fischer, who is leaving the position in the summer. A poor choice here will expose the shekel to market fluctuations.
  • There is still genuine concern that the price of housing in Israel is creating an economic bubble. It is generally agreed that young couples are being priced out of the market and that many banks have too great an exposure to potential bad debts.
  • Too many vital sectors of the economy are protected by vested interests. For example, the port of Ashdod is considered one of the most inefficient and expensive in the world. And yet it is an open secret that vast proportions of the workforce are related to each other. in a separate sphere, the Ministry of Agriculture ensures that tariffs make imports of fruits and vegetables near impossible, keeping prices high to the consumer.

These are just some of the challenges facing Lapid. As often is tha case, the list is near endless. Depending on your political allegiances, many argue that the ultra orthodox and  / or those living in the West Bank are receive resources beyond their numbers and contribution to society. Small businesses have been squeezed int he past few years and need help.

Lapid will be forced to look at all these issues, sooner rather than later. Yes, he has an agenda. And here’s the catch. If he tries to alter too much and too quickly, he is likely to fail. Economies are complex. In the era of globalisation, there are many unforseen external anomalies, which computer models cannot predict and an a background in economics cannot prevent.

Where Lapid can make a difference is to set himself gradual targets. The most effective changes are not necessarily immediate, but take place over time and with as much prior general agreement as possible. If Lapid was able to learn that from his father, then he has the opportunity to make a great impact as an untested Minister of Finance.

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