Business Archives - Page 55 of 67 - Michael Horesh Business Coach and Mentor

11 June 2010

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Categories: Business

As a business mentor, I often see this phenomenon. A small team about to or has just launched their operations with mega enthusiasm mixed with trepidation.. and then somebody asks “what next?”

And the answer is an embarrassed silence. Ouch! So how do you avoid that painful scenario?

First, as the kick off day comes ever closer, take a step back and from an objective position ask yourself: “what do I need to enter this business”? What are the resources required? Be honest and respond in detail.

An obvious suggestion, when you coldly read it here. I once met up with a great team, who had been planning away for ages. They knew all the the google refs and more. But when faced with the question of needs, they were flummoxed. It felt like several minutes before somebody could respond. Today, they have a wonderful start up.

Now ask the same question about yourself. What skill-set do you require? For example, if you are operating a one-person enterprise, you will need to be just as adept on the tech side as with sales and with time management. In truth, few of us possess such all round qualities and even less will admit to that. You will need to be able to call on help, advice and even outsourcing services, quickly.

If not, you will almost invariably be left wondering what to do next.

Above all, there is a need to stay focused. A recent article from the Harvard Business Review referred to this as the “coherence premium“. Personally, it took me far too long to admit that I was a great procrastinator, and it is a common failing I see in others.

You need be able to ask yourself why you find all kinds of “alternative activities”, which keep you busy, but do not actually have anything directly to do with accelerating revenue. In fact, because we are scared or afraid or not ready or whatever, the “now what syndrome” is often quickly converted into something more dangerous. And that is leave-me-alone-as-I-am-busy-doing-lots-of-nothing.

Starting a business should be hard work, fun and rewarding. What few people realise in advance is that Stage 2 can be just as challenging as the preparatory efforts and you need to be equally focused to cope with it.

9 June 2010

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Categories: Business, Israel

Innovation is one of those much-hyped buzz words. It can be used in the context of motivation. And yes, I have written about them both, often in the context of Israeli society and commerce.

Yes, Israel is good at innovation. “Why?” the question was posed yesterday by a 4-strong delegation from Denmark’s Enterprise and Construction Authority. I met them with leaders from “Israel Business Connection“, which is dedicated to helping new immigrants to integrating into society.

The discussion was fascinating. One key theme to emerge was that you cannot legislate innovation. It has to be part of a culture. A central authority help to provide some of the conditions of that environment. Here, Israel has several fundamentals working in its favour.

Let’s start by returning to the theme of immigration. It is an accepted fact that much of the brains behind Israeli hightech and cleantech are Russian Jews, who abandoned the Kremlin as soon as they could in the 1990s. With or without Hebrew, many have found their way into industry. I come across this almost every week in my company visits.

And yes, Israel is surrounded by less than friendly countries, which forces (or motivates) it to be creative. Military tech is often converted to civilian use, once former soldiers take on regular jobs. An early example were night sights and their application in medical equipment.

The Israeli government sets up incubators, several of whom have since been bought by private companies. These afford young firms the opportunity to concentrate on development, while minimising the burden of admin.

In parallel, there is a system to allow start ups to engage with professional business mentors, subsidised by 75%. In the past year, I have fulfilled this role several times. It is demanding and rewarding. It requires experience to see above and beyond the immediate issues. I challenge the client to focus on what is the core subject and not to be bogged down with trivialities.

The Danish team reported that in terms of start ups, there is no shortage of numbers in their country. The problems revolve around converting this energy in to large companies. And while we were chatting, the Israeli treasury announced measures to tackle that very subject.

7 June 2010

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Categories: Business, Israel

What should my budding entrepreneur do? Sitting opposite me yesterday was a very talented young gentleman. He had found a way to import cheap goods into Israel, sell the stock quickly, while gathering loads of satisfied customers and locking up a wad of liquid profits.

Should he take the business up a phase? Can he develop his idea and start to realise his extended vision?

I pointed him to a story in the weekend Hebrew press. Strauss Ltd is an economic food giant in Israel. Legend has it that the company started operations nearly 80 years back. Grandmother Strauss fled Germany, acquired 2 cows and started selling the milk in a small town in northern Israel.

Around 15 years ago, Strauss bought out Elite, Israel’s largest sweet manufacturer. It now dominates the Israeli humous, tehina and “dips” market. Ofra Strauss, chairperson of the Strauss Group, is considered the 12th most influential woman in the world, according to Forbes Magazine.

Two years ago, Strauss began to explore a joint venture with PepsiCo, a US$43 billion food conglomerate. The aim was to buy the company Sabra, and latch on to the growing humous market in the USA. The relationship has proved an amazing success. Ofra Strauss is even pally with Indra Nooyi, the CEO of PepsiCo and 3rd in the Forbes list.

Last week, the two companies upped the level of engagement. They announced an agreement to co-own a new 300 hundred employee plant in the state of Virginia, not bad for an area suffering over 7% unemployment. The American humous market is about to become very spicy overnight.

My prospective client might be better off by moving to the USA and opening up a pita business, which will compliment the Strauss-PepsiCo cooperation. Whatever his choice, grandmother Strauss should remain a simple yet pertinent inspiration during his decision making over the next few days.

6 June 2010

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Categories: Business, Israel, Palestinians

The second Palestinian Investment Conference in Bethlehem closed at the end of last week. Reports differ, but anywhere between US$500 million and US$1 billion were raised to support Palestinian infrastructure projects. The American government was represented through Obama’s special envoy, George Mitchell.

The fact is that most of the money will end up in the West Bank for two reasons. First, there is no love lost between the Palestinian Authority under President Abbas and the Hamas rulers in Gaza. Fatah and the PLO just do not operate in Gaza.

In parallel, there are logistical and structural issues why Gaza loses out. Over the past few years, violence in the West Bank has reduced substantially. The World Bank reported an 8% spurt in economic growth during 2009. The Ramallah stock market is showing initial signs of trading regularly.

Drive 2 hours south to the Gaza Strip and beneath the rhetoric of Hamas leadership, you find fundamentalism. Even during the fracas with Israeli commandos, Palestinian human rights groups condemned the local leadership for harassment. The Arab Bank has already closed 2 of its 3 branches in Gaza, amid reports of money going missing. And of the 20% of the population listed as refugees, not one family has been relocated to the former Israeli wealthy towns since 2005.

One blogger has described how the Israeli raid of the Turkish flotilla was reported with the full force of Orwellian newsspeak. 6 ships sailed to prevent a human disaster, which does not exist. The Daily Telegraph (UK) quoted Khalil Hamada, a senior official at Hamas’s Ministry of Justice:

There is no starvation in Gaza….No-one has died of hunger.

Yes, the British newspaper also confirms that the Gaza economy is in a very poor condition. Matthew Kalman in Time Magazine reports a similar picture. Hamas is thrilled at the “economy of tunnel goods”,a s it takes its percentages from the profits.

So blame Israel? No blockade and everything will be wonderful? Obvious, but just more Orwellian drivel.

Before the flotilla affair developed into an international crisis, I wrote that:

The flotilla will probably be stopped by the Israeli navy. The passengers will be off loaded, and in turn they will channel their vitriol towards the waiting microphones of the world’s media. And the people of Gaza will continue to buy a plethora of goods under the watchful eye of their fundamentalist Hamas masters.

The predection came true. Now remember that Egypt also enforces the blockade, because it realises the evil of Hamas. And Monsieur Abbas is certainly not opening the financial taps to Gaza.

If Gaza was not ruled by Hamas, how much freer would its people be? How many churches would then be open? And much money would begin to flow into its economy?

3 June 2010

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Categories: Business, Israel

Does it matter that bilateral trade between Israel and Turkey is about disappear in to outer space?

For Israelis, Antalya is a mega tourist destination. All charter flights have been cancelled. Zvika Levinson, CEO of Daphna, an important clothing chain, has cancelled plans to open up a production line in Turkey. Almogim, an Israeli building company, has cancelled import orders.

For over a year, Israel and Turkey have been playing love-hate over trade relations. In parallel, senior Turkish politicians have been cosying up to Israel’s enemies; Syria and Iran. And now, after the fall out of the so-called peace-keeping mission, little room remins for hope and expectation. What’s at stake? Around US$2.5 billion worth of trade annually.

One Israeli investment house, Halman-Aldubi, has pulled out of Turkey all together. There are some key Israeli defence contractors, who may see contracts ripped up over night. As for tourism, Israeli TV reported that Israeli visitors barely add up to 1% of the Turkish market.

Who will suffer in the end? Just the average citizen, on either side, as politicos continue to trade insults, replacing cooperation with distrust.

2 June 2010

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Categories: Business

So what does a business mentor do? How can he help you?

In many ways, it is all about clearing away the irrelevant issues and then helping the team to concentrate towards understanding the fundamentals of their business. You engage with people in a manner that allows them to find the correct direction.

Sounds simple enough. Yesterday, I received a promotional offer from the Harvard Business Review (HBR), whose monthly magazine has some of the best and hottest items on managerial technique. They want to sell me 13 volumes of business fundamentals – over 1,800 pages. Probably brilliant stuff, but who has the time?

With some irony, almost immediately afterwards, I received notice of How to Master Your Elevator Pitch…Here’s how to tell it shorter and smarter.

How do you snag – and hold – the attention of someone important who has at least 15 other things on her mind? How can you turn a quick hello into a promising business lead without being abrasive?

Well not by quoting even one volume from the HBR, that’s for sure. The issue was brought home for me in April, when I was mentoring a group, who wish to start up a new service business. “So, what is it that you want to do,” I asked? And back came a full, winding, vague synopsis that could be heard out of the mouths of 99% of business folk around the world.

I continued: “Now assume that you have just got in to an elevator or lift with me. I am the one person you need to impress and you have 15 seconds to do it. What will you say?” Silence followed by shock followed by “that’s impossible” came the immediate responses.

A few weeks on and the team is very focussed. They are recruiting the first round of clients. Task definitions between them are clear. A website is being planned with dedicated content.

Hopefully, they will read the HBR manuals as they expand. What will allow them to achieve that position is a consolidated sense of commercial direction, created at the outset.

31 May 2010

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Categories: Business, Israel

Stanley Fischer is governor of the Bank of Israel. He is just beginning a second term in the position. In a recent newspaper interview, he noted that his job requires him to be “concerned” all the time. Yet, if you read the article in full, you will find that this one happy man.

The reasons are not hard to find. Let’s start with the recent past. As a previous Number 2 at the IMF, Fischer knows all about handling financial crises. In late 2008, Israeli politicians left him alone to find a suitable monetary policy to deal with the credit crunch. As they were too busy fighting a general election, there was no opportunity to throw public money at the problem, like in Greece or the UK.

Surprise! Israel was one of the first countries to emerge from the global economic meltdown.

And Israel’s public sector debt today remains serviceable. In fact, there are plans to continue to lower direct and indirect taxation, although a debate remains over what is the correct timing.

Fischer is also thrilled at the opportunities presented by Israel joining the OECD. This will open up the economy to new lines of investment and credit. In the long term, this will help the government to secure balanced budgets.

Domestically, the economy knows that thre is a wise and caring official in charge. In the past year, Foreign currency speculators have been fought off. The head of the country’s largest bank has been forced to resign. And May 2010 has seen the cenral bank prick a potential real estate bubble.

So, whilst the soars of Athens can still be felt across Europe, Israel still remains an economic pleasure spot in the Mediterranean basin. Thanks Stan! Your keep on with your fretting, whilst us poor civilians reap the benefits.

30 May 2010

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Categories: Business, Israel, Palestinians

I have just read a bizarre banner, beaming out political correctness: “Gaza seize isn’t sweet. Boycott Israeli chocs“.

This was all to do with a small protest in New York. It follows similar efforts led by activists, primarily in Europe. They claim that Israel is not interested in peace with the Palestinians, and therefore should be isolated. Sounds cool, until you examine the childish if not racist hypocrisy of the newspeak.

First, consider how these groups spread the word. Obviously, they use computer and mobile tech. Open up these machines of wonder, anywhere in the world, and you will find loads of Israeli tech inside. Yes, Intel’s current and next round of microchip was developed in Israel.

Try googling www.soluto.com. This Tel Aviv start up has just won Tech Crunch’s prestigious 2010 Disrupt competition. Soluto has designed a software to make computer’s work faster. How long will it take for a hate-Israel activists to latch on to that?

Israel’s tech pervades many aspects of life overseas without people being aware of it. Better Place is a prime exponent of battery cars, maing their way into Europe. The country has the top brains in solar and wind tech. The irony is that green politicians, often noted for their criticism of Israel, have consistently failed to reconcile their rhetoric with facts on the ground.

Palestinian President, Abbas, has claimed this week that he “will deal with the USA but not with Israel”. Bravo, a true practioner of the boycott policy.

And here’s the catch! I thought that making peace was all about getting together, finding a way to talk to each other. Rather than boycotting products, surely it would be preferble to arrange joint exhibitions and displays. I is time for Abbas to sit down with his Israeli conterparts.

If the Palestinians and their supporters are so afraid of letting Israel’s pluralistic society be exposed to others, what are they afraid of? What hatred is their spin covering up?

28 May 2010

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Categories: Business

I have just finished an excellent book, “Soul Traders“. The author, Jonathan Gabay, marketing whiz and CEO of Brand Forensics, argues that the psychological tactics to win over consumers over the past century continue to attain new depths of distortion.

The bookis full of examples. He starts with Rent-a-crowd for political demos. Lady Diana memorabilia netted around US$150 million for UK companies within 6 months of the death of the Princess. The “unemployment” poster, which won the general election for the British Conservatives in 1977 was not a long queue of job seekers, but 20 mainly teenagers whose faces were copied. At the Beijing Olympic games, every men’s swimming event was won by somebody using Speedo attire. And so on.

No surprise that the advertising industry began to mushroom as people began to read Freud. Even the Palestinian media machine has been nicknamed “Pallywood” by some academics, as you see “dying” youths reemerge from ambulances to take up another role in protests. Things ain’t what they seem.

Jon Deighton comments that for all their resources and size, “World Corporate Inc” is not having things all his own way. Writing in the Harvard Business Review, Deighton concludes that

Social media are making life difficult for mainstream marketers. Insurgents use so-called “earned” media in place of paid media, creating video ads passed from friend to friend that like to target the imperfections of national brands and the excesses of mass consumer culture……

United Airlines, Northern Face, Dell Computers – we have all seen videos on utube mocking these and other giants. About time too?

Deighton lists 4 rules of thumb for conglomerates so that they can protect their brand names. Gabay takes a different posture. He argues that much of “Jo public” no longer believes what they are told. And they certainly are well beyond the reach of many old-fashioned 30 second expensive ads.

Gabay suggests that the lesson for politicians and CEOs alike is to tell it as it is; simple, straight, and to the point. Is this a case of the wheel coming full circle with the soul traders needing to find their soul?

27 May 2010

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Categories: Business, Israel

Thursday 27th May is the Tel Aviv stock market’s (TASE) first day of trading under the highest classification of the global MSCI. Although a tiny percentage of the pool, TASE is now in the same league as London, New York, Paris et al. Congrats.

As part of the “warm up” to the big day, Wednesday’s trading was TASE’s largest ever day for turnover. An average day sees vloume of around 2+b nis (US$0.55b). The highest previous record was in December 2007 with 5.4b nis. Yesterday’s level hit 16.4b nis, approx 8 times a normal day’s activity…until now.

Teva, Israel Chemicals, the telecom sector – many of the blue chips saw high volatility. And despite the specially extended trading hours, some of the orders will only be placed on Thursday due to the backlog.

TASE ended up on the day, although it cannot be taken for granted that the gains will be secured over the next few days. Europe’s financial instability threatens the Middle East as much as any other region. Despite reaching a new record high since the credit crunch, the index is 10% of its peak.

The question is why the rush into Israel? And the answer remains that Israel’s economy is performing well. New gas reserves will fundamentally change the country’s balance of payments over the next few years. Cleantech r&d plays an increasing part in the economy and for exports. Israel has just entered the OECD club, which will spark a new round of foreign investment.

Mazaltov to TASE!

24 May 2010

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Categories: Business, Israel, Palestinians

As I write, at least 9 ships are heading towards Gaza laden with humanitarian aid, activists, European politicians and soundbites. The aim is to help the population of Gaza, which continues to suffer from poverty and high unemployment. In addition, the voyagers and their supporters wish to protest against what they see as Israel’s irresponsible behaviour towards the territory.

If you google the phrase “Gaza economy”, you end up with very few serious analyses of what is the true situation in this tiny fertile strip of land. The Financial Times of London, a leading media beacon in international money matters and no friend of Israel, observes that

…the tunnels below Rafah have offered a unique lifeline to Gazans, who are otherwise deprived of all but the most basic humanitarian supplies. They have also allowed Hamas, the Islamist group that controls the Strip, to replenish its coffers and rebuild its military arsenal, making the tunnels a target for Israel……Branded products such as Coca-Cola, Nescafé, Snickers and Heinz ketchup – long absent as a result of the Israeli blockade – are both cheap and widely available. However, the tunnel operators have also flooded Gaza with Korean refrigerators, German food mixers and Chinese air conditioning units. Tunnel operators and traders alike complain of a saturated market – and falling prices.

This is not an isolated piece of reporting. If you pop into the Roots Club in Gaza, according to Lonely Planet, you can dine on “dine on steak au poivre and chicken cordon bleu”. Tom Gross documented the “after effects” of a previous flotilla, when the arrivals were seen purchasing souvenirs in well stocked shops.

Earlier this month, I wrote that:

According to the World Bank, the Palestinian economy is booming. During 2009, growth in the West Bank reached 8%, although Hamas controlled Gaza saw a more modest development of 1%.

In fact, the World Bank had previously noted that up to the beginning of the Intifada in September 2000, the Palestinian economy grew at over 5% pa in real terms since 1968, shortly after the beginning of Israel’s control of the region. So, while Israel’s current restrictions cannot help economic growth, you have to wonder if the cause of the poverty lies elsewhere.

Ironically, it was the singer Elvis Costello, who indirectly pointed out the true fallacy. This pop icon has just cancelled a two-date performance tour of Israel in protest at Jerusalem’s continued humiliation of Palestinians. On the day of the announcement, Hamas authorities executed three Palestinians…in front of their own families. Who’s humiliating who?

Similarly, who’s starving who? As one Israeli blogger observed, the Palestinians are the recipients of billions annually in aid. We know the shops are full. The UN confirms that Israel sends in tons of aid near daily.

And then there is the housing issue. According to UN stats, just over 20% of Gazans live in refugee camps. Israeli towns in the Gaza Strip were closed down in 2005. Since then, not one person has been allowed to move out of the camps and into these former settlements. Why?

The flotilla will probably be stopped by the Israeli navy. The passengers will be off loaded, and in turn they will channel their vitriol towards the waiting microphones of the world’s media. And the people of Gaza will continue to buy a plethora of goods under the watchful eye of their fundamentalist Hamas masters.

23 May 2010

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Categories: Business, Israel

It took me 2 minutes to realise that Kibbutz Yodvata is not your regular kibbutz, usually associated with green lawns and orange trees. Located about 80 kilometers north of the port of Eilat, it is surrounded by the dust and the sand of the Negev desert. And yet this is a wonderful place for farming!

First our guide showed us the pomela and pomegranate crops, cultivated using desalinated water brought up from the Eilat coastline. Neat, and these fruits are now lucratively grown out of season.

At the back of the kibbutz, we drove by the border with Jordan. We saw a locked gate and on the other side a lightly armed Hashemite presence. It seems that the soldier was waiting to escort an Israeli team to teach Jordanian Bedouin how to work the terrain. This cooperation has been going on for around 15 years, and the results can be seen in the new crops.

On to the cows. 10% of their biomass is reused to generate electricity for the milking plant. And as we were finishing our tour, we saw the latest installation in solar energy being fitted.

Stuck in the middle of nowhere, the kibbutz has around 300 families, and is growing. Swimming pool. Brilliant milk products. A real life desert oasis and thriving.

21 May 2010

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Categories: Business, Israel

When you write about Israel and its economy, every now and again you are see the wierd, which often comes attached a powerful commercial theme.

This week, Jews around the world celebrated the Festival of Shavuot (Pentecost). One of the customs is to eat milk products on the day. Our house was duly swamped with cheese cakes, creme brulee, quiches and other tasty goodies.

In parallel, the media gleefully reported that “Israeli cow yields 11,292 liters – almost double amount produced by European cows”. It seems that Israel may not have large herds or massive grazing areas. It may not be known for Grade A steaks. But the country has learnt how to “butter up” mama cow.

Clearly, there is something in the earth of the Holy Land. Even the cows under Barak Obama yield on average 20% less than those surrounded by rabbis and other priests.

For many in the world, the cow has an important religious status. In Israel, it is the sign of the country’s largest confectionary manufacturer, Strauss-Elite. It is a brand that kids grow up with and the company is unable to change it.

Israel has long been considered a pioneer in agricultural technology, and not just drip irrigation. It has developed leading software for herd management and for diaries. Many kibbutzim are learning to use biomass from their farms and convert it into electricity.

I never thought about it in this context, but it would appear that Israel possesses some of the sweetest cows in the world.

20 May 2010

3 Comments

Categories: Business, Israel

IMD is a leading business school, based in Switzerland. Every year, it publishes a world competitiveness survey. Based on over 300 factors, it historically places the USA at the top of the tree.

The survey’s author, Professor Stefan Garelli, notes that the study accounts for improving performance as well as damage control in light of events such as the credit crisis. So, maybe, it is no surprise to see Singapore and Hong Kong frogleap the American giant in the table.

And if competitiveness is all about resilience, then we can begin to understand Israel’s jump forward to seventeenth place. Israel was one of the first country’s to come through the recession.

Drilling down in the statistics, Israel comes top of several categories; performance under stressful conditions, the role of the central bank, relative expenditure on r&d, and training personnel. The latter two elements feed into the equation as to why Israel has been so successful at innovation.

Israel is now 17th out of the 58 leading countries analysed. That means that there are still several areas in which it can improve. Transparency must be one of those. The rules of the OECD, which Israel has just joined, should help to ensure a change in that aspect.

Nevertheless, the survey adds to the increasing evidence as to why Israel is an excellent opportunity for new investment.

18 May 2010

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Categories: Business, Israel

A couple of weeks ago, I met up with Jonathan Gabay. His company, Brand Forensics, has a strong track record in branding leading household names, and not just consumer products.

Branding is not just about positioning. It shows your potential why you are strong and why people will want to be associated with you. And thus, Jonathan’s work increasingly takes him in to the offices of politicians.

Jonathan wrote a poignant summary of the recent UK elections. As the campaign became focused on “politically correct hype”, three party leaders vied for the trust of the public. And all were found wanting. When each one could have pressed home an advantage, not one politician emerged personally triumphant. For all their advisers, financial backing and experience, what did they miss?

Now flip back to early April and the plane crash, which decimated Poland’s leadership. Writing in the Financial Times, Stefan Stern noted that plane crashes have occurred when “macho pilots could not or would not listen to advice, or ones where rigid hierarchy, deference and emotional chilliness led to vital messages not getting through”. Hmm!

In Israel, ineffective coalition governments continue to plague the population. In the past few months alone, the country’s so-called leaders have changed their minds frequently. For example, the site of a new hospital has New housing projects in East Jerusalem have stop-started during 2010. The Interior Minister has backtracked on refusing to let in to the country two young twins, whose parents do not have suitable documentation. etc etc.

8 Traits Of Ineffective Leadership is a wonderful article that summarises all these issues. The author, Mike Myatt, considers poor character, track record, communication skills, selfishness, lack of concern, follow through, and narrow mindedness. Together, what do you get?

The moral of this story is leaders need to be honest, have a demonstrated track record of success, be excellent communicators, place an emphasis on serving those they lead, be fluid in approach, have laser focus, and a bias toward action.…

In his book “Make a difference with your marketing”, Jonathan Gabay talks about marketing managers – be they in the political or corporate world – needing to act as business managers, whose talents will effectively control a portfolio of resources. What talents? Link back to Myatt’s list.

You have to wonder why world politicans continue to ignore some obvious lessons in leadership, and then wonder nobody wants to vote for them.

17 May 2010

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Categories: Business, Israel

Every banker is asking themselves how the knock-on effect of the demise of the Greek economy will impact on their own economy. For Israel, a 90 minute flight away, that same question is just as pertinent.

Let’s get one thing straight from the outset. The countries may share the Mediterranean sea and a love of humous. Spain and Portugal may not be far away either. But, as I wrote last week, the structure of Israel’s financial system is very different and much stronger.

That said, there are some early indications of a negative fall out. You only have to look at the shekel, which has appreciated 6-7% against the Euro and Sterling over the last 30 days. Bad news for local exporters.

Both amongst the manufacturers and exporters organisations, there is deep concern. Financial markets are on the defensive. And such a feeling of uncertainty is often reflected in people’s hesitation to buy goods and services. Potentially more bad news.

Israeli companies have several options. One is to explore new markets. At Expo 2010, Finance Minister, Steinitz, signed a wide ranging financial agreement with his Chinese counterpart. I have lost track of my friends who have made commercial trips to India over the last 12 months. Foreign Minister Lieberman was in Japan last week.

In contrast, the domestic market is not necessarily available to local manufacturers. It is often considered less profitable, where terms of credit are very stiff. Further, statistics released yesterday reveal that the consumer upsurge at the end of 2009 continued by only 1.6% in the first quarter of 2010.

Where to next? The stability of the Israel’s fiscal and monetary policy indicate that although the Mediterranean waters may be choppy, the long term should be a smooth sail.

11 May 2010

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Categories: Business, Israel

In June 2010, Israel will become a full member of the OECD. Prime Minister, Netanyahu, led the self-congratulations.

For the proverbial average person in the street, nothing has changed. There will be no bonus in next month’s wage packet. Unemployment will not dip a percentage point overnight. However, for the foreign investor, a thundering wake up call has gone out from the Holy Land. So what really is the news?

In the past few months, there have been several discussions on the financial newswires about Israel – its use of innovation and a centre for economic growth. Even during last week’s Greek crisis, Israeli financial markets reacted with relative calm. A catch phrase in recent years is that Israel has discovered the path to economic stability despite diplomatic and military strife – elements that normally restrict any country’s development.

It is relatively easy to sing Israel’s praises; the excellent reputation of the central bank under Stnaley Fischer, the successes in communications and cleantech, the number of patents or even nobel prize winners per capita. However, over the next 3 to 5 years, it seems that some key fundamentals of the Israeli economy and its financial markets are about to undergo a significant overhaul for the better.

Yes, joining the OECD will expose Israel to new lines of credit and on better terms. In addition, more international tenders will be available for bids from Israeli companies. Israel’s credit rating should improve. It can be assumed that together, these moves will allow the government to finance more public sector projects without increasing the budget deficit.

Nice, but not amazingly wowish on its own.

Now add in factor number two: The Tel Aviv Stock Exchange is about to be accepted as a member of the leading group of international share centres. Over time, it is expected that this will ensure a greater interest than before in Israeli shares, which converts into more jobs, better infrastructure, exports, and other economic benefits.

The icing on the cake is the energy sector. Over the coming decade, Israel will cease to import natural gas. It is conceivable that the reserves are high enough to allow for exports. (It is too early to talk about new oil reserves). The off-shore drillings will decisively alter Israel’s balance of payments, again releasing resources to other sectors such as education and health.

Even volcanic ash should not stop wave of new investors visiting Jerusalem and Tel Aviv in the immediate future.

10 May 2010

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Categories: Business, Israel, Palestinians

Governments around the world are berated for not helping small businesses, which statistically generate over 90% of a typical economy’s wealth. And it is only a further small step for politicians to ignore the needs of minority groupings.

In the past few months, Israel has launched a major campaign to tackle this problem. It has been spearheaded by the Export Institute, an arm of the Ministry of Industry.

The Arab Business Conference in Nazereth proved to be a launching pad for a multi year strategy, supported by a budget of hundreds of million of shekels. The fund will provide consultancy services, training and marketing facilities to export focussed firms in the Arab sector. Significantly, the conference was attended by both Palestinians and Israeli Arabs.

On its own, this strategy will not be enough to drive forward the Arab economy. However, to be fair, Israel has invested considerable resources in the past year in assisting the Palestinian economy. A 5 chapter report from the Ministry of Foreign Affairs details some of the recent measures taken: –

For example, in 2009, trade between the two areas increased by nearly 3%, despite the recession. Over 5% more Palestinians were employed in Israel. Several crossing points, such as Gilboah-Jalamah, have been upgraded, facilitating the transfer of goods. Numerous water disposal and / or sewage improvement projects were implemented. The list of public and commercial initiatives is extensive.

Of equal significance is that despite the upsurge in terrorist activity in early 2010, these projects continue to operate and have even been extended. For example, more commercial crossing points are being developed, such as on the 443 road between Jerusalem and Modi’in.

Argue that this is not enough, and you may have a point. However, these are excellent starting points. They need to be supported by similar efforts on the Palestinian side. They serve as a lesson for many other economies around the world.

6 May 2010

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Categories: Business, Israel, Palestinians

According to the World Bank, the Palestinian economy is booming. During 2009, growth in the West Bank reached 8%, although Hamas controlled Gaza saw a more modest development of 1%.

Much of this change has been associated with the reduction in violence directed against Israel. Many remember how at the beginning of the Intifada, 125,000 Palestinian labourers lost their salaries overnight, as Israel was forced to close the border with Gaza. And these were relatively high value jobs, a shortfall which has never been fully made up.

In parallel, Israel’s economy is also doing well today. Yuval Steinitz, the Finance Minister, is looking at 4% growth in 2010. Andrew Stanley, head of the EU Commission in Israel, “said that he is fascinated by the dynamics and resilience of the Israeli economy, which proved to be one of the markets to note the fastest recovery from the global financial crisis.”

It has been long accepted by all sides of the peace process that Israel will have to help and encourage the Palestinian economy in years to come. Clearly, it has the capacity to do that.

But then comes a catch! The Palestinian Authority (PA) has begun to lead a campaign which boycotts Israeli products, specifically those made in the West Bank.

This policy was kicked off with the official support of Prime Minister Fayyad, back in January 2010. He attended a televised burning of Israeli products, ironically close to the anniversary commemorating Kristallnacht.

This week, the campaign was taken into Arab towns inside Israel, which are also being encouraged not to buy Israeli products.

And there are now moves by the PA to stop all Palestinians working on what are determined as settlements – effecting roughly 25,000 people – and their dependents…and those who they buy goods from.

And that’s the point. It sounds wonderfully politically correct not to “support the enemy”. But there is no spare capacity inside the Palestinian territories to take up the slack. Just look at the Gaza debacle mentioned above. In an agricultural economy with a small population, the fall out will only be painfull.

None of this furthers the cause of peace. If Fayyad, his cabinet, Hamas and all the rest really want a long term relationship with Israel, it is time for the rhetoric of violence to be replaced by ploughshares. Otherwise, thousands of newly poverty-struck Palestinians will be driven back to hidden stocks of weapons.

Here we go again?

4 May 2010

1 Comment

Categories: Business, Israel

Yesterday, I came across a fascinating and professional piece of writing: “10 Reasons to invest in Israel“.

The author detailed Israel’s strong trading performance, a banking sector only marginally exposed to the credit crunch, an economy that imports raw materials and then exports high value finished items, a solid stock market, and much more.

All very rosy. So who will this information appeal to?

This week, I attended a seminar in Tel Aviv, hosted by the Office of the Chief Scientist (OCS). The specific department. ISERD, is responsible for coordinating the efforts of Israeli companies, who are searching for European commercial partners.

In the past year alone, another 34 local companies have entered European consortiums. The net value of these ventures over three years is close to €300 million.

What does Israel have to offer? In 90% of the cases, the answer is the same – technology. Israel is a power house for developing new ideas. Lack of resources – manpower, finance, connections – means that Israelis find it difficult to implement and market. However. inventing en masse is what comes naturally to the country.

That is what outside strategic partners are often looking for in the Holy Land. And the previously mentioned report means that the economic background for investing is stable, thus reducing the level of potential risk involved.

In a separate section of the OCS is “Tnufa”. This team has established a relationship with nearly 20 multinationals, such as Renault, Oracle, GE and Microsoft. They are deliberately seeking new ideas, waiting to be commercialised.

That is no one-off fact. The government has just announced that it intends to continue with its policy of reducing taxes in 2011, including corporation tax.

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