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Sport’s coach – business coach: The Miracle

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

Last week, I wrote about the importance of coaching. Whether you are training on the sport’s field or grappling the intricacies of a commercial issue, it is often a coach that can show you the path through.

I referred to a session by coach Herb Brooks, who demanded that his team discover the meaning of the term ‘dig deep’ in order to beat a mightier opposition. Brooks was not only to achieve success with the American Ice Hockey team, who pulled in several accolades at league level.

Today I read about Noah Hertz, a seemingly innocuous ultra-orthodox Jew with eight children and a long grey beard. The article described how the former air force colonel was forced to bale out of his plane over the Golan Heights during the 1973 war. He broke his leg, received minimal treatment, was questioned, tortured, kept in solitary and………….well all the other things that most of us can only imagine through the help of Hollywood camera men.

As Noah relates, yes, he did pass to his capturers some info. However, it was basic details only. He discovered a mental and physical capability that he did not know that he possessed, even for all his exhaustive training to become a pilot.

Today, a man at peace with life, Noah views life just like a fighter pilot sees the landscape, as he flies precariously low to beat a radar trap. There are dips and troughs which zip pass the aircraft at great speed. What keeps you going – through danger and excitement – is the knowledge of a greater and specific final destiny. I guess that is what digging deep is all about.

For the record, the film about Brooks is called “The Miracle”. When you read Noah’s story fourty years on, you learn what a true miracle is.

Sports’ coach – business coach

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

When trying to motivate my clients, I often refer to a clip from the film “The Titans“.

The film is the standard theme of school sport’s team not achieving the results it needs. Amidst girl troubles etc, the coach comes along and inspires them to great results. Very Hollywoody.

For all that, the link to a 6 minute clip is brilliant. When the coach demands “your level best”, he challenges all of us – on the field, in our office – to consider if that is really what we give every day. After all, what is ‘the best’? Can it be measured, and not just in goals or points?

I recalled this when an American client of my mine recently referred me to the film “The Miracle”. This is a true story of how the American ice hockey team overcame the brilliance of the Soviets at the 1980 Winter Olympics.

As a Brit and lover of cricket, I realised that I needed to educate myself, to delve into utube and to discover the relevant section. I was not disappointed. The speech of coach Herb Brooks is a ‘must-listen-to’ three minutes. He makes a whole squad realise what they are capable of and how they can seize the moment, whatever the obstacle.

Sports are not simple. Tiger Woods or Andy Murray, even the best have to train and practice. Similarly in business, success and profits rarely come without some sweat and a lot of worrying. Again, there is no guarantee of great results.

Yesterday, I visited a client in Jerusalem. After a steady beginning to the year, they are not having the best of months. If I could put into pictures my pep talk, it would not be far off the other message from Brooks in an earlier part of the film. Dig deep, but really deep, to remember who you are and why you want to succeed in your enterprise. Then you have a great chance of making a go of it.

Why Israeli high tech is a success

15 August 2013
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Categories: Afternoon Tea in Jerusalem, Business, Israel

There has been much talk recently about Israeli high tech having reached a peak and is now faltering ….whatever that means.

After all, there are signs that VC funding is falling off. The continually high level of the shekel against other key currencies may be having an adverse effect on exports. Even the government admits that tax incentives introduced over the past few years have had a miserly effect.

Take a look again. All is not so gloom and doom. For example, Johnson and Johnson has just given its financial backing to a new biotech incubator.

The item that caught my eye was that “online translation company Babylon Ltd is in preliminary talks to merge with online and mobile app distributor ironSource Ltd.” I am talking about two Israeli minnows with barely a decade of commercial experience between them. And yet together, their sales cross the one billion dollar mark.

How have they done it? What will allow them to go for a full launch on NASDAQ? Will they seriously start to challenge parts of Google’s empire?

Recent articles in the Guardian and Business Insider highlight an important and unique element to Israel’s high tech industry. The key is the geeks who emerge / graduate/ are demobbed from the Israeli army’s 8200 Unit, the techy part of intelligence operations. In Hollywood terms, such anonymous heroes help the James Bonds of the Holy Land do their work.

As Matt Kalman wrote, these people:

have made the most of their expertise in cybersecurity, data storage, mobile communications and analytical algorithms to help transform the basis of Israel’s economy from orange groves to mobile-phone apps. Israeli inventions include instant messaging, the USB memory stick, the firewall and the secure data links that enable most of the world’s banking transactions and TV signal decoders.

Israeli tech firms Nice, Comverse and Check Point were all created by 8200 alumni.

Such companies are turning over billions, employing tens of thousands, and generating tax revenues of equally vast sums. Maybe there is a lesson for the Israeli government.

Go out and listen to what the new entrepreneurs are saying. Keep the incentives simple. Some of them just want cheap office space and no bureaucracy for a year in order to get started…..and maybe turn into another Babylon or Nice.

Does Israeli society promote peace in the Middle East?

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

I was in Tiberias this Saturday night, walking along the edge of the Sea of Galilee. As I strolled down to the sea front, past the Scottish Hotel, owned by the Church of Scotland, the crowds were deafening. Jews mixed with Druze, who mixed with Moslems, along with the foreign tourists. All were customers and waiters at the multitude of restaurants on the thriving promenade.

And while thousands of Israelis were partying, American Secretary of State, John Kerry, was on the warpath. He is pulling out all the stops to reignite peace talks – at least, talks about talks – between Israelis and Palestinians.

Depending on whose spin you believe: Either the Israelis are not serious, because they keep building or enlarging so-called settlements. Or the Palestinians have shown less than a minimalistic level of commitment by bombing tourists in Eilat. UN experts have shown revealed their position by criticising Israel for its supposed harassment of a Palestinian human rights’ activist.

All this comes on a day, when Israel released 26 Palestinian prisoners, as a gesture of good will. Judging from the record of the former inmates, Israel was forced into this move by Kerry. Tom Gross, an experienced journalist covering the region, has noted that:

  • Abu-Musa Salam Ali Atia of Fatah  hacked to death  Holocaust survivor, using an axe in broad daylight.
  • Ra’ai Ibrahim Salam Ali of Fatah killed a pensioner by axe blows to the head while he sat on a public bench reading a book.
  • Two of the prisoners, Abu Satta Ahmad Sa’id Aladdin and Abu Sita Talab Mahmad Ayman, were imprisoned in 1994 for the murder of David Dadi and Haim Weizman. They killed Dadi and Weizman as they slept in Weizman’s apartment, and then cut off their ears as trophies.

And so the list goes on. You have to ask. Why would Palestinian President Abbas want such people released into his society? Why give them a heroes welcome? And why has there been no reciprocal move to show to Israelis and the peace brokers how serious the Palestinians are about peace?

What the process is showing is that while Israel, and specifically her Prime Minister Netanyahu, are not liked by parts of the international diplomatic community, their complaints do not stand up to realities on the ground. It is not just that citizens of different religions mix freely on the streets in the Holy Land, Israel goes out of its way to help others. For example, dozens of Syrians have now been treated in Israeli hospitals as a result of fighting on their own soil.

In contrast, as Palestinian journalist Abu Toameh records, “while Palestinians are being slaughtered and forced out of their homes in Syria, the Lebanese government is preventing them from entering Lebanon.” And in Gaza, the planned executions of named traitors has even attracted the disgust of the British government, as well as the UN and Amnesty International.

There are no simple paths along the journey towards peace. This was best illustrated by a recent and amazingly frank appraisal by an outgoing member of the Spokesperson’s Unit of the Israeli army.

However, I would like to take one step further what the Wall Street Journal wrote. “What does it say about a prospective state of Palestine that among its heroes is Salah Ibrahim Ahmad Mugdad?“, who beat a 72 year old security guard to death with a steel rod. When Abbas and co are prepared to find a new type of hero, one that Israeli society can relate to, than Kerry’s efforts will have a far deeper meaning.

The real story of the Israeli economy

11 August 2013
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Categories: Afternoon Tea in Jerusalem, Business, Israel

To the outsider, Israel’s economy looks wobbly. After nearly a decade when the average annual GDP growth was well over 3%, there appears to be a feeling of uncertainty.

Take the issue of the new-found offshore gas reserves. Despite committees and Parliamentary debates, the government has yet to conclude how much is permitted to be exported to Cyprus and elsewhere. That is poor decision-making at the very top.

And there is the fiasco over choosing a new governor of the central bank. Jacob Frenkel, a man who possesses all the right professional credentials, was chosen. It has since emerged that he did not disclose an unfortunate private issue and thus was forced to chuck in the nomination. Next up was Leo Leiderman, a brilliant economist, but his nomination was brought down via rumour mongering. And it is said that an excellent female candidate is unlikely to be picked, because some years ago she wrote an analysis, which was not so friendly towards the current Prime Minister. All rather pathetic.

There has been some initial fear that all this uncertainty would lead to speculation against the Israeli shekel in the currency markets. That is a possibility. However, there is another side to the economy, which is far more positive and encouraging, and is being ignored.

First, the budget deficit finally seems to be under control. For over a year, it had been rising progressively from 3% to 4.6% of GDP. Now, “the treasury said higher-than-expected tax revenues over the last few months and lower-than-planned spending had reduced the 12-month-trailing budget deficit to just 3.79% of gross domestic product at the end of July.”

Almost at the same time, the Bank of Israel released information that the foreign currency reserves stood at an all time high. Not exactly the sign of an economy in trouble.

What next? Very simple. The people are clearly doing their bit to make sure that the economy is stable. It is time for the politicians to learn how to govern.

 

 

Israel’s next industrial revolution?

8 August 2013
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Categories: Afternoon Tea in Jerusalem, Business, Israel

Back to agriculture?

Israel is known as the Silicon Valley of the Middle East. Where it has led in telecomm technologies (internet, mobile, apps) etc, the successes have been followed in biotech, nanotech and cleantech.

Thus it may come as a bit of a surprise that one of the most important pieces of equity finance this month centres on a small moshav (farm) called Sharona. Host to genetic engineering seed company Kaiima Ltd. the final stages of a financing round is in completion stage. The talks involve “Asian investors, including Horizon Ventures of Hong Kong billionaire Li Ka-Shing and the chairman of Hutchison Whampoa Ltd. The World Bank has pledged up to $20 million out of the $50 million that Kaiima plans to raise.”

Let me explain what is so special about these farmers. Since 2006, they have been developing seeds, which have a capability to produce high quality crops and in quantity, but without any of the drawbacks of GMO. Just recently, the company was named as one of the world’s top 100 achievers in the field of cleantech.

Israel has always had a strong reputation in the field of agriculture. It was a pioneer in drip irrigation. The Negev desert produces vast quantities of crops throughout the year. Its expertise in diary farming is sought after in countries like Vietnam and elsewhere.

To understand fully the results of Kaiima’s work, the pictures on this link (Hebrew text) explain the differences achieved. That is how a small start up in the middle of nowhere can attract the attention of some of the world’s leading investors and thus record a book value of US$300 million.

Peace talks and what Palestinians says about their own economy (2)

2 August 2013
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Categories: Afternoon Tea in Jerusalem, Israel, Palestinian Society, Palestinians

Earlier this week I questioned if the potential of increased economic wealth for the Palestinians is a priority for their own leadership during the peace process, which has made a solid start.

The issue is not the scope and vast potential of the Palestinian economy. As one person remarked – only half in jest – that it is possible to predict how Hamas and Fatah will go to arms; not over the role of religion but over who will control the revenues from energy reserves off the Gaza coast.

“Where is the money” has always been a sensitive issue amongst the Palestinian elite. This issue of financial responsibility and transparency is barely discussed openly, if not censored. However with a large dose of ironical timing, Mohammed Dahlan, the former head of the Palestinian internal security services in Gaza, has just accused the Palestinian Authority of being a corrupt institution under Abbas’s thumb. And using an Israeli legal team, he is seeking to take his own President to an international tribunal.

Now Dahlan is no saint. Google long enough and you can discover how he rose to fame by controlling youth gangs in Gaza. Along the way, he secured for himself the rich cream off monopolies and perpetuated via the ‘tunnel economy’. Hamas ousted him from Gaza, and he left the West Bank two years ago in political disgrace, but wealthy.

What must be disappointing for the average Palestinian is that Dahlan is not alone in achieving financial security while his people endure 30% unemployment. Mrs Suha Arafat, wife of former Palestinian President, has probably visited every 6 Star hotel in Europe over the past few years, a lifestyle supported by some extra generous handouts. And as Al-Monitor reported:

The annual report for 2013 issued by the Coalition for Accountability and Integrity (AMAN) showed that corruption is still rampant inside public Palestinian institutions…….Examples were given of public-fund squandering in Palestinian municipalities of the West Bank, where the total accumulated debt of municipalities and water-works agencies owed to the PA amounted to 1 billion Israeli shekels [$280 million] in the period between 1996 until 2012. Official vehicles were still being misappropriated by employees while suspicions grew concerning the running of Palestinian Airlines and the building of a mausoleum for the late President Yasser Arafat in Ramallah.

For the patient reader, detailed reports of misappropriation, lack of transparency and low accountability from 1993 to 2010 can be found at the website of the Funding for Peace Coalition.

What is so disturbing? The world is looking to create a stable peace treaty. Unfortunately, the same Palestinian hierarchy that has a self-vested interest in perpetuating the poverty that has been ramped up since 1993 (when Arafat returned to Gaza) are the very people surrounding President Abbas…… and condemned for corruption by senior Palestinians themselves.

Peace talks in the Middle East? What Palestinians says about their own economy

30 July 2013
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Categories: Afternoon Tea in Jerusalem, Israel, Palestinian Society, Palestinians

So the Palestinians and the Israelis are due to meet today in Washington to begin talks about talks.

One of the issues that always annoys me is the way the Palestinian economy is reported and analysed. The standard retort is that the economy is in a mess – eg unemployment at over 25% – because of Israeli restrictions on the freedom of movement.

Well that specific stat is agreed upon by most sources. And it cannot be denied that Israeli security measures by definition must inhibit economic development. However, there is a flip side. For example, before the violence of the Intifada and up to 1999, the World Bank has stated that Palestinian economy grew by 5.5% annually for over two decades. And what about the implications of the violence on the Israeli side, which demands that resources are directed towards defence rather than structural growth?

So,let’s try to move away from the spin and the meaningless of politically correct statements. I often like to hear what Palestinians are saying about their own economy.

Last week, the Palestinian Monetary Authority released the latest figures on the state of the business environment. “In general, the overall index indicates that recovery in economic activity that took place during the past months of 2013 was back on the track in July, as a result of improvement in some industrial sectors such as food industries (index increased from 0.37 to 1.97) and furniture (from 0.24 to 1.75).”

The figures were especially encouraging for the West Bank region. It can be no coincidence that the Swedish furniture multinational, IKEA, has confirmed that it is holding discussions to open a new outlet in Ramallah in the coming year.

Despite the hypocritical howls of the BDS movement, cooperation with Israeli authorities continues. One notable example is the annual seminar held for farmers from Gaza. This year, around 50 people attended. Last month, a new industrial complex was inaugurated in Jericho with the open support of Israel, Jordan and Japan. And there is increasing speculation that discoveries of energy resources in the Eastern Mediterranean and its forthcoming development will also bring the two sides together.

The down side at the moment for the Palestinian economy can be traced to events in Egypt. Seasoned Middle East observer Tom Gross cites a report from AP from 24th July. “Egypt’s new government has imposed the toughest border restrictions on the Hamas-run Gaza Strip in years, sealing smuggling tunnels, blocking most passenger traffic and causing millions of dollars in economic losses.”

This was not a one-off comment. Egypt controls around 70% of the power supply into Gaza. And Al-Monitor headlined that Gaza fishermen can no longer ship out into Egyptian waters, which will have a clear negative impact on a major local industry. Gross observes these are blatant restrictions of economic movement, but there is no international outcry. Why?

So what does this all this mean for Mr Kerry has he brings the two sides together over a very wide negotiating table?

As these pictures illustrate (even if I do no agree with the flavour of the website), there are many aspects of affluence in the Palestinian territories. However, the population as a whole deserves better. And here’s the catch.

Instead of blaming Israel for their poverty, Palestinians can do more to resolve their own issues. A simple but obvious start would be to divert their limited resources from activities which generate hatred against Israel. They can be moved towards fostering internal structural growth for the civilian population.

The question remains if this potential of increased economic wealth for the Palestinians is a priority for their own leadership during the peace process?

So you want to start a new business, and……

28 July 2013
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Categories: Business, Israel

A significant percentage of my clients come to me at a very early stage of their business development. Some are trying to start out for the first time. Others may have filed their registration forms, but have that awful heavy feeling hanging in their stomach. Another category boasts those people who simply want to try something new, abandoning past triumphs.

What prompted me to return to this theme? First, I was asked by a magazine to write an article on the problems in setting up a new business. In America, around 30% do not make it through their first year. In Israel, where I live, 70% of food enterprises close within 5 years. That is a lot of time and effort that can be invested for minimal reward.

On a different level, I was reading “Inc Your Dreams” by Rebecca Maddox. She reveals the horrible secret as early as the preface of her book: “No one really taught any of us how to make decisions”. And this is from a person who used to resonate ‘Ms Corporate America’.

The point is that while there is a lot of supposed glamour in setting out on your own and it can often seem that many around us are doing just that and so successfully, the truth is often different. Whether you are opening a shop or NGO or high tech start-up, the grime of reality  – emotional strain mixed with financial strain – can be more than challenging.

There are many ways around the issue. And two come to mind immediately.

1) Never forget who you are and what your core values represent. Always remember just how good you are.

2) Understand that nobody succeeds by themselves. We are all dependent on others. And if you do not have a confidant to help you along, find a business coach who you can rely on.

A hidden secret of good business – timing

21 July 2013
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Categories: Business, Israel

One topic that often comes up in mentoring sessions is when and how to call prospective clients.

It is staggering the number of people I meet, who tell me that they do not have enough work. Yet, at the same time, they are carrying around a list of people who they can contact and who may give them a contract. By not calling the potential source of work, my client clings to the hope that they are still needed, which psychologically appears to have more value than being rejected or even receiving a positive answer.

At this stage in the conversation, I find myself encouraging the client as strongly as possible to commence dialling immediately. Why let a hot or warm opportunity go cold?

However, while this is a rule of thumb, it is not etched in stone. Business is dynamic and we must be prepared to change and act differently when challenged.

For example, I know of a few cases recently, where the customers of my clients have been seeking – even demanding – more services, without completing previous payments. The background and reasons are different. In one case, the customer has been trying to change the terms of the contract.

Let me clarify. A customer may apply subtle or blatant emotional pressure. They may play on the fears of the supplier, who is desperate to obtain more work or create a larger contract.  However, the general pattern of proffered advice is to wait it out, patiently. For all the talk and persuasion and posturing, more often than not, it is the customer who is more worried. They are the ones who are desperate to be serviced in order to move forward.

In Israel, there is an old phrase, which describes a good business deal like a meal of “hamin”. This is a stew, which is cooked overnight on a low flame. You can hurry it up, but then risk ruining the taste.

And this is what is happening here. Even though you might want the work, you have to make a judgement call and not to rush your responses. Let it come towards you, slowly and gradually. The tang of success is that much sweeter.

 

Israeli banking system – status report mid 2013

15 July 2013
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Categories: Afternoon Tea in Jerusalem, Business, Israel

The world banking system has been through a lot in the past 5 years of so. Israel, which depends so heavily on external finance to support its start-up economy, has had to dodge through the maze of collapses and constant retrenchments. The question remains, why has the banking system in the Holy Land not joined in the free fall?

A Hebrew interview in yesterday’s with Dudu Zaken, the outgoing inspector of banks, was revealing. As he put it: “We have run simulation models to see what would happen if one of the local tycoons went under, and no bank would collapse.”  For me, that is significant.

The reasons for this strength are many and varied. Start with the fact that when the global credit crisis attacked world markets during 2008, Israel has been there and done that two decades earlier. The lessons had been learnt back then.

Equally importantly, Israel’s central bank has been run until recently by Professor Stanley Fischer, a heavyweight on the international banking scene. He rarely shirked from taking on the top leaders of the major local banks, particularly Bank Hapoalim, if he feared that there was room for poor management and conflicts of interest.

A third part of the picture is the desire of central regulators, both at the Parliamentary level and via the Finance Ministry, to make the world of banking more transparent. While the success here has been limited, progress has been made. For example, over the next few months the minimum for all banks will be clarified and lowered. The types of commissions or charges have been reduced from 300 to 70.

Not all is perfect. As Zaken observed, local banks need to cut their own costs, and his comments were directed at the high wages paid out to the top managers.

About 60 percent of operational expenses at Israeli banks stem from salaries, the most of any country in the Organization for Economic Cooperation and Development after Denmark and compared with an average of 47 percent, Bank of Israel data show. The efficiency ratio of Israeli banks, which measures the effect of operational expenses on revenue, is about 70 percent, the data show. The OECD average is 62 percent.

In addition, Zaken sounded a warning about the lack of opportunity for competition. Five banks dominate 94% of banking activity in Israel.

What next? The Israeli economy is due for some structural changes over the next few years. It would appear that these need to include a more open policy to encourage additional banking players, while not impinging on the successes achieved to date.

Why are we scared to admit that customers scare us?

5 July 2013
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Categories: Afternoon Tea in Jerusalem, Business, Israel

Last week, I described how a client of mine learnt why and how he had to tell his own customer that sometimes ‘the customer is not always right’. It may require courage. It may lead to a loss of follow-up business. However, it is a necessary skill to acquire in running a business.

The same thing happened this week. I was asked by another client how they should handle a disruptive customer that was creating a highly negative atmosphere, which in turn was impacting on other people. Simple, I replied. Ask them to behave or to leave with a refund.

Naturally, the client was stunned. “I will lose revenue,” they exclaimed. Of course, but they also ran the risk of losing many more irritated but stable customers. 24 hours later, the cause of the negativity had departed…and with full mutual understanding.

The point is that sometimes we are so anxious to win a contract and then please the customer that we often forget that customers have to be managed, just like suppliers. Just because customers may feel that they have the supreme right to demand whatever they want, that does not make them correct. It is your job to remember that and point that out when necessary.

For example, I was asked to partake in a meeting, where a client of mine was desperately seeking an extenuation of a contract with a leading customer. The problem was that my client had failed to appreciate that he had been maneuvered into selling his services at a loss. My role effectively turned out to show both parties that this was unacceptable and could not continue. Eventually, my client realized that they needed to walk away from the opportunity.

What makes us stoop so low? Why do we so willingly abandon our business model? Some would argue that it is fear.

I have just reread a brief article from an Australian Rabbi, Ralph Genende. He cited Tina Montalto, who wrote:

I think our biggest fear is living up to our potential. We are afraid of our greatness. We are afraid to venture beyond the norm, the expected, the usual. We are afraid to be different, to stand out, to be the unique beings we really are. So we fall into the trench of common, ordinary, and routine. Yes, a trench. A hole in the ground. Dug in times of war for protection. Dug in our consciousness to hide our true selves.

Manipulative clients will ensure that you do not have any freedom to operate, as they play their ‘trump card of fear’. Thus, they keep control, but do not move forward.

Genende’s concluded with some practical words of advice. While not sacrificing humility, sometimes, it is only when we step out of ourselves that we can truly appreciate just how much we have to offer. And it is that higher value what we want to supply to our clients, so that everyone benefits.

Intel, Israel, incredible bucks

3 July 2013
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Categories: Afternoon Tea in Jerusalem, Business, Israel

 

This week, Reuters reported that Intel is considering a further US$10 billion investment in Israel.

 

The main impetus will be to upgrade an existing fab facility. This will add to the three sites that the chip multinational operates in the Holy Land and will thus double its current regional investment.

 

To illustrate the importance of Intel to Israel’s economy you need go no further than the listing of income for the largest private sector companies. Looking at 2012 figures, Intel is ranked third with 17.7 billion shekels – around US$5 billion.

 

But why Israel?

 

Bloomberg recently put together a video that explained the secret of the country. Nir Barkat, mayor of Jerusalem and former entrepreneur, summed it up a meeting of start-ups last night at the Jerusalem College of Technology.

 

  • The army or geopolitical necessities forces on Israel a cultural of “having to succeed”.
  • The local market is too small and so Israelis look to sell products overseas
  • An education system that for its faults encourages questioning

 

And to show how this converts into real numbers:

Over 250 multinationals have research and development centers in Israel, 80 of them Fortune 500 companies, with a majority (66%) belonging to US companies. During 2011, international tech companies bought out 83 Israeli start-ups (many of which were either converted into or merged into existing R&D centers), with the buyouts amounting to $5 billion; meanwhile, during the first half of 2012, there were 50 buyouts, at a total value of $3.5 billion (not including the purchase of NDS by Cisco). Between 2002 and 2009, productivity by MNC units in Israeli grew by 121%, an average of 12% annually. This accounted for 15% of all business activity in Israel.

Just think how many pieces of hardware, check out registers in shops, units of medical equipment and more are being generated by intellect that is located in a country that is half desert and surrounded by enemies!

The Bank of Israel is set to do well, again

26 June 2013
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Categories: Afternoon Tea in Jerusalem, Business, Israel, Jerusalem

Professor Stanley Fischer was a great catch for Israel. When he became head of the Bank of Israel eight years ago, he entered the job with a host of credentials from the world of international finance. And it is well-known that he has been a lecturer or teacher to the likes of Summers, Bernanke et al.

He saw Israel through the global credit collapse of 2008. Since then, growth has hit the 3-4% target levels. He took on and beat the heads of several local banks, specifically Bank Hapoalim. He has controlled inflation and helped to ensure that unemployment has remained reasonable, around 7%, despite the economic downturn.

No wonder Fischer has had enough. With some concerning irony, there are reports that he collapsed at his home last night with exhaustion.

Fischer is well aware that not all is well with Israel’s economy. He has been particularly concerned with the housing market bubble. Prices do not seem to stop rising. The month of May saw an additional 47% new mortgages compared to April 2013. Worrying.

And Fischer will be succeeded by Jacob Frankel, who has served in this position before and ahs already declared that he will need to find a method to support the government’s austerity measures. Unfortunately, he will not be allowed to meddle too much with interest rates.

Frenkel has his critics, and few financial leaders have not been tainted by mistakes over the past decade. That said, I was interested in the comments of Richard Quest, CNN’s lead economic anchor and a person who has visited Israel on several occasions.

Interviewed on Israel’s Channel 2 news programme last night, Quest pointed out that Fischer is a hard act to follow. However, Frenkel is also known in the international rooms of financial decision-making, such as the Bank of International Settlements and at JP Morgan. His words will carry a lot of weight when it counts.

And why is this good news for Israel? Given Jacob Frenkel’s wide knowledge, experience and global reputation, it be very difficult for local vested groups – the Prime Minister, the Treasury, unions, senior bankers or otherwise – to challenge his control and the thus independence of the central bank.

Israel’s economy – connecting the dots

19 June 2013
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Categories: Afternoon Tea in Jerusalem, Business, Israel

The “Calcalist”, which means ‘economist’ in English, is a daily financial newspaper in Israel.

Today’s leading story makes for sad reading. The country’s coffers are missing 14 billion shekel – say US$4 billion. Nothing original there. The Ministry of Finance can explain half of the reasons for the less than expected revenue – downturn in the stock exchange etc. What is worrying is that leaves another nearly US$2 billion ‘wandering around’ and unavailable for public use. Looks unprofessional.

Sure, the Finance Ministry is now pushing a series of cutbacks through the Kenesset, Israel’s Parliament. They are unpleasant. They should help and could well work out in the end, hopefully.

However, life is not static, certainly not in commerce and finance. And as you move through the next few pages of the newspaper, you pick up on a very different picture for Israel’s economy.

First, there is an interview with Professor Larry Summers, President of Harvard University, one of Obama’s prime economic advisors, and tipped to be the next head of the US Federal Reserve. To summarise, he does not hide his praise. Israel has an economic weight above its supposed role as a small country locked away in the Middle East. While some of this is due to the role of departing Bank of Israel boss Professor Stanley Fischer, there is something more positive and of deeper note. For all its short-term fiscal issues, Israel’s economy is stable.

Summers did state that Israel has to apply itself more fully to the issue of deregulation and thus ensure greater openness. So, turn the page, and you will find an article detailing how another chink has been taken out of the power of the unions at Ashdod port.

For years, the unions at Israel’s sea ports have run the authorities like personal fiefdoms. For example, it was known that the best way to obtain employment there was to be a family member of somebody in the inner circles. In the past month, the government has been able to present plans that will create more efficient working conditions and even see the building of a new private port. The knock on effects for the rest of the economy must only be beneficial.

So, I went hunting for a third piece of good news that ensures we have a pattern of dots lined up in the correct direction. Yes, the tax authorities have finally encouraged Israelis to be more open with their holdings abroad – another 12 million shekel ‘has come out of the closet’. Roman Abramovich, Russian oligarch and owner of Chelsea football club, has declared his intentions to increase his financial involvement in Israel. And there is hardly a day that goes by without further glowing reports on Israel’s developing gas industry.

Summers is right. For all of Israel’s structural issues, the economy is doing well.

Core product value – what does that really mean?

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

Last week, I wrote about the meaning of the phrase “business model“. New companies are asked by potential investors to describe commercial plans for a product, service or technology that at best may exist on a few scraps of paper. So a nonsense request elicits in turn a silly set of commercial eloquent yet empty statements. Sounds like a Monty Python sketch.

And quite often, amongst the justifications you will find a sentence that says: “The core value of our product is its ability to………..do something fantastic.” Yet I have just said that that the product or service is barely in existence. So how can they make such claims, which can only be based on unproven assumptions?

Is there a methodology that can enable us to understand and then to evaluate the core value of any product or technology?

At the Kahena Digital Marketing Conference last month in Jerusalem, I listened to a lecture by Tal Zilberman, who has worked as product manager for several successful apps. He referred obliquely to lecture by Chamath Plaihptiya, former VP of Facebook and now one of the richest men in Silicon Valley. It is entitled “how we put Facebook on the path to one billion users”.

This 40 minute clip has received barely 8,000 views. And yet its importance for any entrepreneur cannot be overstated!

Chamath has his roots in Sri Lanka and in Canada. One of his first premises is not to make strenuous assumptions. In parallel, understand what it is about your idea that will push people through the door. Then, bring as many of them to that “aha moment” as soon as possible.

Chamath related those concepts to his time at Facebook. The company became fixated on a motto to ” get any individual to 7 friends in 10 days”. That ensured these new customers would become part of a mass market, which was and remains the value of Facebook’s core product. The rest is commentary and add ons.

Facebook’s vision has not really altered since day one. That is why it seemingly vast sums for Instagram and Waze, which with hindsight may have been very reasonable prices.

So, what are you trying to do? And what is it that people will really like about what you are offering? In other words, what do you really have, which is of value to others?

Business coaching – vision, values and your business model

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

Many a business coach will often start by encouraging a client to state their goals or vision, at least on a commercial sphere if not also a personal agenda.

This approach is certainly something that I have stressed over the years from a number of different perspectives. I have used biblical anecdotes as well as analysis of leadership qualities and some basic 101 psychology.

John Whitmore, writing in his excellent book”Coaching for Performance“, takes the subject one step forward. In describing how a company can adapt to changing conditions, he observes how managers “are likely to be called on to live up to the values and ethics they so boldly claim in their mission statements“.

This is when people through their services and products will be challenged to make a “genuine contribution”, both internally and towards their customer base.

I recalled this over the past few days, as I was asked to summarise the business model of one of my clients, Marx Biotechnology Ltd, a biotech start up located in Jerusalem. The idea was to write flowing words about partnering up with larger companies, and thus convince the reviewer that Marx will conquer the market in half a nano-second…or words to that effect.

As we thought about the task, Dr Marx and I realised that the business model was actually more profound than that. It originated in his initial mission statement from which he has never wavered. It is wrapped in his daily quest to do his level best, whether it be in the lab or as he delivers investor presentations. And Dr Marx had constructed from the outset a modular approach towards commercial success that has gradually been implemented and is now showing results.

It is from this foundation – Dr Marx’s original vision, full of core personal values that he tries to abide by daily – that I will base my work. It is this start that will allow me to describe the future link ups with new strategic partners, while mentioning lots of large financial figures in the process.

‘Waze’ how investors look at a start up

13 June 2013
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Categories: Afternoon Tea in Jerusalem, Business, Israel

The Israeli mobile application, Waze, has been sold to Google for over a billion dollar, assuming that the regulatory authorities do not block the deal.

Several institutional investors have made a killing. An Israeli charity has also reaped a relative fortune. However, the question is why did people put their money into such a start up, which even today is barely making a profit?

The newspaper “Calcalist”, which means “economist” in English, asked the same question. The answers make for important reading for the next generation of entrepreneurs.

Ehud Levi was one of the first major investors, back in 2008. As he said, he was impressed by the initial vision – the need to create a mass product, Equally important, this goal never changed. It drove the company forward over the years.

Moodi Rozen put it slightly differently. For him, Waze is not just another app. It is a solution that meets the modern needs of drivers around the globe.

As another newspaper asked: Who’s next? Or, which CEO has the ability to create a company around a similar business model?

 

Baird, Britain, Nature, Israel – connect the dots

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

Nick Baird is the CEO of Britain’s UKTI, the government’s prime public organisation to promote exports.  A seasoned diplomat, Baird was recently in Israel. As he explained in an interview published in Hebrew, UKTI is deliberately targeting Israel because of the country’s “innovation and energy”.

What Baird is saying is that the UK can not only benefit from Israel’s position as the Silicon valley in the Middle East. Just look at the ” Tech Hub” set up between the two countries, exploiting Israel’s strat-up methodology. He understands that as Israel’s economy has continued to grow at around 3% annually, the Holy Land is open for business to receive Britain’s hungry exporters.

There are no end of examples of Israel’s technological capabilities. This week, the news wires are blaring out how Google is paying over a billion dollars for an Israeli app called Waze. That makes the deal more valuable than for Instagram.

The result is that Google will attain a very important capability which will slot in with its maps and Google Plus services. People will begin to use Google to find parking places. In effect, Waze will provide a healthy lead on competitors looking to profer similar options.

Israel is also a prime player in biotech. At this week’s Biomed forum in Tel Aviv, the official British delegation was comprised of over 20 members. For example, I met up with Medidata from West London as well as Huntingdon Life Sciences. Both have quickly realised the potential commercial scope of the Israeli market.

What I found fascinating was the speech given by Dr Jeremy Levin, CEO and President of Teva, which when translated into English means ‘nature’. Addressing a reception at the home of the British ambassador to Israel, Levin noted that Teva now has four factories in the UK. He estimates that they produce about eight billion tablets a year or about one in six of every pill consumed on the British mainland.

This is not just about saving lives. As Levin noted, by sharing ideas, lives are improved and communities are enhanced – just what Nick Baird is setting out to do.

Why we must ignore Israel

9 June 2013
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Categories: Afternoon Tea in Jerusalem, Business, Israel

One of Britain’s largest trade unions with over 600,000 members has voted to ban any association with pro Israeli groups. This was the message that went whizzing round the net this weekend, ironically.

You see most computers are powered by Intel technology, which was developed in Jerusalem. And let us not forget that RAD Data’s communication device, also Israeli, that has been chosen as this year’s best networking device by Dr Robert Metcalfe, famous for creating the Ethernet.

So why is it so important for trade unions to consider Israel in such a negative light? Just look at these recent stories coming out of the Holy Land?

  • Miss Israel 2013 is Yitysih Aynaw, who was born in Ethiopia and recently made a return visit the country for the first time.
  • Soda Stream, a successful Israeli company, operates in the West Bank and was reported to be sought after by Pepsi Cola, is one of many companies that seeks to “build bridges, not walls“.
  • Waze, whose app is allowing millions of people around the world to beat traffic jams, is a typical example of an Israeli start up helping those in other countries. It has drawn interest from Apple, Facebook and now Google.
  • In fact, Google has been instrumental in bringing together Israeli and Palestinian industrial leaders. The search engine giant is merely following the lead of others like Cisco. Last year, it invested billions in Israeli tech, and this has not stopped it continuing its promotion of Palestinian developmentt.
  • Earlier in June, the life of a 10 year old Palestinian was save by a kidney transplant, donated by an Israeli family.

The list goes on, extensively. As Israelis and Palestinians are finding ways to come together, British trades unions are trying to keep them apart!

It is different for me to understand why a UK workers’ union deliberately targeted Israel. Is the country perfect? No. Compare that to Britain, host to the EDL and where mosques are burnt down. Meanwhile, Palestinian NPOs have for years been protesting against the use of torture in local prisons, but the reactions of the Ramallah and Gaza governments have been minimalistic, at best. A stunning no comment from the unions!

Such hypocrisy is dangerous. It not only excludes members from the benefits of learning from other cultures. It also breeds a form of hatred that was supposed to have been eradicated from Europe in 1945, an abyss of human tragedy for all peoples.  I guess that by ignoring Israel, the supporters of the unions new policy are hoping for that epoch to return.

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