Pages

Israel’s economy – going well, but for who?

18 February 2011
No comments
Categories: Business, Israel

In the past year, Israel’s economy has managed to defy both the global economic crisis and the worsening security situation, posting an annualized 4.4 percent growth in the last quarter…

Impressive. Now here’s, something even more amazing. That quote comes from Newsweek, almost exactly one year ago, in early March 2010. As for the economy at the end of 2010 itself, note the similarity in the description.

Israel’s GDP rose at an unprecedented pace of 7.8%,on an annualized, seasonally adjusted basis, in the fourth quarter of 2010, the Central Bureau of Statistics reported today. GDP rose by an annualized 5.4% in the second half of last year, after rising 5% in the first half, and 3.4% in the second half of 2009.

Direct investments continue. Kaltura, a developer of open source online video platform, has just secured US$20 million. The government is ploughing around US$100 million into incubator companies. Everything is coming up roses …but there again, maybe not quite.

At the beginning of the week, Bibi Netanyahu, the Prime Minister, was forced to make a series of tax concessions. Petrol, water, transportation will all come down in price. So far, the budget framework, which was passed only recently, has not been too disjointed. But it is clear that the government will have to make cut backs in order to finance the tax changes.

However, it is a mute point if the threat of strike in the public sector will force more concessions from the politicians over the coming month. Talks with the Histadrut, the trades unions, are not progressing smoothly.

And this pressure group has a point. The price rises hit the lower and middle classes. Tax  comparisons continue to show how the latter in particular are being squeezed on all sides.

And that is not all. Let’s start with something simple like inflation. The official stats point to price stability, well within the limit set by the Treasury of under 3%. However, given the rise of oil prices, commodity prices in general and poor crop growing weather, prices are on the move upwards.

These factors will only encourage the wonderfully cautious Stanley Fischer,  governor of the Bank of Israel, to raise interest rates. Correct he may be, but this will impact negatively on future economic growth. More squeezing of the weaker sectors.

Where next? Growth will probably continue, but not necessarily at the same pace. Will the politicians care? The fear is that they will bury their heads and gloat about wonderful economic stats.

Arab unrest: The shoe thrower’s index and Israel

17 February 2011
No comments
Categories: Business, Israel, Palestinians

The Economist magazine has made great efforts to predict which Arab country might be the next to fall after Egypt. Syria? An emirate?

More intriguing is the “Shoe Thrower’s index, which aims to predict where the scent of jasmine may spread next.” Simply using factors such as youth ratios, unemployment and corruption, the Economist has attempted to which autocracy could go next, assuming that the bug spreads.

It is interesting how Egypt, Libya and Yemen figured at the top. There again, Tunisia is placed in the middle, close to Jordan, another potential time bomb, and Bahrain below that. So, the index makes for a cute exercise, but it is not complete.

Marxists and co are having a field day. Do the violent street protests signify a return of proletarian revolutions, with the proverbial spark spreading virally via facebook? A man burns himself in a backwater town in Tunisia and within a month, billions of petrodollars become meaningless, as leaders in Iran, Bahrain and Algeria hurry to learn the art of damage limitation. 

So where are the protests from the Palestinians? Without claiming that Israel is the perfect country – who is? – it is all very quiet inside the Ramallah/Gaza axis. True, Abu Mazen’s cabinet reshuffle is seen as a defensive response rather than a move from strength. And the Palestinian Independent Commission for Human Rights issued a statement on 6th February:

concerned by the restrictions on freedom of expression and peaceful assembly by Palestinian security agencies, which have banned peaceful protests by Palestinian citizens in solidarity with the people of Tunisia and Egypt.  On 2/2/2011, the Palestinian police banned a peaceful protest which was organized in the city of Ramallah and arrested a number of journalists and participants for a short period of time.

In Gaza, it is possible that the situation is still too raw for change. “The new wealthy class — many associated with Hamas — as well as established capital owners are concerned about keeping their money inside Gaza, preferring to move it abroad….even to Israel”

As for the Jewish State, the Netanyahu government has backed down on some price rises. There may be a general strike in two weeks. But there are no mass demos, coloured by riot police. Why?

Dr Robert Brookes is leading blogger in the field of psychology. With amazing irony, his latest monthly posting is titled “we all want out voices to be heard“. He concludes that: –

Self-determination and autonomy are basic needs that exist throughout our lives, …… Intrinsic motivation and democratic ideals flourish when environments encourage and support one’s voice being heard. In all of our institutions, whether in schools or in various organizations or businesses, those in leadership positions must ask if all members truly believe their opinion is respected and that they are afforded a certain level of choice and autonomy. This kind of respect does not imply a loss of authority on the part of leadership, but rather the cultivation of a climate in which leadership will be honored for validating the input and voices of others.

For all its faults, and despite of a very real existential threat for all of its modern history, Israel has a free press, freedom of worship and a secret vote for all. The country is at the heart of the industrial revolution in telecommunications, with over 50 companies at this week’s World Mobile Congress in Barcelona. Open source tech and apps are everywhere, near impossible to block. 

I know that many, possibly even most, of these demonstrators in the Arab World do not like Israel. But for all their hatred, are they telling their leaders that they are actually envious of the way the Holy Land is ruled? Israel is a democracy.

And maybe there is another message here for world leaders. They have often thrown shoes at Israel, claiming that Jerusalem’s intransigence on the Palestinian issue is the core of instability in the Middle East. The Economist’s index is telling you that it is time for a review of your mindset.

Innovation – new rules for entrepreneurs

11 February 2011
No comments
Categories: Business, Israel

“The rules of the game have been rewritten” exclaimed Luke Johnson in the Financial Times.

The world of business has changed dramatically since the 1980s, and the rules of the game have been radically rewritten……An important factor has been the all-pervading influence of the internet. ……Various consequences flow from this digital revolution that affect the very nature of a business. It means you can test an idea quickly and cheaply and, if the trial does not work, you can reinvent it or just shut it down.

24 hours after reading this, I found myself mentoring a very talented young lady, who intends to take her hightech company global within 24 months. When I say talented, she has had a great career to date in the arts. As for her firm, despite a struggling website, they have generated some initial income.

This lady is very serious. She has already started and sold a couple of small (non hightech) enterprises. Like Master Zuckerberg, and she is only a few years older than him, she has hit on a simple idea. And it seems that nobody is in that space, yet. 

What is she lacking? A little bit of initial guidance and a small amount of financial backing to support site design and promotion. Initiative and determination, what you are not taught at Harvard Business School, are in no short supply.

Luke Johnson referred to Mark Zuckerberg, as an example of somebody, who “can create a 500m-strong community with Facebook – employing just 1,000 staff. Facebook is also an example of how investors are willing – in certain circumstances – to back projects that have minimal revenue, following a belief that a lucrative business model will emerge in due course, as it did with Google.”

I often set homework, and this time I pronounced a two hour assignment. I told her to watch the film, Social Network.

Israel’s tourist industry – investment opportunity

10 February 2011
No comments
Categories: Business, Israel

Israel’s Ministry of Tourism will proudly tell anybody willing to listen that 2010 was a record year. 3 million overseas visitors were recorded for the first time ever.

As for January 2011, the figures were 17% up on last year, as around a quarter of a million guests entered the holy land.

In a country of 7.5 million people, these stats are significant. Estimates place around 100,000 people are employed directly from tourism, with another double that employed indirectly. Altogether, this is worth around 33 billion shekels or $9 billion.

This week’s annual International Mediterranean Tourism Market exhibition has been larger than ever. Over 300 participants from 35 countries have turned up. All very encouraging, but so what’s in this for a potential investor?

The answer is quite a lot.

First, infrastructure: New hotels are required in most of the major centres, including Jerusalem and the airport. The Tourism Ministry has publicly expressed its commitment to a new port complex in Ashkelon, the setting up of several golf courses, the expansion of the filming industry, and much more. 

The Israeli government has not been slow in coming to the party, providing tax incentives. Eilat, an all-year-round beach resort, has benefited from a VAT-free zone for nearly two decades. As Leon Harris, a noted local tax expert points out,

Tourism enterprises may enjoy company tax rates ranging from 10% to 24% for seven to 10 years. The higher the level of foreign investment, the lower the tax rate…..

Bottom line:  Israel has a reputation for a booming stock market and a great high tech basis. Now, the tourism industry offers an additional exciting opportunity for foreign direct investment.

What stops us from selling more….

8 February 2011
No comments
Categories: Business, Israel

Dov Gordon is one of Israel’s leading consultants in the disciplins of management and strategy.

His workshop this week in Jerusalem focused on creating a “selling system to bring you all the customers you want”.  A 5-stage approach, I was particularly interested in the middle element. “The potential customer must feel that you, the vendor, understand their needs and wants”.

There is nothing new in this psychological element. Dov’s added value was to sum up the issue in a concise manner, clearly driving home its place in the selling cycle. From there, Dov encourages the seminar participant to evaluate the tools and tactics required to achieve this vital sub-goal.

OK, but why do so many sales people ignore this part of the game?

As I write, it is Tuesday morning. However, I have already encountered two clients this week, who in effect are happy to wait for clients to come to them. Word-of-mouth, or a website hit, or otherwise will drive the next pay check through the door. In other words, the “pre nuptial chit chat” will be a brief formality, hopefully.

It does not take me too long to show them the fallacy involved in this thought process. What is of more concern is how they arrived at that juncture.

One theme that remains prevalent in many of my discussions is that of “fear”. What happens if I get it wrong? Heidi Grant Halvorson describes this as the “do good” impulse outbidding the desire to “do better”.

The irony is that all this pressure to be good results in many more mistakes, and far inferior performance, than would a focus on getting better. 

And in a sales situation? There are people, who will find any excuse not to look for clients. Surely it would be better to reel in the bait, maybe even try too hard, fail, but at least you will know for the next time.

You might even learn how to understand new clients that bit better.

Leadership skills – fascinating case study from Israel

27 January 2011
No comments
Categories: Business, Israel

From the top business schools to the extremes of the internet, we are flooded with material about what makes a good leader.

Be open. Listen. Appreciate those around you. Develop an ability to make decisions under stress. Hope you have the right biological make up? And who knows what else.

And every journalist loves it when a leading personality refers to ” a crisis of leadership“. I typed the phrase into google, and the first page brought responses from Eire, the USA, Nepal and Japan. I mean, would we know what a good leader is even if they were to walk into the room right now?

Pilots in the Israeli air force are considered a very elite sort of group; physically strong, educationally bright, with an ability to perform well under adverse conditions. They are never photographed face-on for security reasons. So, they don’t need any extra leadership skills, do they?

So, it came as a surprise to read in the Hebrew press of a new approach to training for the “lead” plane or helicopter in a squadron. The idea is to allow the pilot to act as the chief-of-the -airforce. It is a concept by a multipurpose team, consisting of former pilots, psychologists, sociologists and others.

Is that an anathema? Not necessarily. What happens if  pilot is able to use all, but all , the resources at his disposal? That means exploiting full knowledge of himself, of his plane, of his surroundings, and even the control tower.

A helicopter pilot in the article described a battle scene from Lebanon, when a discussion broke out whether or not to carry out a rescue mission. Meanwhile on the ground, the lives of soldiers were at risk, but there was no easy flight path in or out. The pilot took responsibility for the situation, assessing all known factors. (The mission was a success).

Not everyone can do that in every situation. However, there is a clear lesson from this study.

Empowering your colleagues (senior and junior) to learn and to initiate, through clear established lines of guidance, can lead to effective results for organisations.

Israeli high tech – what next?

24 January 2011
No comments
Categories: Business, Israel

Mobile tech, software, cleantech, nanotech, etc – Israel has played a leading role in all of these mini industrial revolutions. Israeli hightech accounts for over a third of the local economy’s output.

In the past year, some analysts have been wondering if this “boom” can last. After all, so few companies have gone on to become mega corporate commercial successes. Seed money appears to have dried up. Some export markets, particularly in Europe, have yet to fully emerge from the credit crisis, possibly threatening future growth.

There again, maybe the next chapter of the story will be more positive than ever. Over 50 Israeli companies took part in the recent World Mobile Congress. Intel is now looking to fill an additional 1,000 positions in the country, Celltick has announced plans for 100 new posts. Multinational based in Israel, such as IBM, are rushing to register patent.

These are not isolated islands of success. Only yesterday, Wells Fargo announced that it intended to raise its investing presence in Israel.

And a concrete illustration of what can be achieved was given by  “iwaymobile“, a start up led by an investor and a former mayor from a poor development town. After 3 years of quiet development work, iwaymobile has yesterday launched an internet system for cars. The geek websites are twittering the news all today.

If there is a bottom line in all of this, it probably focuses on the word “innovation”. Israel is a society that encourages people to think beyond problems. This means that in tandem with sensible montary and fiscal policies, the pioneers in hightech know that they can continue to progress safely.

The human body, weak economies and Israel

23 January 2011
No comments
Categories: Business, Israel

The human body is a complex item. Even today, we do not fully understand how the brain operates, and we are full of proteins that have yet to be identified. We are told that only 20% of everyday tablets like asprin ever reach the target spot.

Much the same can be said about national economies. They are nearly impossible to micro-manage. You have to treat all parts with respect and still keep monitoring just in case.

Greece, Ireland, Portugal and even Spain are classic examples of countries, which relied on the “good times never ending”. And there are fears that Belgium may join the list. The Economist has led a discussion of senior analystson the topic; even under a restructuring policy, some of these economies (and their citizens) have a lot more hardship to endure before they see happy days again. The doctors had failed

Why is the Israeli economy different?

Zvi Eckstein is the deputy governor of the Bank of Israel. Speaking at a conference in London earlier this month, he listed the strong points of the economy. These included: –

  • The strength of the high tech sector
  • Decreasing debt ratio
  • Controlled use of interest rates in monetary policy
  • High savings ratio

I would add to that the discovery of commercial quantities of gas. Let us be clear, this will not be available for selling for several years, and very little is suitable for the local market. What is of note is that the Israeli government has stood firm against obvious vested interests, and will levy taxes on the profits. The main beneficiary should be a cash-strapped local infrastructure.

Dangers still loom large. The shekel has appreciated to violently over the past year, partially as a result of speculators. Last week, the Bank of Israel counter attacked, issuing a series of measures ensuring greater accountability and transparency on large transactions. The result has been a 2.5% depreciation within a few days.

Israel has to accept that it has a strong economy. As such, investors are going to want to hold its currency, a major change from the previous 60 years. The managers – politicians and civil servants alike – will have to observe and guide the Israeli economy closely as it matures into manhood, just as they will look after their own individual health.

Choosing marketing content; Simple, ain’t it?

20 January 2011
No comments
Categories: Business, Israel

This week, I met up with three separate groups. One is a classic service provider. The second is establishing a sales campaign via the internet. The third is a very competent artisan. They all are based in Jerusalem, smothered by years of university education and are looking to ramp up sales.

I asked them what content they intended to use on their advertising space; flyers, websites, give-aways, and more. And the kind of responses that I received could be summed up by: “I want people to know how good I am at blah blah,” and off they ranted for another minute of explanations

Fair enough…until I followed up with 3 basic questions. Whatever your medium, whatever your font and colour: –

  • Who is your audience
  • What are they looking to hear 
  • What is going to make you stand out from your competition?

These are some of the basic parameters that will drive content formulation. Two people could not believe that they had missed these 101 guidelines. A third asked me why the view of the client was so important.

These days we are inundated with marketing experts.

They are called strategists, consultants, sales’ dynamos, social media experts, website optimizers and so the list goes on. Any senior manager, struggling to raise his revenue figures, cannot fail to miss these guys. Their blogs and podcasts and tweets are to be found in every dark corner of cyberspace.

So what are my clients missing? Despite being surrounded by information and suggestions and despite being exposed to a culture of commerce, they were using a marketing opportunity as a platform for their ego. In fact, selling is all about helping and enabling your potential customer to make the correct decision. 

Simple, ain’t it?

Israeli economy: victim of its own success?

14 January 2011
2 Comments
Categories: Business, Israel

Who would have believed that the shekel would turn into one of the most powerful currencies in the world.

Thus spoke PM Netanyahu this week. Over the past 12 months, the Israeli currency has appreciated 6% against the dollar and double that against the Euro. Thus, exports have become that more expensive to zones that import over 70% of Israel’s tradeable items. Can that last?

The head of the Israeli Manufacturers’ Association summed up the delicate situation very well, when he observed:  “Over the past three quarters, exports have weakened and job creation has come to a halt. We are very concerned about activity in 2011 and are urging decision makers to take the necessary steps to strengthen the dollar.”

As with most things in the Middle East, nothing is simple. The problem has been caused by success. The fundamentals of the Israeli economy are very good.

This week’s press release from the Bank of Israel is full of glowing predictions for 2011. Unemployment down to 6%. The debt ratio falling below 80%. Growth is set for just under 4%.

Here’s a specific example of what I mean. The Israel tourism industry in 2010 broke the 3 million visitors figure for the first time. As for 2011, the hope is to host 4 million overseas guests, which will add another 15,000 jobs to the sector.

The 2011 budget for capital investment and infrastructure development stands at NIS 375 million, of which about NIS 205 million will be allocated to encouraging investment in tourism and increasing the hotel supply: construction, expansion and conversion of hotels mainly in Jerusalem, around the Sea of Galilee and the Galilee region. A further 3000 hotel rooms are expected to open around the country by the end of 2011. About NIS 170 million will be allocated to infrastructure development including the development of tourist cities, trails, national parks, boardwalks etc.

As with more traditional parts of industry, many of the multinational tourism groups are realising that Israel offers potential rich pickings and becomming involved.

2011 offers many challenges to the Israeli economy; achieving a competitive rate of exchange, finding a suitable tax base for an emerging energy industry, a stock market that shows no sign of cooling down, etc. Above all, the bureaucrats will need to ensure that those often-praised fundamentals remain true and transparent.

UK and Israeli banks

12 January 2011
No comments
Categories: Business, Israel

Over two years on from the onset of the credit crunch and the UK banking system is still looking over its shoulder at what was. The head of Barclays, Bob Diamond, has called for “sounder and safer” bonus schemes.

“Sounder and safer” is newspeak for “how can the top guys get the money they want – maybe even deserve – without the public and press screaming stop thief?”

Here’s a cute suggesting – how about banks giving the public some value for money? Yes, this probably is a revolutionary concept for top financial managers, whose offices are so away from the ground floor that they have forgotten what reality is.

Contrast this to the Bank of Israel’s HQ in Jerusalem, not very high at all. The governor, Stanley Fischer, took the post after a brilliant career amongst the grand in international banking.

Yesterday, the Bank of Israel announced the results of a three year campaign to encourage Israel’s banks to provide more efficient services and become more competitive. The results?

  • Standard banking fees are down 13%
  • Fees on credit cards are 20% off their peak
  • It is clear who provides the cheapest (or not) services and for what kind of customer.
  • Websites are becoming more using friendly

There is probably a long way to go yet. However, after many years of public disappointment with fat banking profits, Israelis are beginning to feel the improvements.

Meanwhile, back in the UK…………

Coexistence in Israel?

8 January 2011
No comments
Categories: Business, Israel

Just before the Christmas holidays, I hosted some delegations from Europe. Some of the visits entailed me guiding them around one of Jerusalem’s leading hospitals. They witnessed at first hand a multi-ethnic staff treating Jews, Moslems, Christians, and whoever else came through the door.

Some of the tourists expressed surprise. In comparison to what they were used to seeing about Israel via the international media, this was not what they expected to see. Was it typical, I was asked.

How to answer? In Jerusalem, you have ultra orthodox fighting (almost literally) against the state authorities. In the Palestinian territories, minority extreme sections of Israeli society can be seen inciting Palestinian neighbours. Bedouins for years have not received social services available to others. And so the list goes on.

Yes, it is easy to criticise, but then which society is perfect. Just look at what is happening in Sweden today, seen for decades as the bastion of a politically correct land.

So, if Israel’s hospitals are getting it right, day in and day out, what else happens in Israel? can a pressure cooker of 7.5million turn out all right?

Well, once a week, I do my shopping at a branch of the Rami Levy supermarket chain. I can assure my readers that a fair proportion of the buyers are not Jewish. And the latest outlet opened up in Gush Etzion, an area where the two sides have distrusted each other continuously.

What about the religious and non religious battle ground, where often comaprisons are made to Iran. Go the kibbutz Shomeriyya in the Negev desert. In the past decade, the farmers have been joined by a group of observant Jews, who used to live in the Gaza Strip and were evacuated in 2005.

On the surface, apart from an id card and passport, the two sets of people conduct their lives in very contrary ways. And yet, they have found how to put aside political and religious differences. By talking, they realise that they have more in common than could be believed. Even if the “application” is different, ideals and aims are similar.

The Abraham Fund has dedicated over 20 years of efforts to bring peoples of different religions in Israel to work together. Elwyn serves over 2,500 children and adults with disabilities from all sectors find their positions in society. etc, etc.

Last month, the Yediot newspaper led with a story about refugees from Sudan and other parts of Africa. A moving photo showed the sufferers, walking through the desert and crossing illegally into Israel. As my wife said, we must be doing something right for these people to want to come here that badly.

Entrepreneurs, innovation, and the global market

7 January 2011
No comments
Categories: Business, Israel

The new year of 2011 is barely a week old, and I have already been asked by 2 seed stage companies to help them. Bottom line: do I believe that they can convert their fledgling ideas onto a product suitable for the global market?

Well maybe not by next week, but certainly they have a chance. And why?

The Financial Times has led a discussion on why multinationals are increasingly sourcing innovative new products and technologies from emerging economies. A classic example is how Coca Cola’s new fruit juice started its life in China.

I have read elsewhere that General Motors is investing US$5 million in a mobile phone charger. The product was developed in Israel and produced in China. The list goes on.

So what is going to allow my entrepreneurs to make a difference and succeed? How are they going to develop in order to catch the eyes of the big players?

Luck and ready access always help. More specifically, a recent survey from American universities highlights the importance of old-fashioned common sense:

Entrepreneurs, especially during the early stages of their start-ups, have to think on their feet…..They have to make the best decisions possible in the least amount of time. They need to act. Practical intelligence empowers them to act quickly and confidently.

How to do that? First and foremost, emerging CEOs should not think that they have to do everything by themselves. We are so trained to believe that the only success that counts is one of perfection and which is obtained on our own.

Nothing could be further from the truth.

Here’s what I mean. I was meeting my 2 seed stage companies in good surroundings. I encouraged them to look around themselves. They realises that what they were observing was achievement and success, but not perfection. And these “impurities” had not stopped the owners from setting out and moving ahead.

The follow on from this is to find a mentor. All business people need somebody that they can trust in order to bounce ideas off them. Even if the two people disagree, the final concept is often crystallised in to a more sustainable form.

Paying a few cents for a few words of support can even lead to the yellow brick road and commercial joy.

Reasons to invest 100m Euro in a Palestinian start up

4 January 2011
No comments
Categories: Blog, Business, Israel, Palestinians

The European Commission decided today (22.12.10) to provide an initial financial package worth €100 million for the Occupied Palestinian Territory under the 2011 budget.

Now that is a pretty cool donation, especially from an international organisation also financing at least 4 economies suffering meltdown. And this public money is going to end up in an economy that does not officially exist, at least as a member of the UN.

This is not the only set of Western taxpayers funds ending up in the Treasury of the Palestinian Authority. The UK recently confirmed that it had contributed approx US$45 in 2010 to the World Bank Trust Fund, which “pays the salaries of public sector workers in both Gaza and the West Bank”. Japan gave US$12m in early December. Mrs H Clinton came up with US$150m. And so the list seems to go on.

Conglomerates from the private sector have also joined the game:

  • Cisco will invest $5 million in a venture capital fund for Palestinian startups.
  • Google is investing $2 million which will include contributions to the same VC fund and to the local operations of NGO Mercy Corps.
  • A long term commitment by HP to expanding business operations in Palestine and local collaborations with USAID.
  • Intel will expand cooperation with Palestinian IT/software firm Asal Technologies.

Is this a wise bet on the future or just politically correct? SKY TV recently reported on the new strengths of the Palestinian economy. Google Bethlehem at Christmas and you will find plenty of info on how Manger Square has been full of tourists this year.

According to David Makovsky of the Washington institute for Near East Policy, Prime Minister Salam Fayyad claims that 120 schools have been built in the last decade. Those and 3 new hospitals, 50 health clinics, hundreds of new or resurfaced roads, etc, etc. And tax collection was up 50% in 2010, although starting from a meager base.

Bottom line for Fayyad is that poverty is down a third as are expected contributions from foreign assistance.

 It’s all looking very positive….that is until you start to ask a few questions.

1) The European press release above recognises that “the EU now fulfils by far the pledges made at the Paris Donors’ Conference in December 2007.” Good. Encouraging. So where are the equivalent donations from Arab countries. What do they know that is stopping them from fulfilling their pledges and thus investing?

2) If the World Bank Trust Fund is asking the UK and others to contribute to salaries of public workers in Gaza, they are effectively paying the wages of Hamas officials. Hamas is listed as a terrorist organisation. As I write, news came through that Hamas has illegally arrested over 3000 political opponents in 2010 alone.

3) If the Palestinian economy is improving so much, why is so much aid needed in the first place.  The World Bank talks about 8% annual growth. New luxury hotels are to be seen in Gaza and in the West Bank. Israel is no longer withholding tax revenues as all debts by the Palestinian Authority are accounted for. Even the number of manned Israeli roadblocks in the West Bank is only 14 in number, thus allowing for easier commerce.

So here’s my issue: When an investor or venture capital group seeks to become involved with a new project, they look at the skills available, the team, transparency, history, and future accountability. They consider who else will share the risk. Above all, is it possible to assess the true need.

Would you invest 100m Euro in one go under such conditions? There again, in this case, it was signed off by those who are not necessarily accountable.

Israel’s economy for 2011: Positive trends to watch

3 January 2011
No comments
Categories: Business, Israel

The year 2010 is behind us. Despite downturns in Europe and a currency that has been revalued over 15% in 18 months, Israel has achieved 4% growth, yet again. And much of this is export derived. So what’s in store for 2011?

Many of Israel’s trade partners have entered January looking over the shoulder at the past. Greece, Portugal, Ireland and Spain are still in recovery mode. The UK retail sector as usual will spend weeks working out if the winter sales were successful. Germany and Australia are the rare exceptions to a non-too-optimistic OECD picture.

But in Israel……

Gas exploration will forge ahead. Many of the finds will not produce direct revenues for a few years and then they will be directed to overseas markets. However, the new resources will drive up the stock market and create jobs at primary and secondary sectors.

At a macro level, the government is slowly pushing ahead with tax reforms. Personnel tax brackets have been updated from the first of the month. Corporation tax has dropped another notch to 24%.

And the government is finally learning where it can make a difference to the lives of citizens without playing “big brother”. For example, Israeli society is dominated by the use of mobile phones. The service suppliers have churned out billions in profits with poor service in return – I write from experience. Fortunately, charges from landline calls have just been slashed. And licenses have been handed over to two extra competitors. There is hope.

What else? It is probable that a possible real estate has been burst. The stock market is breaking new highs. The one real fear is that trading partners will not perform as needed, thus acting as a break on further growth.

As for innovation, the trigger for much of this growth, I have 4 new start up clients due to commence work with me during January. Israel’s economy is on the move.

What happens when you boycott Israel

24 December 2010
No comments
Categories: Business, Israel

It’s almost Christmas time, the season of smiling at your fellowman…except if they are Israeli?

The year of 2010 was marked by an increase international campaign to delegitimize Israel. The musicians, Elvis Costello and the Pixies, cancelled a concert in Tel Aviv at the last moment. This week in Seattle, a series of adverts were placed on public buses, decrying so-called Israeli war crimes. In London, there are now regular demonstrations outside retailers stocking Israeli products. And so on, at great length.

Years ago, if you wanted to protest about Israel, you stopped buying Jaffa oranges. So what would happen today, if you were to ignore deliberately Israeli products?

Teva is considered the second largest manufacturer of generic drugs in the world with facilities in Europe and in the USA. Many of their products end up in the bodies of the poor on all continents. I suppose you could just avoid the company, and either suffer or hope that you could afford the alternatives.

What about Argo? Their equipment is helping thousands of people confined to wheelchairs to start walking again. One application was featured recently on Glee, the award-winning tv programme. Of course, paraplegics in Seattle may wish to remain immobile, but me thinks this unlikely.

And then we have fans of Lady Gaga, Bruce S or U-2. These artists and others depend on technical support from Waves Audio, based near Tel Aviv. Like the music or not:

Waves Audio … will be presented with a prestigious Technical GRAMMY® Award during the GRAMMY Week celebration in February 2011. ……With this presentation of the Technical GRAMMY®, Waves joins a prestigious list of previous recipients which includes such well-known names as Apple Computer, Inc., Sony/Philips, Shure Incorporated and Yamaha Corporation.

And we must not forget Intel. 95% of people reading this item will have a computer whose chip tech had been developed in the Holy Land. And the next generation is already in the planning stage. So, switch off your computers and stop listening to most modern music?

So what is the boycott all about?

The true hypocrisy of the boycott was exposed on a picture of the front page of the newspaper Yediot, this Christmas Eve. The reader saw a stream of illegal refugees from Sudan and other parts of central Africa hiking across the Negev desert into Israel.

You have to conclude that Israel is not that bad for these people to come here. And, assuming that they are persecuted in their home countries, why are those protesters against Israel not uttering a word of behalf of these poor souls. Anti-Israel or just old-fashioned hatred?

When a “key performance indicator” is not so keyed in

23 December 2010
No comments
Categories: Business, Israel

Coincidence?

Earlier this week, I was told of a report commissioned by a leading Israeli company, which wanted to track customer responses. The bottom line did not make pleasant reading. Complaints of arrogance, misleading pricing policies, poor products, and other comments nobody expected to read.

And yet this was a company doing well. Most key budget targets had been met over the outgoing year.

Meanwhile, my IIB colleague, Siu Ling, has directed me to “Misleading Indicators: how to reliably measure your business”. Her bottom line: not all key company indicators are measuring what you think they are.

The results can often be disastrous and confusion. What can be done? Remember, businesses live and thrive in a dynamic situation. Just remember why you cannot take anything for granted.

Christmas cheer and Bethlehem’s economy

20 December 2010
3 Comments
Categories: Israel, Palestinians

How do you know it is Christmas time?

The Europeans always complain that the amount of snow is wrong, whatever the quantity. The shopkeepers are never happy with either the pre or post festivity purchasing stats. And the “spinners” in the Israel-Palestinian conflict begin to bombard the gullible with slanted stats about life in Bethlehem.

Here’s what I mean:

In “New Christmas Story: Bethlehem under Occupation“, the reader is asked to believe that Israel has effectively banned Christianity from Manger Square. Published almost on the same day, Human Rights Watch (HRW) in New York called for a boycott of Israeli products manufactured in the West Bank, as the Jerusalem government must be seen as a brutal occupying force.

Israelis will reply that economic growth in the West Bank is bouncing along at about 8-9%, now that the Palestinian Authority is directing more resources towards proper government and away from violence. And the HRW report can only be described as a pathetic or dangerous whitewash, as “the manufactured allegations erase the context of a protracted and intense conflict, and ignore the legitimate security needs of Israel.”

So what is happening in Bethlehem, Christmas 2010?

The Catholic News Service has just reported that:

With five new hotels in the works, a handful of new souvenir shops opening recently and nearly 40 restaurants able to serve crowds from 100 to 1,000, the Bethlehem economy is showing signs of recovery following the desperate intifada years. For the first time in years, shop owners and tourist industry workers in the birthplace of Christ are optimistic and have confidence in the economy. For most, 2010 was the best year for business in a decade.

And it is an established fact that Israeli and Palestinian tour guides are cooperating, bring trade to each other under a new scheme. In fact, as Israel is completing a boom year in tourism and as around 2/3 of the visitors are Christians, it can be assumed that many have ended up visiting Bethlehem.

Start crawling the net and the evidence from non-partisan sources is that life ain’t too bad in Bethlehem these days. By the way, it should be emphasised that every since the municipal boundaries were reorganised by Chairman Arafat in 1996, the city has been predominantly Muslim.

Led on by the Palestinian PM, the Christmas preparations near their climax. Meanwhile, 15 miles away in Israel, two Christian tourists were attacked , probably by terrorists. One died of her wounds.

Managing the expectations of partnerships

18 December 2010
No comments
Categories: Business, Israel

“Get the expectations clear up front to prevent your business partnership’s failure.” Jean Charles

I was sitting with a new client, listening to how they wanted to set up the business. Super qualified, experienced, dedicated, I heard the rich and thought out commercial philosophy in full. And now is the time to set up their own legal office. Fine. What were my thoughts?

Fine, I wanted to agree, but I had the suspicion that there was a “fly” disturbing our conversation.

So my experience as a business mentor told me that it was time to prod. And very quickly, we were not chatting about their own letterhead, but being associated with partnership. Their former boss in Jerusalem, who is much respected, wanted my person to set up in Tel Aviv. And this would be a partnership. Good.

Very good. They would be linked to a fine national team. They would not need to search for the first clients, ensuring an initial revenue stream. Groovy!

And one last question: Did this concept match their own philosophy and approach? Well, not exactly. And suddenly, I had the “fly” in my sights.

A few rapid questions later, and the truth began to eek out. No, there was nothing wrong professionally or personally with the boss of old, but he had rejected the initial suggestion of partnership. So what was their understanding of a “partnership”, I asked.

And suddenly, a chasm opened up. It appeared that assumptions had been made by both sides. The expectations of all had not been defined, and the road t confusion was wide open in front of them all.

In 1997, Don Miguel Ruiz wrote a short but brilliant book about the Four Agreements Of Life.  

Don’t Make Assumptions. Find the courage to ask questions and to express what you really want. Communicate with others as clearly as you can to avoid misunderstandings, sadness and drama.

I encourage my readers to find a copy of the book.

Why investors continue to show faith in Israeli hightech

13 December 2010
No comments
Categories: Business, Israel

The annual Globes business conference in Tel Aviv is a great occasion for Israelis to reveal their economic capabilities. After all, Israelis never need to be given a second chance if asked to show off.

And there is much to shout about. At the macro level, GDP will have moved ahead by around 4% in 2010. Unemployment dropped to under 6%. Israeli scientists, who have created successful careers abroad, have begun to find jobs locally. etc etc.

I noticed this morning a series of press releases that show how well parts of the economy are performing.

NICE Systems Ltd. (Nasdaq: NICE), the worldwide leader of intent-based solutions that extract insight to impact business performance…..has been recognized as the worldwide leader in speech analytics implementations, with a 34% market share, …..by DMG Consulting LLC, a leading analyst firm.

That is very welcome praise indeed for this high tech outfit, based north of Tel Aviv in Ra’anana. And they are not alone amongst Israeli companies receiving glowing reports: –

 ClickSoftware Technologies Ltd. (Nasdaq: CKSW), the leading provider of automated workforce management and optimization solutions for the service industry… has been named as a winner in the ninth annual Mobile Star Awards™ program, hosted by mobile technology news portal MobileVillage.com.

A leading internet investor’s guide, INVESTORS.com,  summarised the issue very clearly.

If you’ve been sifting for top-rated stocks, you’ve probably noticed a gaggle of stock-market winners from Israel popping up on your screen recently. And a lot of these hail from high-tech industries.

Israel? Talk about a country with problems. But some basic features of its economy compare well with the U.S. and Europe, though not against emerging-market stars such as China, India and much of Latin America.

Client Feedback

"Michael transformed the way I think and approach working, and also how to monetize my social media and communal projects."

CEO of digital media company

"Michael helped my high tech company take off."

CEO of clean energy start up

"Michael has been an invaluable resource to me throughout all of the steps of starting up my business."

Art Studio owner

“Working with Michael Horesh is like having root canal treatment, marriage counselling and business coaching all rolled into one, successfully.”

CEO of digital media company
CEO of clean energy start up
Art Studio owner