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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 

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

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

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

In addition:

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

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

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

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

We all know the phrase that the customer is always right. We all at least pretend that we do our level best for our client. As I wrote last week, we all make a claim to strive for excellence. And we are surrounded by books and blogs about how “to go above and beyond the call of duty to provide customer service that truly stands out.”

However, when we set about on some introspection, especially over customer complaints, the truth is often very different, if not painful. We just cannot be bothered. Excuses abound – we do not have the time, deliberately forget about the mess, do not think the person is worth it, and ……….well, the list is very long.

As a business mentor, I am often asked by my clients what they should do, as they recall a story when a customer feels dissatisfied. Sometimes, it is told out of despair or frustration, but with little intent to follow up. On other occasions, the person just cannot see through their fuzzy thoughts in order to provide a solution. Many just run for a financial compromise – a heavy a discount or voucher – as if that is a universal cure.

The main question is what are we  trying to achieve? To be quite cold, I believe that the answer is extra revenue. Maybe we are seeking to convert a no-sale into a purchase. Maybe, we are in the area of damage-limitation. And yes, we want to feel good ourselves. However, much comes down to the money factor.

Last week, a new business owner in central Jerusalem hit a classic pitfall, when on a specific day they had too many customers that could be handled properly. Eventually, somebody took offence and immediately let this be known on social media. Ouch!

What to do? I suggested reaching out to the troubled client. After all, this is the last thing you need when you are at the beginning of the commercial journey. However, little did we know that just as we were discussing options, another blow was in the offering. A blogger was writing a negative piece and about to publish, which the owner was to find offensive and inaccurate.

Significantly, they did not lose perspective. Instead of ignoring the problem and with my words in their head, they contacted the blogger, met up and talked / communicated directly with each other. I assume that it will not be a surprise to hear that both sides learnt a few facts about life and what they have to change. Oh, this should result in few extra, happier customers.

My client had gone out of their comfort zone in order to make a difference on behalf of others. There had been no guarantee of success or reward, but they had done something for somebody else, willingly. That is what pushes businesses on and up to the next level.

President Barack Obama will be visiting Jerusalem next week. I assume that he will be making key speeches, cajoling / indicating / imploring leaders in the Middle East not to bomb the guts out of each other.

Allowing for the fact that he will also be travelling to the Palestinian territories, he will be on Israeli soil for less that 48 hours. And yet, part of that time will be taken up by travelling to and touring a special exhibition on Israeli tech. And you have to ask, why?

Yes, Israel has been called the start up nation or the Silicon Valley of the Middle East, very flattering for a country of barely 8 million people all-in. However, there is another factor, just as important.

To create this success, you first must create an environment that allows you to accept new ideas and to be able to develop them. This requires an open and tolerant society. And maybe the best way to measure that openness is through the number of Nobel Prizes attained per capita – Israelis have received ten awards since 1948. As if to emphasise the point,  Israel was recently ranked first in the world in research and development intensity.

To quote  Dr. Dan Schechtman, a technology professor from Israel and who was awarded the 2011 Nobel Prize in Chemistry for the discovery of quasicrystals. “What does a Nobel Prize winner has to say about entrepreneurship? First and foremost, he emphasizes that “entrepreneurship is the only way to maintain long-term peace.” Unfortunately and crucially for Schechtman, the combined number of all the other winners in the Middle East region is less than ten.

From here on, I will quote an abbreviated form of the official government’s press release in Jerusalem, which explains the tech ‘on show’ to the American leader. It makes for fascinating reading and is an eye-opener for potential investors.

The products that were chosen are in the fields of renewable energy, the war on traffic accidents, medicine, search and rescue, and robotics. They are located at the “Israeli Technology – For a Better World” exhibit at the Jerusalem Science Museum.

1) In the field of energy alternatives – Phinergy. The company has developed an aluminum-air battery designed for electric vehicles, and which allows a significant increase in travel range (three times that of a regular electric vehicle). The technology will allow for a reduction in global oil consumption. The system is based on metal air technology, including aluminum air and zinc air. A metal-air battery features an air-electrode that breathes oxygen from ambient air, instead of the conventional cathode. That is, the battery consumes the required oxygen from the air, rather than having heavy materials that bound oxygen inside it. Metal-air batteries therefore have a huge potential for delivering high capacity with low weight.

2) In the field of the struggle against traffic accidents – Mobileye, a global pioneer in developing Advanced Driver Assistance Systems (ADAS), is to develop and market vision-based systems that will help drivers keep passengers safe on the roads and decrease traffic accidents by warning about dangerous situations and even braking the vehicle when necessary. To date, Mobileye’s technology has been implemented and launched by BMW, Volvo, GM and Ford in over one million vehicles. Beginning in 2014, the system will become standard for new vehicles in Europe.

3) In the field of medicine – BNA technology by ElMindA, which provides a non-invasive tool for the visualization and quantification of BNAs of specific brain functionalities, disease development and rehabilitation from injuries, reactions to treatment, psychiatric and neurological problems, and pain.

4) In the field of search and rescue – robot snake, which is designed to enter spaces in collapsed structures with minimal disturbance. The robot thus assists in location and rescue operations. The robot is unique in its manner of crawling and is very flexible thanks to its great number of segments. Each joint is motorized and has a computer, sensors, wireless communications and batteries. Its head carries a camera. Thanks to its flexible structure, the snake is able to crawl through wreckage without causing additional structural collapses and provide vital information about inaccessible areas, including the status of people who might be trapped, the location of hazardous materials, etc.

5) In the field of medicine – Rewalk seeks to give persons with lower limb disabilities, such as paraplegia, an experience that is as close to natural walking as possible. The ReWalk exoskeleton suit uses a patented technology with motorized legs that power knee and hip movement. Battery-powered for all-day use, ReWalk is controlled by on-board computers and motion sensors, restoring self-initiated walking without needing tethers or switches to begin stepping. ReWalk controls movement using subtle changes in center of gravity, mimics natural gait and provides functional walking speed.

6) In the field of medicine – MiniDesktop, whose headset has been developed that enables computers to be controlled by brainwaves or facial movements. The computer is controlled without a mouse or keyboard by means of a headset that images the user’s brainwaves from 14 separate points. The system, which was developed by three software engineering graduates from Ben-Gurion University of the Negev, is designed to serve the physically handicapped who could not otherwise operate a computer or other devices.

Earlier this week, I wrote how a CEO is Jerusalem is “constantly listening and trying to innovate”. He is looking to provide his customers with that “feel good” factor. Crucially, he is aware that whatever that ‘factor’ is today, it will change by tomorrow.

With a sense of some ironical timing, the subject has already come up on two further instances.

First, I met up with a client of mine, who was asked to describe the service she is trying to provide to her target market. What was interesting about the response was how it was centred around what was important to her.

Yes, she brought some key and essentials values. She even mentioned the ‘feel good’ phrase. Fine, but the overall position was controlled from her perspective. She had failed to appreciative the psychology of why a prospective client may be getting in touch. She had ignored what are the real motivating determinants.

Look at it another way. A shopping mall is not just a convenient place to find all your favourite retail outlets under one roof. The owners of the premise have designed it so that you can have a complete or perfect ‘experience’; background music, easy access to different floors, rest benches, and plenty of friendly eateries. The thought process goes the extra mile on behalf of the customer, trying to understand their needs.

Second, I have to admit, I did not do my best recently. I was asked to make a submission, only to receive an email, which explained what I had failed to clarify. My initial reaction was full of expletives, anger directed at the bureaucrat. Eventually, I took a deep breath and read the comments in detail.

The anger mellowed to annoyance, which I found that I was turning it towards myself. It became cringingly obvious to me that I had rushed the work and cut corners, hoping to ‘get away with it’. When I finish posting this piece, I will have to invest extra time in fixing something that should have sailed through. There is a lesson here for all of us.

So what is doing your “level best’ all about? How can we convince ourselves not to be so lazy? Have a look at this Hollywood clip for 6 minutes.  https://www.youtube.com/watch?v=-vB59PkB0eQ&feature=youtu.be

As a mentor, I hear the theme so often, especially from newer clients: “I want to be the best,” they proudly utter. And when I ask them what that means, the answers are less forthright.

The subject came up again yesterday in a most unusual way. I was reading a commentary by Rabbi Ari Kahn, where he noted that the Ark in the Sinai desert and the two Temples, were all filled with increasing amounts of gold. However, the level of grandeur was not commensurate with the level of holiness. Why?

The Ark, often considered the most special, had been constructed by a man named Bezal’el, whose entire being was permeated with a holy spirit. In modern parlance, Bezal’el was empowered and thus determined to create something as brilliant and as appropriate as was possible.

Doing your best or striving for excellence does not put you above everyone else. It does not secure sales. It does not guarantee success. So, why is it so important? Why do mentors encourage people to consider the concept?

There are many websites, which debate the subject endlessly. They rush to quote Aristotle, who opinionned that “excellence is not an act, but a habit.”. For all that, if it is not the elixir of enduring commerce, what is it? What did Bezal’el understand thousands of years ago that most of us still fail to grasp today?

Let me try to explain through a true story, also with a slightly religious angle. I recently popped in on ‘Joe’, the owner of a large shop in central Jerusalem. We had first met when I had attempted to recruit him as a client, but we have remained in touch. With the help of a different mentor, he has reduced his stock, improved sales, redesigned the interior, and………..well, life is beginning to feel good for him.

Joe has no academic background. He has a small back office. He has little professional literature, mostly religious books, as  he has caught the ‘spiritual bug’ in recent years. However, lying on a shelf by itself was a book entitled “Excellence”. It said everything for me.

Joe knows that he does not provide all the stock his customers need, but he is constantly listening and trying to innovate his lines on offer. Joe realised that the appearance of the shop was unattractive, especially to the eye of a female – his main clientelle. That was dealt with. Staff receive training. Prices on key products were deliberately dropped to ensure he was dominant locally. And Joe still looks to improve.

What does this add up to? Whoever walks in to the shop will quickly realise that they are associated with an establishment that genuinely wants to help and toplease. The customer will undergo an enjoyable retail experience that will direct them towards making a purchase and to feeling good about it.

It takes a passion for excellence to achieve that result.

Is there such a thing as the traditional Jerusalem breakfast?

A few years ago, I returned to London, where I grew up. Leaving my hotel room and going past the dining room, I was struck by a smell that immediately recalled school breakfasts; rashes, greasy sausages, fried eggs, drained down by tea with lots of sugar. I hasten to add that I did not eat it at school, but you can never forget.  You know it at the instant. Is there a Jerusalem equivalent?

Possibly the first place to start is the best-seller cookbook from Yotam Ottolehgji and Sami Tamini, “Jerusalem“.  It is a great read. Significantly, the opening section is on vegetables. The spices ooze out of the pages. However, there is no specific heading on breakfasts nor is there a mention in the index.

Moving on, I remember that when I first came to the Holy City over thirty years ago, you felt that people were eating falafel in pita bread morning, noon and night. The taste of the frying oil was smothered and hidden by the heaps of humus and a hot tomato spice. As local brands of corn flakes were expensive and revolting, this seemed to make a (relatively) healthy substitute for the morning starter.

In 2013, the world has changed. As bloggers 21C noted: “Lonely Planet included the shakshouka at Jerusalem’s Tmol Shilshom café on its recent Top 10 list of the world best breakfasts.” Actually, for many from Europe or America, shakshouka is simply loads of poached eggs with lots of pepper and more tomato-type spices. For novelty, it often comes served in ovenware. However, Ottolenghi himself traces the origins of the delight to Tunisia.

Morgens” is a brand new restaurant, just off the bubbly Emek Refaim Street and not far from the magic of the Old City. The owners are hoping to latch on to the theme that Jerusalem has been and remains a very cosmopolitan city, attracting influences from all over the world. They offer eight different types of breakfasts, including a Mexican alternative and a highly delicious ‘Garden of Eden’, which is not recommended for those watching the calories.

Of special interest to me was the first item on the menu – an Israeli breakfast. I will leave my readers to go and sample the delights of Morgens, which is already attracting a steady clientelle. For me, what I like to see on my plate is first and foremost a tomato, cucumber, lettuce and red onion salad, finely chopped, doused with a careful balance of lemon juice and olive oil. I insist on a sweet tahina to be available, according to the taste buds of the moment.

To the side should be a healthy supply of large green and black olives, preferably home pickled. Next to these ought to be a portion of white cheese, Lebana, mixed with a light coating of zatar – a form of wild thyme – and olive oil. A helping of beetroot,seasoned with fresh parsely is a must. And the final item is a lightly fried egg, packed with green herbs such as oregano, basil and even mint. Naturally, the pitta (or brown bread) should be freshly baked.

As for the hot drink, clearly black coffee or tea with mint should be a must. At this final stage, honesty forces me to admit to a small degree of hypocrisy. Having grown up in the UK, I love my morning tea with milk. Some habits are too good to do away with, even in the holiest of cities.

In the final three months of 2012, the pace (of economic growth in Israel) was its slowest in three-and-a-half years, growing at a 2.5% annualized rate, compared with 2.8% in the third quarter……. A year ago, gross domestic product was expanding at a 3.5% rate.

Not very optimistic reporting. Add to that the perspective of the Governor of the Bank of Israel and notable international economist, Professor Stanley Fischer, who observed that the country’s performance is going to be hindered by faltering economic performances in Europe and in the USA. Then yesterday, China announced a budget that restricted annual growth to a relatively low figure of 7%.

What hope for Israel in 2013, an economy that looks to exports? Well, actually, quite a bit.

To start with, Fischer recognises that “we expect 3.8% growth in 2013 and an important part of this includes the start of natural gas production, which will start flowing from the Tamar drilling and that will add 1% to the GDP in 2013.” Then compare that stat of 3.8% to many other countries within the OECD and you will see how Israel is not doing too badly.

Other recent macro economic data is encouraging. After a clear dip for much of 2012, new housing starts are at a ten year high. And January 2013 saw a slightly unexpected drop in unemployment to 6.5%.

For me, the immediate black spot is the cabinet itself and the lack of central direction. The country has been in ‘election mode” since the late summer, at least six months. This runs through from the period of ‘will there be an election?’ to the current maze of misinformation regarding the formation of a new government coalition.

When I ask ministry officials when resources will be released to new projects, they refer me to the newspapers and the talks between the various political parties. One headline from today’s press implies that the Prime Minister will try to create a new budget within 10 days. Not exactly a professional approach. In parallel, the PM has evidently told his two new coalition partners that they can choose between them who will have the Finance portfolio and who will fill it. A bewildering abdication of responsibility.

None of this pathetic nonsense detracts from the basic stability of the Israeli economy nor the dynamism of innovation that underpins it. However, let’s be honest. I bet Fischer did not factor these local instabilities in to his predictions for 2013. They will impact negatively in the short term.

March 1st 2013 is a special day in Jerusalem, which will host its annual marathon. Writing just 14 hours before the start, I can tell you that the city has been decked out with bunting and flags. As ever, the route will take the runners close to some of the most magnificent edifices in the world, specifically as they negotiate the hills around the walls of the Old City and sites holy to differing religions.

Last year, Kenyans dominated the winners podium.  And that is the point I want to make here. When I open up Jerusalem’s cultural events calendar for 2013, this is a city that caters for the world. Picking some of the offerings at random: –

  • Later in March, the Festival of “Sounds of the Old City” will feature diverse musical styles, ranging from gospel to Armenian to traditional Arab themes.
  • Since 1961, The Israel Festival has promoted performing artists from numerous countries. Encorporating most forms of entertainment, from jazz to street theatre to puppetry, it will be held in May 2013.
  • A few weeks later, Europe’s Under 21 football tournament will be co-hosted by Jerusalem. Norway, Spain, Italy are just some of the teams to have guaranteed their places in the competition.
  • The rest of the summer will see the usual contingent of international poetry readings, arts’ fairs, chamber music renderings, as well as the annual Jerusalem Christian Pilgrimage during the Feast of Tabernacles. An ever-popular feature is the International Oud Festival, not an event normally associated with Israel.

The list is seemingly endless. I could go on at length, describing the wide cross ethnic variety and mix, which the events bring together. However, I want to contrast this openess and engagement with three sad occurrences in the United Kingdom from the past week.

First, George Galloway MP walked out of a university debate at Oxford, because he does not debate with Israelis and does not recognise Israel.

Second, at Essex University, a few students clubbed together to ensure that an Israeli diplomat would not be allowed to address a campus forum.

Similarly, Daniel Taub, Israeli ambassador in London, was unable to deliver his speech in Northern Ireland.

Two countries, both with an amazing history. Jerusalem continues to open its doors to visiting nations. Britain is looking to silence that same spirit of pluralism. How sad. How threatening.

The world over, small businesses are asking how they can find ‘easy’ loans which allow them to get going. Last night, I moderated the monthly meeting of JBNF, which addressed that topic and discussed three different, successful yet related approaches.

Before I start, it is no secret that more and more people these days are turning to crowd funding, which is great. However, it must be pointed, that this track is not all glory: For example:

  • A business may end  up with lots of small investors, a potential problem to manage when you are low on manpower
  • Regular investors force you to check your business model, an annoying but necessary process
  • Crowd funding can force you to publish secret info on the internet

With that in mind, let us consider the organisations represented on the JBNF panel, all of which are nondenominational, while trying to place an emphasis on boosting development in peripheral areas throughout Israel.

PARTNERSHIP2GETHER programme brings together donors from overseas with struggling new set ups in the south and north of Israel. Operating for just over a decade, they have created over 5,000 positions of employment, whereby 98% of all loans are repaid. The requirements are minimalistic – a brief business plan from a recognised economist and that is about it. The value of loans range from 50,000 nis to around 350,000 nis: (US$1 = 3.7 nis)

The stories were fascinating. I was impressed by the character of one middle-aged lady, an expert sewer, who had explained to the adjudicating panel how in her community, traditionally people sit and watch TV while she makes up the items of clothing. She needed money for a couch and a screen. Duly given, her triumph forced her to return a few years with a second request – to help finance a larger studio. Interestingly, around 30% of the projects were in the area of agriculture.

The Israel Free Loan Association takes an even simpler approach. It does not believe in business plans that dwell further into the future than six months. Prove that  you have a need and they will give an interest free loan for up to 90,000 nis, which can be paid off over 45 months. They approve 92% of all applications and the rate of non-payment is less than 0.5%.

Joe Rosen, Associate Director, made a perceptive observation, which is probably true of all such groupings. The loan does not just support the creation of a new commercial formula. Suppliers gain a new customer. A family receives an income. There is an additional service for the immediate community. The treasury receives additional tax revenue. The knock-on effects, just as in good old-fashioned Keynesian economics, can be stupendous.

The KIEDF assumes that around 70% of new businesses fail to obtain loans from banks. The fund, backed by the AACI, has granted around 10,000 ‘impossible’ loans over twenty years, probably leading to 45,000 new jobs. As above, the paperwork is relatively pain-free, although the sums are frequently lower.

Is there a  common theme to all of this? Quite clearly, there are many good people out there who realise that to start up is not easy. Banks and governments and bureaucrats still do not get it right enough of the time. It is these benefactors or philanthropists or altruistic motivators who are changing the lives of local communities in Israel of whatever background for the better and for the long term.

This Tuesday, I will have the honour of moderating the monthly session of the Jerusalem Business Networking Forum (JBNF). The theme will be “loans for small businesses”. A panel of three interesting speakers, promised attendance number doing well, a leading bank that wants to sponsor the event – everything looks set for another fantastic meet-up.

This topic is specifically pertinent to the JBNF, which has been hosting meetings now for over six years. As the name says, the group encourages and facilitates commercial activity in the Jerusalem region, deliberately using English as its primary language of communication. It is not just that many have found employment through our contacts. Businesses have leapt forward. Service providers have found new customers. Investments have been brokered. And all this with an emphasis to help the start up-to-medium sized corporation.

As I was preparing my notes for the event, Sui Ling Hui, a colleague from Australia, drew my attention to an article in Forbes magazine. Entitled “5 things for start ups to do when raising capital“, it was penned by Dave Samuel, who is a serial investor and who has posted at least 10 successful exits – and presumably still counting.

Samuel’s thoughts are those of a person who is involved daily in the decision-making of finding new financial resources. They deserve to be read in full. That said, he is only one player in the field of many. By the law of nature, other investors will take different perspectives, and this will be true if you are involved in high tech or trying to set up a production plant or a non-profit outfit.

I suggest two alternative but generic lines of approach:

1)  In everything you strive for, try to do, present or touch, demand excellence form yourself and those around you. Look to be the best. Do not offer shoddy power point presentations, displays that  do not work and lines of argument that have not been tested in prior debate with colleagues. Bottom line; If you go into a meeting with an investor not as prepared as you can be, the chances are that you will fail in your mission to secure funds.

2) It is crucial that you understand the difference between three financial concepts; budgets, cash flow, and profitability. These are terms that are often loosely banded around. All three are linked, but each has a different meaning an implication. In my experience, two of the most common misunderstandings in business are:

  • Many fail to realise that a budget for a given period of time does not mean that all total income and / or expenses will flow and match the same planned numbers.
  • In parallel, every year many a CEO looks in bewilderment at their accountant, who announces that the company has made a profit (on paper) – even though there is a gaping hole in the current account at the bank. Ouch time!

To be blunt: If you appreciate these complexities, you will be showing your investor that you are somebody who has the potential to create and develop a sound, cash-rich business.

Israel’s Prime Minister, Netanyahu, took a chance on going to the polls nearly a year early.

Never mind the external challenges – Iran, Syria, peace process – the economy was closing in. By the end of the campaign, everyone knew that the average voter was about to face a wave of price hikes: water, gas, electricity to name just a few. Further, during the campaign, government supporters stopped trying to pretend that taxes would not rise (again) to cover a nearly US$4 billion extra and unplanned fiscal deficit.

So as the politicians spend the customary dithering time trying to form a coalition government with people they had castigated days previously on the election platforms, what is going to happen to the economy?

On the positive side, there is still much to shout about. In December 2012, the economy kept moving ahead, this time by 0.1%. This stat is in line with the estimate of nearly 3%, predicted for the whole of 2013. Similarly, unemployment has crept up to 7%, which is relatively low compared to many in the Mediterranean zone.

FDI remains fairly resilient. For example, in an extensive analysis in the Hebrew press with Hamilton Lane, it is evident that this private equity group intends to extend its 6 year position in the Holy Land. And while there may be a slackening in the number of buy outs, even during 2012 US$5.5 billion was invested in Israeli high tech by outside positions. No wonder that the Israeli pavilions are so prominent at the Las Vegas gadget show last month and the upcoming mobile / app bonanza in Barcelona.

That said, the country faces critical structural issues that are continually being brushed under the carpet. Delaying serious change will only make the inevitable more painful. Specifically: –

  1. The budget deficit needs to be reduced, immediately. That means higher taxes for all. And that also means the defence establishment has to take a hit.
  2. Israel’s sea ports, specifically Ashdod, are over-staffed. In parallel, the average workers receive wages that are simply scandalous. These facts add up to an unecessary strain on the taxpayer. And similar observations can be made about the Electricity Corporation, which is unlikely to be privatised in the near future, due to a strong workers committee.
  3. The farming sector is set up to protect the producer at the expense of the consumer. For example, it is extremely difficult to import fruit, even when the subject matter is not in season. Again, this is the fault of a government not wishing to challenge strong vested interests.
  4. And finally, there is the high tech arena, the back bone of Israel’s economic success for over a decade. As the country’s Chief Scientist has just warned, Israel is failing to find ways to maintain its competitive advantage in the field of “innovation”. This needs a full and immediate rethink at the highest levels of government.

I could also mention the need to extend immediately land reforms that the previous administration introduced with more fanfare than substance. And there is the disgraceful wastage over positions as directors on the board of government jobs. A recent survey showed that 400 postings – each carrying an expense to the same taxpayer – had to be fulfilled, but life was carrying as normal. etc etc.

Israel’s governement has a strong economic base to correct these anomalies. Delay for too long or become sucked down by coalition politics, and then Israel’s ruling elite will soon find themselves abandoning the economic achievments of the past two decades. Now that really will hurt.

As this is my first post, writing on my new website, I wanted to refer to the themes that I blog about more often than not; management, the Israeli economy, and mentoring.

Actually, I was prompted to write this blog, as I watched the news of several large chains in the UK suffering from sales figures that had frozen in the snow outside their shops. With some ironic timing, this week I visited three small retail outlets in the Jerusalem area, all with ambitions to expand sooner rather than later. I admit that at least one of them is a client of mine. All of them have one related management problem, but they have reacted in a different manner.

CASE STUDY 1: Adam sells toiletries. His shops are in areas with lots of passers-by, although his specific locations just misses out on the main buzz. When he set out around five years ago, he had great ambitions to “stock ’em high, price low” and have a rapid turnover. What he was left with was large stocks of unsold goods. His advertising constantly missed the target groups. Jerusalem did not seem so golden.

Adam brought in a business mentor, who first of all structured a long-term cash flow chart. Rule numero uno – Stock could not be bought if sales did not reach set targets. Although this was a painful process – setting targets, learning to live with excel charts, losing the ‘freedom’ to purchase at will – Adam persisted. Times were tough, but gradually the debts were reduced. He even bought in a design specialist, who restructured the interior set up of the selling space. Despite snow in the Holy City in January, sales are up over 25% for the past 6 weeks.

CASE STUDY 2: David operates a series of shops near where he grew up and lives in central Jerusalem. About two years ago, he opened another outlet in a sector that was not familiar to him. Since then, although sales have remained positive, cash reserves have been plummeting.

As David acknowledges, his business coach did not spend too long mapping out the history of the company. One look at the shelves revealed that they were laden with stock, much of which had dust on it. The ratio of stock to monthly sales was absurdly high. And it was impossible to know the true value of the items, because nothing had been entered onto the cash register.

David’s approach was more simplistic than that of Adam. Yes, he did instruct his staff to commence registering stock and also new purchases, a task that became very lengthy, drawn out, and not terribly accurate. In parallel, he simply cut purchases of new items by around 75%. The effect? It is not just that David found hundreds of thousands of shekels remaining in his bank account, while sales continued apace. He is now planning to open another outlet.

CASE STUDY 3: Moshe’s enterprise is set up in a similar fashion to David’s business. At first, Moshe also took a similar approach and re-evaluated his purchasing policy. However, once the cash flow began to improve, Moshe returned to his old ways, and that is when his bank manager started to become very nervous. What is now called for is a new and immediate appraisal of what he really sells in his shop. Moshe will need to establish a way to identify his best sellers, as well as those items that leave him a true profit.

And the lesson? Big or small, a populous country or a city of 800,000 people, selling toiletries or electrical goods, you have got to know your stock – numbers, best sellers, profitable items. Otherwise, you start taking out loans to fimance new purchases. In other words, your money remains on the shelves and not back in your pockets.

Jerusalem – the city of peace, a centre for three major religions – has been dividing peoples and nations for thousands of years. The title of my blog, Afternoon Tea in Jerusalem, shows just how much I care and love and admire the pleasures of the place.

However, my personal passion cannot hide that again Jerusalem has caused more argument around the globe in the past week. At the United Nations, Israel has been lambasted for planning to build extra housing in what she sees as the capital of her country. Meanwhile, in Gaza, Hamas leaders have celebrated twenty five years of armed struggle against Israel, declaring that they will never recognise the modern Jewish state and its capital. Impasse, no?

I remain hopeful. The reason is that away from the news and the mass media, life in the city is really pretty good indeed.

Sharon reminded me of this picture of hope. She runs a growing blog called “The Real Jerusalem Streets”, which uses photography to illustrate the real facts. Take for example her feature earlier this year on Arab women in Jerusalem, working and roaming freely. A similar montage back in August was equally enlightening.

These are no isolated moments captured through a lens. This weekend I read a feature on a small dairy restaurant in the centre of the city called Tmol Shilshom. It is boutiquey, if such a word exists. It is frequented by writers and poets. It has won the 2012 “certificate of excellence” from Tripadvisor. All very nice, but there is one very crucial factor to this success, that is ignored by even the most cosmopolitan of overseas journalists.

The chief chef of this outstanding restaurant is Ma’azan Shwicki, an Arab who started in the culinary profession back in 1982 doing the washing up. Not only is his work now recognised by Tripadvisor. His breakfast is also considered one of the top ten in the world by “Lonely Planet“. And all this effort is soon to be combined with being the Muchtar of Abu Tor in the south east neighbourhoods of Jerusalem.

Jerusalem may not be perfect. It may not have reached the visionary standards of so-called moral politicians around the world. And for all that, despite the stress and the tensions, today’s Jerusalem has much to teach others about how to co-exist together.

It is generally accepted that the word mentor comes from a story in Greek mythology. The character Mentor was foremost a teacher, who was entrusted by King Odysseus to bring up his son, Telemachus. The professional relationship with the student developed. As in the story, today a mentor is seen as someone who imparts wisdom and shares knowledge with a less experienced person in order for that person to become independent.

Great reading, but I suggest that Mentor was not the first of his kind. There is a biblical story, which in many way is more enlightening.

The episode was brought to my attention, when I was reading an article by Zvi Weinreb, ordained rabbi and qualified psychotherapist. He referred to a discussion initiated by a student by the name of Carol during a course that he was presenting on leadership in the book of Genesis.

Carol spoke about Deborah, not the famous judge but the handmaid of Rebecca (who in turn was the wife of Issac). Weinreb described what provoked Carol’s detailed research in to this seemingly very minor character. The Bible recalls that when Deborah died, Rebecca and Jacob and his sons all wept. Carol wanted to know what provoked this specified outpouring of grief.

It turns out that when Rebecca had wanted to summon her son Jacob back from exile  – Genesis, chapters 27ff – she had a dilemma. Jacob had been living amongst the family of Laban. Although he was Rebecca’s father, Laban was simply dishonest, corrupt. The prime reason that Rebecca had survived her childhood, physically and morally, was due to the efforts of her maid……….Deborah.

As Weinreb relates Carol’s description: “Rebecca had to send someone who could pay a role in Jacob’s life and in the lives of his children, her grandchildren, akin to the role played by Deborah in her own early childhood. Hence she beseeched the frail, old lady to courageously undertake the mission“.

What Carol was arguing is that here we have a different kind of leadership than what we are used to seeing. We are not looking at a person who succeeds through charisma or authority. This is a tender soul, nurturing the good in people.

(As a historical sidebar, Deborah was buried under a tree near Beth-El, located just north of Jerusalem. Centuries later, the judge Deborah was considered a compassionate person, who delivered many rulings from under a tree near Beth-El.)

As per the theme of Weinreb’s course, Carol spoke about Deborah in the context of leadership. I suggest that these biblical figures offer much to modern-day business mentors and how they can approach their work with their clients.

Here is a story posted this week on Facebook by a friend of mine. He quotes a lady called Sarah B, who was riding a bus in Jerusalem.

On the number 13 bus this morning. An ultra-Orthodox lady entered the bus from the back door, because she had a stroller with her. She needed to get to the front of the bus to pay, and needed someone to hold her baby so she’d have the use of both hands. She asked the elderly Muslim woman across from me to please hold her baby. The baby continued sleeping, and the Muslim woman was extremely pleased. “I have 31 grandchildren!” she told all those of us around her, and we smiled. The Jewish woman came back and thanked the Muslim woman profusely, and brought the baby back to the middle of the bus where the stroller was, and the Muslim woman got off the bus a couple stops later.

In most other cities around the world, that incident would barely command a snort of interest. However, this is Jerusalem. This is a city where the only known issue that the leaders of the three great religions cooperated in recent years was when they protested of a gay rights’ march. This is a city where its unity is opposed by most world leaders. And it is the place that journalists flock to in order to learn how Jews, Christians and Muslims bicker with each other, while ignoring the often larger divisions within each individual community.

For all the simplicity of the above tale and the hope it raises, it is not a solitary incident. This spirit can be found elsewhere in Israel, daily. Consider the micro-algae educational project at Kibbutz Ein Shemer, where school children of different backgrounds learn together in order to protect the environment. There was the programme sponsored by the Prime Minister’s office in June 2012 to encourage employers to hire workers from minority groupings. And the Max Rayne  School in Jerusalem is one of three bilingual schools in the project, ensuring how kids of all religions can learn together in this challenging city.

Last night, President Mahmoud Abbas secured Palestine’s upgraded status at the United Nations.  Analysing the text of his speech in the Palestinian media, at no stage did the Palestinian accept the State of Israel, under any borders or circumstances. The Jewish state was referred to hate and loathing.

It is not just that Abbas has now effectively rejected these successful projects of cooperation. The UN exists to encourage mankind to welcome each other. The international body demands that all members actively embrace such a responsibility. Yet the means and  the language of Abbas reveal how and why he rejects the core raison-d’etre of the United Nations.

C’est la vie for the proponents of peace and for safe bus journeys in Jerusalem.

As I was contemplating writing this posting, somebody asked me why they should consider using a business mentor.

Sometimes, it is difficult to give a direct answer. And much depends on where your issues are centred – sales, production, admin, manpower – or at least where you consider them to be. Certainly, a mentor can be that professional shoulder to lean on, when you are searching for direction from a neutral source. Some argue that the mentor becomes a member of your board, forcing you to consider issues that you have preferred not to ask or have tried to avoid.

A recent case study illustrates what I mean.

A couple of months ago, a bank asked me to take on a growing client of theirs in Jerusalem, who effectively greeted me with the line: “I have built up this business for 25 years. It is something that you know nothing about. What on earth can you do for me?” He was right, it was the kind of operation that I have no clue about.

Well, we shortly established that his cash flow planning was ineffective. This was forcing him to take loans and at bad rates. Further, his time management was poor, leading to spend too much effort being spent in his office rather than creating new sales. Not a bad start, but not the “wow factor” that he was looking for.

So, I suggested a trip to his accountant, who knows all teh numbers. The company has been using the same expert for decades, but ususally only meets up once or twice a year. Our CEO agreed, although without much faith. The accountant himself was also initially sceptical and tried to put off the meeting. As for the result of this 60 minute encounter……………?

After some polite introductions and light questions, I threw out a ‘tester’. Turning to the man of finance, I merely asked him what our CEO could do to improve his income. The slightly sarcastic response referred to better sales. However, I persevered. Cautiously, the accountant suggested two technical adjustments to how specific costs are registered in the books.

And the value of these brief sentences? It is estimated that over twelve months, these changes will lead to tens of thousands of dollars entering the pockets of our CEO rather than donating them to the tax man as in the past. Not a bad return for the CEO for some prodiing from a man he had never met until recently.

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