Archive for December 2009

Israel’s economy- taking stock at 31.12.2009

December 31, 2009

Israel’s economy has come through 2009 very well – beyond expectations. It is time to say congrats to politicians, to senior bankers and to civil servants.

The IMF, finance houses, local analysts – they have all been repeating the same message for months now. Both in relation to other countries and to where it could have been, the Israeli economy is set to record healthy growth levels in 2010.

Some of the more recent stats continue to be encouraging. Unemployment has dropped to 7.7% and the pattern remains downwards. Inflation is showing signs of steadying, especially as the Bank of Israel looks set to keep raising interest rates in 2010.

No – not everything is rosy. Almost at the last moment, the Treasury has announced a 0.5% reduction in the rate of VAT, throwing businesses into confusion. Public transport will cost more from 1.1.2010. Local taxes are set to increase. And water rates will shoot up by 25% – if only they would guarantee that the extra income would improve the infrastructure!

The Middle East is notoriously unstable. Who knows if the new year will see Israel entangled in another military engagement? And yet, whether it be activities in Lebanon or in Gaza, that did not stop the local economy in the past decade.

In 2010, Israel’s stock market is set to join the Financial Times list of developed countries. The OECD is expected to accept Israel as a full member. There is a mood of quiet confidence in the financial community, and deservedly so.

Jerusalem & the end of a decade

December 30, 2009

It can be dreadfully boring to quote stats. Of Israel’s 7.5million people, around 11% live in Jerusalem. And of that number, around a third are Arabs.

Now let me tell you some really wow things about the cityJerusalem, a city which I love and am proud to be associated with. And to help me, I will quote from a lecture given by Mr Gideon Ben-Zvi, which I heard this evening.

Now when it comes to Jerusalem, Gideon knows what he’s talking about. He was born and educated in the Holy City. He has set up at least 5 high tech firms in Jerusalem. He is a friend of the current mayor, Nir Barkat.

Gideon observed that many local entrepreneurs have started out with an idea, originating from the heart of the Hebrew University in Jerusalem. Surprise? Well this educational establishment has possibly the highest number of patents in the world for a university – around 70% are in the life sciences.

And Gideon mentioned that teams from Hitachi, Siemens and other multinationals are regularly vetting the books of Yissum, the university’s biz dev commercial arm.

Now consider that Jerusalem hosts around 22% of the high tech companies in the country. This includes about a third of the biotech firms. And of the 760,000 Jerusalemites, large sections belong to the growing ultra orthodox Jewish communities and the Arab sector, many of whom exist outside the main workforce.

Jerusalem’s immediate commercial future looks bright, as the mayor looks set to continue with his plans. Jerusalem, at the turn of the decade, has a hopeful future to consider.

Intel, Israel, & your new microprocessor

December 29, 2009

Intel has been operating in Israel since 1974.

Located on 4 sites. Over 6,500 workers. Export sales are expected to top US$3 billion in 2009. A successful r&d team, backed by Intel’s first production line outside the States. All-in-all, a very hefty operation for the multinational.

For example, the team in Haifa had a leading role in Centrino, found in many laptops around the globe.

The same set up has developed Sandy Bridge, a leading edge microprocessor. It will be larger and more energy-efficient than its competitors. And it should be on sale in early 2011.

Intel laid the path for many other conglomerates. Today, Siemens, Microsoft, Motorola, HP are just some of the many international conglomerates with larger facilities in Israel. Whether it be in the fields of medical devices, computer services, communications or otherwise, these companies provide a benefit to people around the world.

And here’s the catch, if not the hypocrisy. In Europe, and especially in the UK, there exist pressure groups, which seek to convince people not to buy Israeli products. These same people disseminate their information via their computers and their mobile phones……..which function with loads of tech from the Holy Land.

To quote my young teenager son: “Duh!”

Gaza’s economy – one year on

December 28, 2009

It is a year since Israel invaded Gaza. Many NGOs report that the local Palestinian economy has been devasted. A closer inspection reveals a more complciated picture.

 Israel’s action was a response to the thousands of rockets that had been fired at southern towns since the withdrawl from Gaza in 2005. On the anniversary of the start of hostilities this week, Hamas organised a  “mass” demonstration of support. Estimates of the turnout vary, but as the Assocated Press commented:

…the Hamas call to rally was met with indifference. Ignoring a siren meant to call for a minute’s silence, cars whizzed by and pedestrians kept walking……”I wish they had commemorated the war by opening a factory. That would have been better than this,” said Gaza resident Rami Mohammed, 30.

And that is the problem for the Hamas leadership. Not all the people are stupid all the time. They will not continuously accept that Israel is to blame for their economic problems.

Take a look at the “tunnel economy”. First, it has created a new elite, where many of the members are linked to the Hamas leadership. And in true Orwellian irony, Hamas had ousted the previous Fatah leadership, which was seen as ridden with corruption.

Second, the underground economy has become an employer of child labour, a total contradiction of humanitarian ground rules, and thus a cause for more discontent.

There is another secret side to the economy. On the one hand, Hamas cries “poverty” to whoever will listen. And yet, when the time comes, it showers money on to the streets. Pictures from the Eid religious festival revealed shops full of produce.

Similarly, Hamas is thought to have invested around US$2 m in celebrating its battles against the Israeli army. But also this week,

…… sources in Gaza have reported of a new corruption affair in Hamas’ transportation ministry. According to one testimony, a senior ministry official named Ziad Harara took tens of thousands of dollars and disappeared……

This affair is related to the driving studies industry in the Strip. According to reports, senior transportation ministry officials take about $658-790 for issuing a driving license, even for people who do fail to meet the driving test’s demands. Hamas government workers receive a $100 bribe for letting people pass a theory driving test without taking it.

Motivation and creativity – a new year tip

December 26, 2009

Motivating your worker: With all that cheer in the air, surely nothing could be easier at this time of year.

And yet so many of us just simply miss the boat.

I recently wrote about how inspiring bosses are those who find a way to become a friend with their colleagues. Call it “micro social networking” if you will.

An article in Harvard Business Review labels this as “progress”.

On days when workers have the sense they’re making headway in their jobs, or when they receive support that helps them overcome obstacles, their emotions are most positive and their drive to succeed is at its peak. On days when they feel they are spinning their wheels or encountering roadblocks to meaningful accomplishment, their moods and motivation are lowest.

Note how this is all based around “a feel good” factor. People want to put in more effort when they believe that are achieving something.

Interestingly, even when tasks are outsourced, the external team needs to be encouraged in similar ways.  In an executive brief, which I was recently handed, it was explained that:

The quality of an outsource team’s output is directly proportional to the satisfaction they have in fulfilling the demands of your business. And much of this hinges on how well you value them as workers and their work. How do you make them feel that they are an integral part of your success? How do you make them feel as if they were your employees instead of outsourced consultants and workers?

Yet again, it’s all about making the person – employee or supplier – feel much better about themselves.

An extension of this approach is getting teams to be creative, seeing beyond their comfort zone. A fascinating article by Sue Arnold in the December 2009 issue of “Ruminations” illustrates this point. She concludes by observing that “creativity is essential  for any business to survive and thrive. Everyone has latent creative talent within them, but this often remains an untilised resource”.

And we all know that we are at our most creative when we are feeling motivated.

Now there’s a message for all managers wishing to start off the new year on a dynamic note.

Who are the Christian communities in the Holyland?

December 24, 2009

An announcement from the Israeli army caught my eye.

The Coordinator for Government Activities in the Territories, Maj. Gen. Eitan Dangot, and the Head of the Civil Administration in Judea, Brig. Gen. Yoav (Poly) Mordechai, met today (22.12.09) with Christian leaders, including ……the head of the Franciscan monastery, the Custodian of the Holy Lands, the Ambassador of the Vatican, the Greek Orthodox Patriarch, the Armenian Patriarch, and the Latin Patriarch to ……….

And that does include Prostestants and others. Can you imagine the logistical and security nightmare, ensuring that every group gets to its fair share of the Church of Nativity in Bethlehem? And all in 12 days.

Israel is considered the one country in the Middle East, where the numbers of Christians is rising. About 5% of the total population, the largest single group belongs to the Eastern Orthodox churches. But not all have had an easy year.

Start with those Protestants who live in the southern Negev desert. The largest group are the Black Hebrews, originating from America. Over the past few years, they have endured thousands of rocket bombings from Hamas. “Only” 200 were launched in 2009, a decrease of over 90%. My teenage son was talking to the community last week, and they felt that things were returning to normal.

Life in Gaza for the 3,000 Christians has rarely been easy since Israel departed 4 years ago, and especially more so with the onset of Hamas rule. As opposed to the past, it is hoped that this year, over 300 pilgrims will be permitted by the Islamic authorities to journey to Bethlehem.

In the West Bank, the Palestinian Authority has been more accommodating, although life is not without periods of harassment.

In an effort to promote further harmony, President Peres has sent a message to Christian communities throughout the area. It is now 25 years, when Peres became the first acting Prime Minister to take part in the ceremonies in Bethlehem.

Next year? Who knows. But Israel must be doing something right if Christians find security there coupled with the basic freedom of worship. Here is a seasonal message for others in the Middle East to read and learn from.

3 cheers for good managers

December 21, 2009

Earlier this year, I wrote about Emblaze, a typically successful Israeli hightech company, but which had found itself plunging towards disaster. I cited the reasons of poor management and hinted at an arrogant corporate culture.

Many have argued that similar approaches were prevalent amongst corporate and mortgage bankers in America. And in Britain, the government has been found wanting, trying to buy its way to growth while revenue was drying up. In all these sitations, sooner or later, somebody realises that “the king is naked”, and thus begins a very painfull fall out.

Correspondence with a gentleman, named Colin, has brought to my attention that Emblaze has turned itself around. He claims that much has to do with the role of Guy Bernstein, the CEO, establishing new commercial relationships.

As I wrote to Colin yesterday, it is always interesting to see how companies overcome the seemingly insurmountable. Lo and behold, in today’s Hebrew newspaper, Yediot, there is a listing of several Israeli companies, who have pulled themselves away from bankruptcy.

The companies are located in the clothing, food and retail sectors. And for all the unique stories and internal processes, they have common themes.

  • Most were bought out, but the basic concepts have been retained
  • Most have benefitted from a merging with other logistical systems, resulting in significant efficiencies.
  • Most have benefited from a small injection of money.
  • They all reaped the benefits of a strategic management team.

Bottom line: In a year of economic recession, they have survived, expanded, taken on new staff. It’s smiling time again.

And the lesson for senior management? The phrases of arrogance, resting on your laurels, complacency come searing to the surface.

The recovery programmes implemented were clearly not that difficult nor complex (although probably painful). Generally, the previous set of owners had misread the dynamics. It would appear that for a business to maintain its success especially in a downturn, it needs to have in place a mechanism to further management creativity and innovation.