Archive for April 2010

Which employee do you want to keep?

April 28, 2010

A few months back, I attended a seminar on “engaging employees”. How can a manager obtain the best from his staff? What will motivate them?

I have written extensively of the need to allow a worker to develop in their own space. Payment and smiles are not the only ingredients towards securing a productive employee.

A new article from the Harvard Business Review asks the question “how to keep your top talent”, especially once you have invested in providing them an expensive training programme. Surely, that should be incentive enough?

Apparently, one of the key mistakes of corporations is to assume that “high flyers” are the happy ones. Not so. And when they leave, it can be painful and expensive. In fact, the cost can be a double whammy. Carnegie estimates that it often takes up to 24 months to replace leading members of staff, which then impacts on work flows and revenue.

There is a flip side to this coin. Part of the fall out of the credit crunch has been a slow move towards appraising older workers. Arguably, the recession was partially caused by the enthusiasm of youth. It is an open question if a wiser and more senior commercial leadership in several countries would have led to a different set of circumstances.

In one of today’s economic newspapers in Israel, there is a major feature on how employers are reconsidering the benefits of utilising 50 year olds and upwards. Not so quick, but they give you  a solid, quality performance, often for slightly more money.

Is that enough motivation for the manager, who does he still just want to look at the direct costs?

Bags and motivated entrepreneurs

April 25, 2010

Crumplers is the wonder “entrepreneur” case study that everybody loves to read about. The founders dropped out of school, started an initial business that outsmarted the mega players, were forced out by a legality, and have moved on to something even bigger.

Crumplers manufacture and sell really good bags, specifically courrier bags. Nothing special there you may think, except for their handsome profits.

And that’s the point. Walk down your average high street, and you will find a least one shop selling handbags and similar attire. And you never find the one you want. Just a coincidence?

Daniel Citron almost won an internet competition worth US$15,000 to set up a new collection of bags. Yup, he too had seen an opening in the market.

A couple of months back, a client was looking for a bag to hand out at a conference she was organising in Jerusalem. Nothing complicated, just something presentable and with a logo. However, it took numerous phone calls and web searches and discussions to find a quality item, of the right size, practical, which did not come with a glaring bring pink backing.

What drives the Crumplers’ team? I do not know them personally, but let’s return momentarily to one of my favourite gurus, Dr Robert Brookes. His latest considerations on motivation is a must read and provides us with some answers. Remember, despite their talents, these people left school with few qualifications,  yet Brookes posits that: –

I have found that in both the business world and in schools, autonomy helps to create “motivating environments.” Affording employees, faculty, and/or students some choice does not minimize the authority of supervisors or managers. Instead I believe it enhances a sense of ownership, responsibility, and accountability in all members of that environment. As I have expressed in previous writings, intrinsic motivation is enriched when individuals are provided with opportunities to have their voices heard. So-called “top-down direction” frequently triggers feelings of resentment, lessening any possible satisfaction or joy associated with the activity.

 Brookes concludes with a very powerful comment from a colleague:

And we know that the richest experiences in our lives aren’t when we’re clamoring for validation from others, but when we’re listening to our own voice—doing something that matters, doing it well, and doing it in the service of a cause bigger than ourselves.

All Crumplers et al want to do is to help people, and they have shown why they are good at it.

Rosy economic forecast for Israel

April 22, 2010

Rafa is one of Israel’s oldest pharma companies. This week, I noticed a new sign on a developmental complex in Jerusalem, denoting where the company will build a new US$35m facility for 130 workers.

Just down the road is the Bank of Israel. This is another institution in a happy mood. Its revised predictions for 2010 and 2011 are a metaphor for optimism.

Growth of 3.7%, rising to 4.0% in 2011. Standard of living; 9.2% and 7.4%. Unemployment falling to 6.7%. And exports increasing at a steady 4.5%.

There are concerns if the stock market is too high and if the price of real estate is reflecting a bubble. But neither of these issues undermine basic economic fundamentals.

Next to Rafa is a new biotech centre, close to completion. Obama may not be pleased with Israel’s politicians, but the economy is pressing on regardless.

Israel’s economy celebrates 62 years of independence

April 19, 2010

This year’s Independence Day in Israel coincides with the “anniversary” of Herr Hitler’s birthday.

An irony, perhaps. Where as the failed Austrian painter talked of a Reich lasting for a thousand years, Israel’s Third Republic, despite a constant and continuing existential threat, is in its seventh decade. I will let others evaluate all the reasons for the country’s success, but one of them is the economy.

In the summer of 1986, Israel abandoned the mechanisms of protectionism that had served the country so well during its first traumatic years. It is often forgotten that when Israel was forced in to the Six day War of 1967, it did so emerging from one its deepest recessions.

Leap forward to 2010, and we have an economy based on innovation. The country’s hightech sector is at the forefront of the global cleantech revolution. Many analysts argue that the world is in the middle of a new industrial revolution in communications. Maybe, and at any telecom conference, you will find dozens of Israeli companies.

This push towards new social wealth is not limited to the sciences. I am working with a start up which has developed a prototype to replace printed cheque books. And come Christmas December 2010, you will see Israeli chocs on sale in Wal-Mart

Israel’s economic fundamentals are sound. Adjusted figures show that the economy grew at an annual rate of 4.8% in the last quarter of 2009, which only India and China could beat.

Israel’s population stands at just under 7.6 milion people. Roughly 25% are not Jewish. Despite the real threats of Hamas, Hizbollah et al, the continuing need to incorporate all – new immigrants, minority sectors, hundreds of refugees from Sudan, etc – is a need that works in parallel with the theme of innovation.

Yes, Israel is often criticised by others for not doing enough to help with integration. There is justice in some of those comments, although I have yet to find a perfect county that can preach without fear of being accused of hypocrisy. In parallel, I can proudly say that the importance of integrating all is a strong feature throughout much of society.

Look closely and you will see how innovation feeds off this ability to use the talents of all. The enemies of the people of Israel – from Pharoah to Hitler and on to the present rulers of Iran – have repeatedly tried to eliminate such freedoms and failed. Here’s to the next 62 years, and many more after that.

Cheesy investments on Tel Aviv Stock Exchange

April 18, 2010

Last week, I reread the 1990s classic: “who moved my cheese”. Four mice grapple with a new situation; having been used to a ready supply of quality cheese, the source dried up and each one had to work out what to do next.

Ever since the beginning of the credit crunch, I have been singing the praises of the Israeli economy and its stock market. The former is heading for over 3% growth this year. And investors have seen the main index climb over 110%, reaching a new record high this month. In May, the Tel Aviv Stock Exchange (TASE) moves over to the group of developed countries.

The Israeli economy is doing well. Many of the correct economic fundamentals are in place. Even interest rates are gradually returning to realistic levels. Yet, in the same breath, I must repeat what I have mentioned back in November 2009. The new status for TASE will not automatically bring an immediate bonus to holders of Israeli stocks and shares.

Until now, Israel shares have been a great bet if you wanted to hold shares in the group of emerging economies. Now Israeli stocks are competing with the big boys, and it represents a much small portion of a signficantly bigger pie. To quote a recent analysis:

Market sources have long warned of an exodus by foreign investors from the TASE and subsequent delays by new investors not rushing to get in after the upgrade on May 26.

(Meanwhile…) local investors are buying. Foreign investors are selling huge quantities and the public is buying, but this can’t go on, and at some point it will come crashing down. Everyone in the market knows this and they’re talking about it behind the scenes, but they’re keeping quiet outside.”

What is called for is not panic, but a reality check – an adjusted approach. Anything wrong with that simple advice?

 Go back to Dr Spencer Johnson, the author of the cheesy book. His preface includes the truism: “The best laid schemes o’ mice and men often go astray”…….written 250 years ago by Robert Burns.

How long does it take for people to listen, and learn?

Raise your glass to successful start ups

April 16, 2010

Most of us want to be successful, but are never sure what that really means or how to get there. For Maria Bartiromo, CNBC’s top female anchor, one key ingredient is self-knowledge, “…..the ability to define for yourself what shape your life will take, and how you will pursue success.”

Just recently, I have been looking at successful start ups, and what allows them to overcome the multiple obstacles in their path. Australia’s Snowy Mountains Cookies is one such example. The founders looked for an all-year round product that would also allow a young mother time off for family duties.

Significantly, they quickly identified a new need in the biscuit market, left open by one of the big guys. They plugged the gap by creating a quality product. The result is that after three years of operation, they have a client list including some of the continent’s biggest names.

Lone Tree Brewery also makes for a wonderful case study. Whilst I admit to a certain level of bias, because my colleague, Dorit Kosto, and I have been associated with the progress of the team, I believe that many entrepreneurs can learn from their experience.

A little over a year ago, we sat down with four people, who were very excited about creating a boutique brewery. Their philosophy included encouraging employment and tourism in a relatively undeveloped part of Israel. Each had qualifications in their own field. They talked with knowledge about raw ingredients and production processes. They came to us with a file, full of details.

What was missing was an answer to the “what next” question.

And this is where they got smart. First, they sought help. Second, they learned to establish for themselves a realistic set of targets; timelines, budgets, task allocation. Third, while sticking to the overall dream, they moved from trying to succeed big overnight and began to concentrate on implementing a series of small, achievable tasks. 

Dorit and I met up with Lone Tree Brewery today at their new premises. No, it is not a large factory, but they are producing. And they have room to grow. One of the founders has had to leave the group, but the three remaining members seem to have very clear roles. They were hosting an open-house tasting session. No fancy pre-advertising campaign, but bottles of beer were being sold to many happy customers. 

Speak to our heros, and all are looking ahead. Pricing and marketing, investment, marketing strategy – again, they want to define and to break down the next issues into a series of targets, which fit into a realistic timetable. Interestingly, they seem to be setting a high price in order to position themselves as a quality product.

Is that a risk? Maybe, but a taste of the beers on offer more than justifies the initial strategy.

A big year for the Tel Aviv Stock Exchange

April 14, 2010

Founded in 1953, the TASE will join the grouping of developed markets in May 2010. This is a very positive step for the country’s economic development.

There are 614 companies listed in Tel Aviv. 53 are cross listed overseas. The current valuation of bonds and equities combined is approx US$400 billion.

2010 has started well for Israel’s stock market. Following the credit crunch, the exchange is now back at its all time high. Average daily volume have returned to 2008 levels. The finance sector now comprises just 25% of the total shares, just overtaken by telecom and technology related companies.

Israel is about to celebrate its 62 annual Independence Day, and this commercial achievement is something to shout about with pride.