Archive for April 2011

Economic wars in the Middle East

April 29, 2011

So there is fighting in Libya, one of the largest oil producers in the world. Bahrain’s reserves are expected to last for another 15 years or so. Yemen and Syria also have a few barrels of the black gold. And the list goes on.

So, while all the leaders of these countries are under threat, the dollar revenues keep flooding in. The more they fight, the more they profit. Brent Crude his risen 25% in the past quarter alone.

But what goes for the top brass is not necessarily true for the rest of the folk in the Middle East. A report from The Economist notes that of the countries surveyed “real GDP growth outlook for 2011 has worsened in nine between December and April, improved in eight and remained the same in three”….

Most of the countries registering higher growth forecasts are oil exporters, but Israel and Turkey are both in this group by virtue of better than expected actual performances last year and as a reflection of our modest upgrade of our global economic forecast.

It is somewhat ironic that Israel was given a positive citing. When oil prices first surged back in 1973, it was an aftershock of the Yom Kippur war. Blame Israel for the instability all those years ago? Debatable, but that is certainly not the case with the current violence in the region.

A few days ago, Moody’s issued its annual report on Israel.

The Israeli economy is resilient and dynamic, and the macroeconomic policy framework is coherent. Having eased fiscal and monetary policy to support activity and avoid a pronounced recession during the global crisis, the Bank of Israel is rapidly removing its monetary stimulus in order to ensure the recovery is sustainable and inflationary pressures remain in check.

And here’s another irony. Israel is one of the world leaders in pioneering alternative energy sources, such as solar energy. I wonder why that is?

The Israeli army and society – a personal viewpoint

April 27, 2011

My son is just finishing basic training in an infantry unit in the Israeli army. When I explain this to colleagues around the world, a wave of enforced silence hits the conversation.

Am I mad? Is he mad? Can’t you send him off to university? Isn’t it dangerous? etc etc

Well, yes Israel is surrounded by enemies. Our democracy needs defending. There is talk of the next Gaza campaign. And that’s before you mention the possibilites of Egypt worming its way out of peace treaty or the Iranian threat or Syrian unrest …..

There again, this is not Syria. Nobody sends soldiers up on rooftops to fire at protesters in Tel Aviv, nor in the West Bank for that matter. For all the complaints raised by international protest groups over the January 2009 battle in Gaza, no soldier was found guilty of issuing immoral orders.

This is very much a people’s army, where your commanding officer can often be your neighbour.

Mere words? I think not. Have a look at recent postings on the website of the army, the IDF, Israel Defence Force.

1) “There is a 200% increase of minorities volunteering to join the IDF”. This includes Bedouin, Druze, and Arabs of different religions. The report does not mention the many immigrants, who are able to complete their voluntary conversion process to Judaism through the army.

2) Over the past 4 months, the IDF has helped Druze farmers transfer 12,000 tons of produce to their fellow religionists in Syria. This has become an annual process, facilitated by the Red Cross. Fortunately, this year’s crop was completed before the Syrians closed the border as part of their clampdown.

3) The IDF was one of the first teams to send a field unit to Japan. This follows on its success in Haiti and other countries, which have suffered from a natural disasater in recent years. 

Many elements of the ultra orthodox continue to ignore the importance of the Israeli army as a motivator, as a builder of society, as a provider of skills for life, and much more. In truth the IDF remains far more than just a big bully as frequently projected by the likes of the New York Times or the BBC.

And if my son is part of that process, I am proud of that.

Leadership courses – something for Middle East leaders?

April 20, 2011

Imagine gathering the leaders of Syria, Libya, Iran and Yemen, taking them up in a helicopter, dropping them off two miles from the coast in the dark of night and giving them one order: “Swim for it”!

This is how former navy SEAL officer, Rob Roy, operates. He runs an intensive leadership training course for CEOs.

The purpose is to tell them that they can walk into any situation and come out ahead…Motivation is not leadership—real leaders inspire, guide and give hope.

Now I accept that politicians, and especially brutal autocrats, do not possess the same characteristics as business executives. However, neither group can afford to fail. And they are all leaders of complex organisations.

Roy’s programme makes for interesting reading. There is a great deal of ‘extreme’ physical content. Distractions and sub plots are thrown out at all angles. And the reason why?

  • Roy’s extreme training conditions force people to work by themselves. They are deprived the luxury of customary support systems. In contrast, CEOs (and dictators) often have other people do their dirty work for them.
  • In parallel, the course participants do have to support each other in order to survive. If you ditch somebody, you will not succeed. How often do we hear of those leaders dumping those who are considered redundant?
  • The demands of the exercise ensure that decisions are made under pressure. Filibustering, spin and delaying tactics are out of bounds. Nowhere to hide.

The article on Roy poses a challenging question: “What does this teach people?”

Military people know that if something happens to you, someone will come and get you no matter the cost. And if you want my loyalty as an employee, I have to know that no matter what, you’re going to save me. That’s what this drill is for. It’s a defining moment of loyalty and integrity. It’s not about skill, it’s about knowing that they’ll be there for me when the company goes to crap. 

And who are the people protesting in Syria, Libya, Iran and Yemen? Those various different parts of the societies, who know that their leadership does nothing and will do nothing for them.

Time for some Middle Eastern rulers to put on their swimming trunks?

Business mentors, exodus from Egypt & managers

April 17, 2011

It is mid April and Jews around the world are getting ready to celebrate the festival of Passover. The main event is where the exodus from Egypt is recalled by the family, and even the youngest participants are giving a part in the proceedings.

The story is told through a book called the Hagaddah – a Hebrew word, which means to explain. And from the earliest years, Jews are encouraged to learn more about what happened and why by asking questions, just as a business mentor probes their clients.

You see by asking questions, both sides become engaged with each other. Accepted norms are challenged and evaluated. You discover things about yourself or your business that you did not realise were there, often in front of your very nose all the time.

Going back to the Hagaddah, and early on in the proceedings, the book describes four types of sons. Two are considered positive influences; the clever one and the one who tries to learn but does not have the ability.

Two others are placed on the other side of the spectrum; the evil one who simply makes arrogant statements and the one who sits passively without comment. And the same characters can often be found in companies, acting negatively on their departments’ activities. How so?

Somebody, who just issues statements without checking facts nor allowing for discourse, will sooner or later not progress nor meet targets. Steganation if not worse. Similarly, the person, who just lets things drift, thus assuming that others can pick up the slack or that nothing bad will happen, are simply irresponsible. Life is not static. Situations change, especially when you think that all is tranquil.

So where does this leave us?

The Exodus took place over 4,000 years ago. Few commercial activities survive from that time. But sages have shown how we can learn from history and in what manner in order to make our present lives more fruitful. These are the decisions we then make in order to shape the history of the future.

Pls sir, can I have another US$5 billion?

April 14, 2011

Palestinian Prime Minister, Salim Fayyad, is canvassing Western support for a US$5 billion investment package spread over three years.

Compared to the needs of Portugal ($113b) or Ireland ($50b), that ain’t so much. And nobody can argue that the Palestinian economy is one of the richest in the world. So, in the context of an era when despite open persecutions in Syria, Yemen, Iran or wherever, the Palestinian issue is still considered the cause of unrest in the Middle East, Fayyad’s plan has a real chance of going through.

In my private capacity, I deal with small investors, who always have questions before they throw their money at a new project. So here are my three questions, under the bold assumption that a Western taxpayer might be interested.

1) Is so much money needed?

The World Bank report, “Building the Palestinian State” from 13th April 2011, is highly informative. The press release implies that future growth via overseas help will depend on the relaxation of Israeli restrictions.

Well, nobody can deny that. Before the violence of the second Intifada and the ensuing clampdown, World Bank researchers showed that the economy grew under Israeli governanceby over 5% annually since 1968 . Yet just two weeks ago, a British tourist was killed by a Palestinian bomb in Jerusalem, not allowing a removal of all security measures. 

Yet in parallel, there are signs that the Palestinian economy is actually doing very well. In the executive summary on page 5, the report notes:

Education and health in the West Bank and Gaza (WB&G) are highly developed, comparing favorably to the performance of countries in the region as well as globally. For example, enrollment in secondary education is roughly 20 percentage points higher than the rate in the average middle income country, and levels of malnutrition are 7 times lower.

A week previously, Reuters had described how:

The hilly city of Ramallah, which lies just to the north of Jerusalem, has undergone a massive boom in recent years on the back of Western donor support, with new smart eateries and bars mushrooming alongside a plethora of pristine office blocks.

Significant is the contradiction in the World Bank report, which concentrates on the importance of donor aid. However, as the IMF noted and then cited by Forbes, the need for donor aid is dropping all the time, down to under US$1 billion for 2011.

2) Where is the accountability and transparency?

If the aid or investment is to be given, who will track that it is to be put to correct use? Despite the best efforts of the World Bank and the use of interim mechanisms, money is still transferred via Ramallah to pay for the salaries of thousands of Hamas supporters and operatives in Gaza.

Of equal concern is the opinion of Palestinian President, Mahmoud Abbas. Back in January, he was quoted in Al Hayat al Jadida that “the US is assisting us in the amount of $460 million annually. This does not mean that they dictate to us whatever they want, because we do what we view as beneficial to our cause.”

In a period of international economic instability, with governments cutting billions from their budgets, US$5 billion is no small sum to let go of and wander off on its ownsome.

3) What about other countries?

Fayyad’s appeal is to the West. He specifically started the ball rolling at a conference in Brussels. Yet, in the past month alone, the price of crude oil has jumped by around 20% or US$20 per barrel. Now that is one heck of a lot of extra revenue, which sure ain’t going to the protesters on the streets in Bahrain or Damascus.

So tell me again; just why are Western governments going to accept the brunt of this call from Fayyad? Is anyone going to challenge the figures?

Will my business be a success: 2 helpful guidelines

April 13, 2011

I often find that in many of my discussions with clients there is an unspoken question, lurking in the shadows of the conversation. “Will my business be a success?”

As a mentor, it is not my job to predict or to guess. However, I can prod around two pertinent themes, which pop up continuously.

Belief in yourself and in your product

For all the problems of cash shortage, lack of trained staff or whatever, you have to believe in yourself. It is one of those secrets that they do not teach you at Harvard Business School. This belief contains a massive passion and drive that often helps people overcome enormous hurdles.

Paul Green, an IIB colleague, directed me towards a fascinating utube clip. It is 15 minutes of inspiring viewing, where Caroline Casey’s personal determination allowed her to “look past conventional limits”.

I recalled this to some people this week. Late last year, they had established a service business in Jerusalem and they admitted that it was not easy to wake up every day and “go to war”. The are times when they have to dig deep in order to carry on, and yes the first clients are now coming in the door.

Another client told me how he is no good at selling. So I challenged him and asked: “How come that when you talk about what you want to do, everybody becomes interested in the subject and wants more info.” By the time we meet again, he should have a drawn up an initial marketing campaign.

The importance of the client

A recent posting of mine referred to “putting your audience first”. Remember that it is your customers who keep you in business.

Siu Ling’s latest feature in Ruminations echoes the same point. Servicing customers is all about providing them with value.

Here is a simple example of what I mean. Israel currently has 3 providers of mobile telephones. Annual profits repeatedly hit mega numbers. And yet, those figures seem to be matched by a similar amount of customer complaints. I personally simply do no trust my provider, Orange, and cannot wait to change.

Yesterday, the government of Israel announced that within 12 months there will be two additional companies on the market. Prices will drop, while services should improve all round. 

In the past, I heard one senior sales macho argue that his mobile company invests millions in training. I believe him. The question is not the amount, but where it went.  They probably have not invested enough time and resources into helping the customer and ensuring that they were happy.

Two simple rules of thumb to drive the success of many a business.

How much time to invest in a potential client?

April 10, 2011

We have all been there. Shop owner, insurance salesperson or business mentor like myself; We are about to reel in a client, but they keep putting off the decision.

How do you know when enough is enough and that it is time to move on?

A few months ago, I watched a utube video from a  former advisor for Hilary Clinton. He suggested flicking back in your diary or calendar, counting up all those recurring appointments with people, which had led to nothing. Why did that happen? Was there a common theme?

And what jogged this thought was that last night, I had the fun of clearing out a whole load of old notes and papers. Sure enough, a few thick files popped up, where I could not recall receiving a dime for my input.

This is not about correct business models, pricing policies or success fees. The provider of a service must assess in advance what a customer is worth and can deliver. In parallel, that same provider has to be armed with clear guidelines as to how much they can afford to invest in set up work. Either way, the dream must be balanced very coldly against existing reality.

If one of other of those above elements is blurred, then the result may be a big loss of time for yourself. A secondary negative impact is that you effectively forgo the opportunity to invest in establishing a commercial relationship with an alternative client.  Double ouch!

Each story is different. Everybody has to make their own judgement call. Last year, I went beyond my usual parameters. The result has been an exceptionally commercially exciting adventure for both sides.

Before every additional meeting with a potential clients, you have a right and a duty to ask yourself: Is this meeting truly of value and is there a realistic chance that it will bring me some revenue?