Archive for August 2011

Is the Israeli economy a good bet?

August 24, 2011

Well, on the surface, things don’t look so rosy for Israel’s financial and commercial community.

In one corner, you can find the pessimists, complaining that Israel’s government still manages a restrictive economy in key areas. After all, why can’t local consumers buy fruit and veg from other countries? And it does not help that too many large companies are dominated by a few well-connected families.

And as ever, lurking on the other side of the ring is yet another threat of geopolitical violence: this time from Gaza. Just look at this crazy timeline from Sunday 21 August, as posted by Stuart Palmer. Which modern society can operate properly under such a dark cloud?

  • 06:56 -Short while ago, 4 more Gaza rockets struck southern Israel.
  • 07:20 -Iron Dome intercepts 3 rockets launched from Gaza into Israel
  • 10:00 -7 rockets hit Israel in last couple of hours
  • 12:00 -2 rockets hit so. of Ashkelon, Israel, threatening 112,900 Ashkelon residents; city Pop. = 1/3 of Florence, Italy Pop
  • 14:03 – On Thursday Israel sent 263 truckloads with goods and gas into the Gaza Strip for the Palestinian Population and is sending more today.
  • 16:40 – Fifty Gazans entered Israel for medical treatment while 22 rockets landed in southern Israel.
  • 17:02 – IDF Announcement: In Response to Rocket Fire, Israel Air Force Targets Terror Sites in the Gaza Strip.
  • 17:15 – Another Gaza rocket hit Israel, which is approximatly 11 miles north of the Gaza Strip, threatening the lives of 112,900 Ashkelon residents.
  • 19:27 – Hamas-run Gaza rocket hit southern Israel communities near Israel-Gaza border. A total of 31 rockets struck Israel today.
  • 19:45 – Hamas launched a mortar shell with phosphorus which hit Kerem Shalom today. Hamas broke the international law which states: It illegal to use the substance in inhabited areas.
  • 21:33 – A short while ago two rockets fired from Hamas-run Gaza fell near Eshkol Regional Council.
  • 21:59 – Following the terror attacks emanting from the Gaza Strip, the Israel Defense Forces’ soldiers helped in moving babies to protected wings in the hospital.
  • 23:14 – Three more Gaza rockets just struck southern Israel.

Which country? Well, actually Israel does.

It is not that I am advocating that crises are good for the economy of the Holy Land. Quite the opposite. What I am saying is that Israel has found a way in the past two decades to move ahead, despite everything.

How? Why? Is it the natural desire of a population that looks to change and innovate? The effect of the brilliance of the Governor of the Bank of Israel, Stanley Fischer? A government that has held the budget debt ratio in control despite the previous credit crisis and now financial troubles in Europe?

The future remains unsure for many economies, including that of Israel. The mandarins in Jerusalem have much to improve structurally. For all that, the current fundmaentals look good and need to be protected.

Why mentors look for two sets of tablets

August 21, 2011

Rabbi Eli Levin posed a very interesting question to his community on the Sabbath. Which set of tablets had more relevance to the Children of Israel in the Sinai desert?

Was it the first set, which were tumultuously shattered by Moses, following on from the story of the golden calf? Or does the emphasis lie with the second and complete set?

The rabbi discussed the point with his congregation, eventually drawing them to the conclusion that in fact both are needed in life. Strange as it may seem, there are commentators who note that on at least two occasion in the book of Deuteronomy, G-d almost appears to be thanking Moses for his initial act of destruction.

What’s going on? The broken tablets did not go to waste. Eventually, I believe that they too were stored in the Temple in Jerusalem. They represent what could have been. That show how many things in life are started but not completed, yet we are encouraged to continue onwards. They remind us that sometimes our failures also contain many good points.

And, of course, the second set shows what we can all achieve if we really try and produce a “quality result”.

There is a parallel here to the work of mentors, at least in my work as a business mentor.

To simplify what happens in my line of work: People will turn to me with their issue or problem. “What can be done?” they cry out.  Gradually together you chart what is holding up progress and then create a way forward. And then on to the hoped-for perfection.

However, in the background is the thought of what went wrong in the past. I never reject all of the old stories. At the very least, these people were (and still are) full of vision and good intentions. Quite often, there were some very strong commercial positives that have been smothered or snuffed out by poor mistakes. 

And where does the mentor come in?

Steve Jobs once called this an element of “joining the dots”. Not all parts of your life are golden successes. But, the mentor can see the overall path that the client cannot, clarifying the lessons of the good and the bad elements. And that is why we are often encouraged to take two tablets.

So what’s changing in Israel?

August 18, 2011

I was speaking to a top advertising exec this week in London. To summarise his question:

A democracy based on strict proportional representation, producing continuous minority governments. Nuclear threats from Iran. Hamas and Hizbollah constantly probing. The Palestinians launching a diplomatic initiative at the UN. How do Israelis cope?

That’s point. Somehow, Israel and Israelis do continue jogging along. The economy is sailing along, even if growth has fallen back to 3.3% per annum. Tourism is at a record high. 28 hightech / internet companies will take part at the International Broadcast Convention in Amsterdam.

And yet, and yet…..Something has happened in Israeli society. It has not been just another hot summer.

First, hundreds of thousands have taken to the streets in demonstrations against the social policies of successive governments. Years of growth may be fine on paper. Unemployment may be at a record low. But as this “triumph” has come at a cost of continually squeezing the nebulous middle classes, there has come a point in time when people have said “enough”.

It will be a brave person to say exactly what will be different. And I am not referring to some cosmetic changes in tax codes or cheaper housing for young families. For possibly the first time since 1982, a social movement has exploded out of nowhere and without any control from the established political leadership.

At the very least, politicians of most persuasions are going to have to spend some time listening and understanding to what is going on. They will not be able to carry out one of their basic functions of leading from the front, but they are going to have to be “reactive”. They are being called on to “respond” in full to the call for change.

Where that will take the country is anybody’s guess. A ‘dash’ back to the past of 1977 shows that some social movements may start with a bang but they can fizzle out.

As for the diplomatic front, the aftershocks of the Arab Spring are coming in to play. Following the fall of Mubarak, the Egyptian border is looking tragically porous. With Assad in trouble, intelligence reports indicate that Hizbollah and Iran are trying to support his position. And for all his gesturing over demanding UN recognition, the position of Abbas as leader of the Palestinians is clearly unclear.

The geopolitical map is moving again. And just as interestingly, in parallel, so is the socio-economic foundation of Israel.

It is time for American Presidential hopefuls and European decision makers to recognise that somebody has moved Israel’s cheese.

Amy Winehouse, gangs and that mentoring thing

August 17, 2011

“So what is mentoring?” I am often asked.

I guess that many see this as one of those nebulous phrases, which mean most things to most people. For me, it is very simple – helping others to take a few steps towards their vision, commercial or otherwise.

In the past week or so, I have seen two very different aspects of this work. For example, I read an interview in the Hebrew press with Mark Ronson, music producer and key figure in the life of the late Amy Winehouse.

Ronson was asked how he deals with the ego of the music greats. He observed how Winehouse, Allen or Adele are typical of people who are able to express what many of us mortals cannot. His job is to understand those feelings and then bring them out, so that they are heard in the best way possible.

Is that just producing or something more complex?

Earlier this week, I observed a discussion on Sky TV, featuring a former gang member and now mentor to youth in deprived areas around the UK. I forget his name, but the comments were fascinating. He challenged the government to provide resources that will help misdirected teenagers find a direction for their problems and pain.

The mentor went on to describe children who cannot recall having a table in their house in order to eat a family meal together. He mentioned the fact too many role models for teenagers – sporting heros or politicians – have become embroiled in drugs or bribery. From that point, it is a short step in the chain of logic, which then allows people of all ages to break the law and to riot.

My mentoring is usually less intensive. Often based in Israel, I tend to deal with commercial or financial issues, although by definition they often impinge directly on private matters within the home. But all of my customers are trying to break free from their current set up and move ahead.

Showing them that vision and helping them move on is the art of mentoring, often combined with many other skills.

Why Israeli and UK politicians can unite…in shame

August 16, 2011

I love playing the role of an Englishman in Israel. The Holy Land is a country, where weak tea is served black and with heaps of sugar, yet mine is still brewed well and drunk with milk.

August has been a momentous month for both countries. In Israel, social unrest has seen over 400,000 take to the streets in peaceful demonstrations and we have witnessed tent cities erected in many a city. The demand is for a change in the social agenda of the government, and the organisers have forced the Prime Minister to appoint a bipartisan committee to recommend reforms.

In parallel, less than a week after the senseless violence struck numerous English cities, I find myself visiting London. The media is still full of shock from the riots – how can gangs get away with stealing and murdering and torturing with such abandon? And why has nobody dealt with these thugs until now?

The causes of the problems in both countries are very different. In Israel, it is easy to point to the squeeze on the middle classes. The handling of the doctors’ strike has been pathetic. Housing prices are still high. And more. 

But note that the Prime Minister has supported his committee of experts with his own sub team from the government containing 17 ministers. SEVENTEEN ministers to deal with one issue, which they all shown that they did not see coming.

Why so many? I guess that the PM could not afford to offend sensitivities of various coalition partners.

As for the UK, I was fascinated by a comment by a social mentor on Sky TV on Monday morning. He questioned why people – especially gang members – should respect politicians. It is this elite group of people who have been fiddling their expenses for years and getting away with it. So why shouldn’t others go out and rob a store of electrical items.

Anyway, there will not be enough law enforcers to stop them, as successive governments have cut staffing and raised the level of paperwork for the constables.

Britain is arguably the oldest democracy in Europe. Israel is the only democracy in the Middle East.

And yet, there is a common trend that links the social phenomena in the two countries. Politicians have spent so long looking after their own – or their own causes – that they have failed to notice what has been going on under their very noses.

They have forgotten that they have been elected to govern for others and not for themselves. Time for a wake up call!

Protesters, economic boom and world recession – Israel’s economy Agust 2011

August 9, 2011

On Monday August 8th 2011, as Wall Street and European markets crashed 5%, the Tel Aviv market rose 1.5%. Less than 36 hours previously, over 300,000 citizens – around 5% of the population – had taken to the streets, demanding “social justice”. Yet, figures just released show new car sales for 2011 approaching an all-time high!

So what is the true state of Israel’s economy? More importantly, if there is to be a global recession, what will happen in the Holy Land?

Let’s start with some basic, boring stats. All agencies are still reporting around 4% growth for 2011 and 2012. So even if that was to be cut by half, Israel will still be in a good position compared to most fellow members of the OECD. Unemployment is at a record low of under 6%. Foreign direct investment is there for all to see. Even the bubble in the housing market is showing signs of bursting.

On the other hand, new mortgages were down 25% in July, a month when they normally rise. Tax collection has fallen off during the summer. The average wage is 1.2% down. All symptoms of the next recession?

In addition, there is a forthcoming potential strain on the Israeli Treasury. Israel’s own Facebook social protest has risen out of virtual nowhere to a powerful movement for change in just four weeks. Most of the list of the demands will cost substantial amounts of money. However, as the demonstrations have received massive street support, the government will be struggling not to fork out at least some unplanned expenditure.

So for all of Israel’s many economic triumphs in the past two decades, the leaders have trampled on the middle classes, and got away with it, until now. But don’t forget; many of these same people have also received an improved quality of living, despite their complaints.

So, what next? If America and European political leaders continue to blither around with their debt issues, then few countries can avoid some fallout. Israel has good fundamentals – S&P has maintained its credit rating fairly high – and so starts this difficult period from a solid position.

In management, you are taught to fix problems by looking at success stories and learning from those experiences. Is there a case to apply that model to international economics? Time for world leaders to visit Israel and not just to complain about its policies?

Why can’t genius enrepreneurs move quickly to marketing

August 5, 2011

Dear Entrepreneur: Stop Dreaming and Just Launch That Start-up

Thus pleaded Naveen Jain in his latest blog on Forbes. And he explains how so many entrepreneurs, frequently brilliant in the home skills, spend all their time on perfecting a prototype that they never bring to market.

And it is not just the time that seems to disappear. So do lump sums of financial reserves. And in the end? Well, these talented people risk becoming another “me-too-tried-it-and-got-nowhere”.

This week, I met up with a mentoring client who has strong abilites in the sciences. Over two decades she has written several patents and has tried to perfect several products to infinitum. Naturally, her powerpoint presentations match the length of time she has taken on technology development.

Everytime, I asked a question, the conversation was drawn back to the concept. Using long complicated words, she detailed what the product could eventually do. And, no surprise, there are a wide range of commercial fields open for the platform technology.

Jain looks at the example of Microsoft, which rushed “Word” to market for all of its early faults. However, my client baulked, when I suggested just moving from the computerised drawing board to a prototype. I cannot do that until it is fully ready is a summary of her response.

The question is why. What stops people commercialising their own dream? Are they afraid of mistakes? Do they want to keep full control, even at the expense of making no money? Is it a case of entrepreneurs are just that? They love innovating, because they hate admin or sales or production or anything of real substance.

Successful entrepreneurs are not just clever. They are also brave. They also recognise  their own limitations, which exist in parallel to thier talents, and bring in a team. Then, these geniuses are “in business”.