Archive for June 2012

Mentoring, ministers, muck-ups – Israeli conundrum

June 23, 2012

Item One: As a business mentor, I try to encourage my clients to take responsibility for their decisions. My aim is that they should realise how any strategy has consequences, which need to be explored thoroughly in advance.

Item Two: The popular television programme of the 1980s, “Yes, Prime Minister”, wonderfully satirised the notions of citizens around the world. If a government minister makes a mistake, he will never own up to it.

Item Three: The ombudsman in Israel has released two reports in June. The first slams the Prime Minister for his conduct of a sensitive military operation. The second effectively censures the Finance Minister (Steinitz) and the Interior Minister (Yisha’i) for their management of the fire brigade service, following the deaths of 44 people in an inferno 18 months ago.

Let me concentrate on the latter incident, where the ombudsman feels that the two members of cabinet had a “special responsibility” for ensuring that the fire service had sufficient equipment and training.

In response, everyone accepts that this failing can be laid at the hands of several governments, going back possibly twenty or more years. Specifically, Steinitz argues that he was in favour of granting significantly higher allocations, but had demanded a programme of reform, which was never offered. Yisha’i contends that he had complained repeatedly about the lack or resources, but nobody listened.

I am sure that they are both correct. And I agree with Steinitz, when he also says that he cannot be held responsible for a second minister’s problems, everytime he has not been able to allocate better budgets. After all, next people will blame him for deaths in hospitals.

However, when I don my hat as a mentor, both men come up very short, although for different reasons.

Steinitz wanted to hear of detailed reforms before signing a large cheque. Good for him. Nothing is free in life. However, he has a duty to understand that if a situation is so dire, especially when dealing with a subject that can involve life-and-death, then greater flexibility is demanded.

This is a classic case of trying to turn a situation in to “black or white”, when we know that life is full of compromises. Could Steinitz not have released some initial funds?  Steinitz and his team failed to take that wider and more responsible approach.

As for Yisha’i, that he failed to convince the money men to hand out the cash does not mean that he should be censured. However, he is known as one who understands how to secure finance for his political party’s favourite projects. And on the weekend on the fire itself, he is reported to have spent the Sabbath safe with his family in Jerusalem, while his teams were operating flat out in the north of the country. Where was his leadership, and with that comes responsibility?

Bottom line? The ombudsman is correct when he says that government ministers should take a more professional approach. May he and his successor continue to broadcast that message. However, it is a message that he has failed to apply to his own office, which criticised two experienced politicians for the wrong reasons.

As in “Yes Prime Minister”, Steinitz and Yisha’i will shift the blame and life will carry on as normal….except for the families of 44 people.

Israel tech takeaways – where Cisco leads….

June 22, 2012

Earlier this week, I wrote how I am bewildered how Israel, a nation of less than 8 million people, continues to hold such an important position in the global tech revolution of the past two decades. 

I listed five stories that I had come across in the past few days. However, I did not realise that I was only just scratching the top of a very large iceberg. The comments of John Chambers, CEO of Cisco and visiting Jerusalem this week, put this into perspective.

There are a lot of opportunities here. It’s the second country, after the US, in terms of start-ups and entrepreneurship. There are companies here that do not grow enough, and what we do is to bring these companies into the Cisco family and grow their activity. I don’t think that there is a better time to invest here, in partnerships, venture capital and help our partners expand.

Chambers is specifically looking for partnerships between Jews and non-Jews. And where he leads, others are right behind him. CA from California has committed itself to setting up an innovation centre with Tel Aviv University. “The new center will focus on enterprise computer infrastructure management and cyber security. CA did not disclose details about the planned investment in the center, but it will reportedly total several million dollars.”

 And for specific successes of the week, let’s start with Flash Networks from Herzylia, just north of Tel Aviv. The company was named co-winner of the prestigious Global Telecoms Business Innovation Award for Mobile Content and Services Innovation.

Second, LucidLogix is reported to be providing support to millions of global game users via its partnership with Intel on motherboards.

Third, Orad Hi-Tec offers video servers, which are cheap and effective solutions for all the video cassettes stored in TV station warehouses. It is exceeding helpful when TV stations need quick and ready access to old sporting tapes. Bottom line is that the company has become Israel’s main rep at the 2012 European Football Championships, as several large organisations like the BBC use their services.

A country of 8 million people? A country surrounded by geopolitical issues? A government that can barely run the fire brigade? Israel’s youthful private sector has found a method to get around these restrictions.

5 unexpected takeaways about Israei tech

June 19, 2012

Combining the phrases “Israel” with “start-up nation” in the same sentence has almost become a cliché.

Back in the mid 1980s, Israel’s commercial fame centred around the theme of growing tomatoes in the desert. Although that agricultural tech is still very evident, hightech / cleantech / biotech / nanontech etc is what drives the numbers today at the Finance Ministry in Jerusalem.

That said, every week, I am stunned afresh at what Israeli companies achieve. So, I have compiled a brief list of items that I have spotted in the past few days, technologies which will quietly impact on millions around the world.

1)  Israel and the Galaxy S3

Samsung’s new smartphone, Galaxy S3, is clicking up the sales around the world. How many of the new users are aware that part of the security package was developed by Discretix Technologies Ltd, located 25 miles north of Tel Aviv? The company ships over 4 million of its devices monthly.

2) Israel and Google

Google’s r&d centre in Israel has long been considered a success for the company. Chairman, Eric Schmidt, reiterated the triumph in an appearance this week in Tel Aviv. That same evening, he appeared on a national news programme, where he stated categorically that one of the reasons for his latest visit to the Holy Land was to evaluate additional Israeli tech firms to purchase.

3) Israel and Euro 2012

While Europe’s 16 leading football nations thrill their fans in Poland and in the Ukraine during June, behind the scenes there are hundreds of companies supplying products and services to the players.

Delta Textiles, based in Carmiel in northern Israel and known as an excellent employer, was contracted some time ago by Nike to manufacture high quality socks. It is not just the topsplayers from France and Portugal, like Ribery and Ronaldo, whose smelly metatasarls are benefitting from Israeli machinists. By the end of the year, it is assumed that Barcelona, Manchester United, Inter Milan and several other great European sides will also be sporting this attire.

4) Israel and Boeing Aircraft

Elbit is one of Israel’s leading defence manufacturers. With the help of its sales, the country is consistently one of the world’s leading exporters of such systems.

The company has just secured a contract to supply “a low-profile head-up display (LPHUD) that will be part of the Advanced Cockpit System for Boeing fighter jets.” At the first level, the contract is valued at US$80 million with further opportunities available.

5) Israel and Facebook

Face.com was created in 2007 and has developed a capability for facial recognition of photos. Five years later, the company has been purchased by Facebook for a reported US$100 million. Last year, Zuckerberg’s team invested US$70 million in Snaptu, another Israeli start-up.

By way of an afterthought, I recalled how Israel has a lot of critics if not haters around the globe. They will boycott anything to do with the country. I wonder if they have asked the question how the world would function without access to these and similar capabilities.

How business mentoring can make a difference – 6 case studies

June 17, 2012

In May 2012, the BBC announced a series of events to engage young adults in the London borough of Hackney, not normally known in recent years as an area of economic enterprise. Last week, I was invited to attend a radio recording, featuring 6 commercial initiatives by members of the local community, all in their 20s and who had received at least 10 hours of expert mentoring.

The event saw the competitors pitch their hopes and aspiration to a panel of three successful businessmen, who were known in the borough. Although there was a financial prize going begging, it was soon evident that the more important catch were the connections offered by the judges.

Mega kudos to everyone involved – it was a fascinating success. The six projects included: –

  • An aggregation service to compare university courses for school leavers
  • A media studio
  • An aggregation service for start ups seeking legal advice
  • A sports academy for distressed areas
  • Products for sufferers of dementia
  • Fun headwear and accessories

They were all given four minutes to present and a further four minutes to answer questions. With some irony, either they concentrated excessively on their business model but excluded the vision, or the other way around. Of the six, five already had some level of initial sales.

All clearly benefited from the mentors, who had come from different sectors of the business world and had given their time gratis. And one of the consultants told me how they had benefitted from the experience.

It was hard to choose a winner. However, judging from the reaction of the audience, the preferred pitches came from those who valued the “SUCCES” acronym from the authors of “Made To Stick“. Whatever you are selling, it should be simple, unexpected, concrete, credible, emotional and have a story line”.

That is what mentors will be telling their clients – it is a safe methodolgy to help ensure that your product or service will be around for sometime to come.

Investing in the Palestinian economy – who gets what?

June 12, 2012

It was recently pointed out to me by a blogger friend that American federal agencies are encouraging those willing to listen that they should place greater investment in the infrastructure of the Palestinian economy. The aim is to move away from the traditional support given to UNRWA or non commercial elements.

A World Bank report in September 2011 describes “the necessity of both sustainable economic growth and effective institutions for a future viable [Palestinian] state. (And)……investment opportunities have arisen in Palestine. For example, in 2011 the Rasmala Investment Bank established the Ras­mala Palestine Equity Fund, which seeks to “achieve long-term capital appreciation by investing in a diversified portfolio of growth and value stocks listed on the Palestine Stock Exchange in securities anticipated to undergo initial public offerings as well as securities at their initial public offering.

One reason for this encouraging change of approach is that the senior Palestinian leadership has yet to shake off the whiff and evil of corruption that pervaded the Arafat dictatorship. To paraphrase a second blogger, Arnold Roth:

Muhammad Rashid, Arafat’s money-carrier (literally), has been arrested. He has been running the Palestine Investment Fund, which in turn controls the Arab Palestinian Investment Company. This organisation is dominated by Tareq and Yasser, the sons of President Abbas.

May not look good to outsiders. The Palestinian Authority (PA) has reserves. Reuters recently observed that:

The Western-backed PA ….says it has poured around $7 billion into the Gaza Strip since its rival Hamas seized control in 2007, but complains that the Islamist group is stymieing its efforts to balance its books……The PA says it spends $120 million a month, or more than 40 percent of its whole budget, on salaries and services in Gaza. 

Remember, those salaries includes dosh for those people launching rockets daily into Israel. And they more than likely funded the “security” provided to a journalist friend as he toured Hamas smuggling tunnels last month. It is also useful to recall that much of this funding comes from the generosity of European taxpayers – over 1 billion dollars since 2008.

Maybe Western leaders are finally aware that this displacement of resources is adversely effecting the average “man on the street” in Ramallah or Jenin. For example, Palestinian sources note that hospitals are facing closure, as they are starved of income. And because the PA has consistently ignored its water obligations under the Oslo Agreement with Israel, villages in the Bethlehem district are now running dry.

Where next? Difficult to say. Palestinian banks are also in a precarious position as they have been struggling to feed the needs of central government. One thing for sure – if you want to invest in the Palestinian economy, make sure that central sources are nowhere near the distribution table.

When spin fails in customer relations – a case study with El Al

June 11, 2012

All of us have set answers when faced with a difficult question from a customer. Most of us know that every so often, it is worth ditching the blurb and just saying sorry. So, when a large company ignores that rule, effectively just laughing at the customer, you just feel that you want to get annoyed.

Take my situation early last Friday, checking in at the airport. Over the years, I have liked to fly with El Al. They may not get everything right, but you can see the staff trying.

Once past security, I had to weigh my bags and obtain a boarding pass. I was clearly over the limit of 22kg, but an extra 5 kg had never bothered the airline in the past.

The young clerk, with a bright and pleasant smiled, explained that I would have to pay an excess fine. I was stunned, and without raising my voice, expressed my displeasure.

She repeated her smiled, stood her ground and then launched into a long and embarrassing explanation. She told me that I had made the choice to fly with El Al and that I knew the conditions before agreeing to purchase the ticket and that……… As you can imagine, her smile did finally disappear during this gust of corporate patriotism.

I went away. I shifted a few items into my hand luggage. I returned to madam, who allowed me to be 2kg overweight, thus directly contradicting her own rules. In parallel, she tried to reassure me again that she was right.

When she eventually she understood that I felt that it was too early to argue over the matter, she halted the flow of words, professionally finished her work, politely handed me my boarding pass and we parted company. Meanwhile, in the line next to me, another assistant was repeating the same mantra. Thanks goodness for El Al training manuals, chapter 7, section 8, para 3.5

However, I felt yucky. Madam Smilely assumedly felt triumphant. And El Al may be losing a customer.

Let me be clear. Her facts were correct. And she was definitely within her rights to charge for excess. No argument. BUT…………..

For decades, El Al have not charged me. Why now? Why a change of policy? Could El Al not invest 5 lines of time and explain the new policy on the ticket, in advance? 

El Al is the dominant airline at that airport. How about a few signs to warns of the decision to enforce the rules?

Bottom line, El Al was technically correct but they were definitely not right. They were wrong, and the clerk did not have the grace to admit it. It hurts me to write but the more I thought about her smile, the more I felt how it lacked some of its value.

As for me, I just felt that I was being exploited for a little bit of extra potential profit. I wonder who I will fly with next time.

Who is to blame for inequality? Israel as a case study

June 6, 2012

Can you join the dots?

Item 1: Approximately 25% of Israel’s population live below the poverty line.

Item 2: In the OECD’s recent “Better Life Index“, Israel ranked in the lower third of countries. Specific issues of concern included lack of affordable housing and poor education facilities.

Item 3: Despite Israel’s highly efficient milk industry, the prices of dairy products are 44% higher than the OECD average.

Item 4: Israel’s government issued the Kedmi report this week, which proposes mechanisms to lower the price of staple groceries and household items. The main emphasis appeared to be on blaming the strength of large supermarket chains amongst barely 8.8m people.

Poverty does not just exist in a vacuum. It is the result of multiple socio-economic forces coming together at one time. In Israel, the problems are compounded by two externalities:

  • Ultraorthodox families are encouraged to have children; 8 or 10 is not uncommon
  • Arab families are also large, and there are often less employment opportunities in such areas.

Imagine you are a business mentor and you had one challenging question that you could pose to an Israeli decision maker. What would it be? I suggest something like: “Why do governments continue to support positions that only support dominant commercial powerhouses and thus detract from price competition?”

For example, excise and regulation make the import of fruits and vegetables totally unprofitable except under specific conditions. The result is that even when there is a drought of a certain product, the consumer has no choice but to pay or to forgo. The winner remains the farmer or the shop owner.

Similarly, two chains control around 60+% of the food retail market. With the price of land high, little space available for out-of-town shopping districts and prohibitive advertising costs, the two companies look set for long and safe future. Again, the winner-loser break down is clear.

What next? Time for Israel’s government to do its job rather than act on behalf of interest groups who pay for its election campaigns.