Start-Up Nation: Business Lessons from Israel

The long standing struggle between Israel and the Arab Middle East is certainly well known. But did you know Israel has produced more NASDAQ-listed publicly traded companies than Europe, Korea, Japan, Singapore, China, and India combined? Moreover, Israel has more engineers and scientists per capita than any other country?

Start Up Nation: The Story of Israel’s Economic Miracle is a nonfiction look at the reasons behind these facts and more. It examines Israel’s technological and venture capital industries through the prism of its economic, political, and social culture, as well as through events such as the airlift of Ethiopian Jews in Operation Moses.

Start Up Nation makes for an interesting read, particularly for business owners who draw metaphors from the example of business leaders. In this case, however, the leader is a nation with no natural resources and a short history marked with shorter yet intense periods of war.

Excellent Insight into How Culture Infuses into Strategic Business Decisions

Authors Dan Senor and Saul Singer link Israel’s societal and culture aspects into the personal behaviors of the business leaders chronicled in the book. The first pages tell of a compelling pitch to Carlos Ghosn, CEO of Nissan, for an Israeli electric car battery start up. “Israelis understand not only the financial and environmental cost of being independent of oil,” says start up founder Shai Agassi, “but also the security cost of pumping money into the coffers of less-than-savory regimes.” Agassi made this pitch with former Prime Minister Shimon Peres alongside. From page one the reader experiences how Israelis consider opportunities beyond the terms of money and with cooperation among leaders new and old.

Throughout Nation, Israelis are a frank-speaking people who are willing to explore the world, to learn from those experiences, and to be persistent with implementing ideas in business. Managers at Intel Israel, for example, are credited for changing Intel’s strategic decision to no longer seek increased processor clock speed and instead create new processing paths. The change positioned Intel for offering processors well suited for mobile devices and laptops, capable of even faster running software but with lower detrimental heat. Division managers were persistent; supporting their claims with data, and displaying a culture that “challenges the obvious, ask questions, debate everything, innovate.” There are numerous other big-business references throughout Nation, including Cisco, Google, and even Warren Buffet.

Out of all the influences, Senor and Singer spend a number of pages on the Israel Defense Force and its impact on Israeli life. Military organizations are usually a starting point for innovation. But the book shows how all the personally natural outcomes of a military upbringing translate into civilian life — discipline, drive, national pride, and comfort with ambiguity while developing a new idea. Opportunities for business grow from familiarity with alumni in military units, since military service is honored throughout Israeli society.

Historical Perspective can Influence the Strategic Choices for Start Up Founders

Senor and Singer also root their chronicled individuals with contrast to culture behavior stemming from key historical events, like the The Six Day War and the Yom Kippur War. The comparisons and historical contexts makes the book a solid, compelling read. It is not a history book — though researched, the comparisons do not dwell on data extensively in the text — but Nation provides a context just right for those who are not politically savvy about the Middle East.

The authors offer cultural comparisons to other nations in respect to the potential organizational impact, both large businesses and start ups. For example, American businesses sometimes do not “have a capacity to understand combat experience” from applicants who served in the military.   For Israeli businesses “military service provides the critical standardized metric for employers — all of whom know what it means to be an officer or have served in an elite unit.”

Nation also notes areas of weakness in Israel’s economic model, most notably how its somewhat singular focus on technology has inadvertently left out two significant social groups, Haredim Jews (who enter seminaries while others got to the military), and Israeli Arabs. There is also note to Iran’s pursuit of nuclear technology, which if turned into a support of armed weapons could “spark a nuclear arms race throughout the Arab world … and could freeze foreign investment.”

What Can Small Businesses Can Learn

Israel is a great metaphor for the significant global impact a small business can make despite having “enemies” nearby with huge natural resources. Israel never strays beyond its strengths, and its business leaders treat each decision with care. The book is also displays classic economics — how choosing a specific economic model can eliminate another equally important choice. Small business ultimately learns how effective a cohesive team can be, especially when that team places an emphasis on chutzpah first.

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About the Author: Pierre DeBois is the founder of Zimana, a consultancy providing strategic analysis to small and medium sized businesses that rely on web analytics data. A Gary, Indiana native, Pierre is currently based in Brooklyn. He blogs at the Zimana blog and can be found on Twitter @Zimana_.

Pierre DeBois Pierre Debois is Associate Book Editor for Small Business Trends. He is the Founder of Zimana, a consultancy providing strategic analysis to small and medium sized businesses that rely on web analytics data. A Gary, Indiana native, Pierre is currently based in Brooklyn. He blogs about marketing, finance, social media, and analytics at Zimana blog.