Military secrets behind Israel’s economic miracle

BOOK REVIEW: VIC ALHADEFF
Start-Up Nation
By Dan Senor and Saul Singer

IMAGINE a board meeting in which the participants include Albert Einstein, Sigmund Freud and Martin Buber, with Chaim Weizmann in the chair.

Sound fanciful? Not for the Hebrew University of Jerusalem. The four luminaries, each of whom pushed the frontiers of humankind’s intellectual capacity in his own unique way, all served on the university’s first board of governors.

While the level of debate would have intimidated the most self-assured minute-taker, the extraordinary composition of that board underscores the premium which Israel placed on intellectual prowess, even before the State had been ­established, and which continues to this day.

Start-Up Nation:‚ÄàThe story of Israel’s Economic Miracles, by Dan Senor and Saul Singer, explores how it is possible for a nation of just seven million to have 63 companies listed on the NASDAQ in 2009, second only to the US, with Canada third on 48 and Japan fourth on six. Germany and France had two apiece.

This is the nub of the book: how a country so lacking in natural resources and so preoccupied with keeping existential, military and terrorist threats at bay can nevertheless become the world’s start-up capital, not to mention its second Silicon Valley. The explanations are numerous, yet while they include such factors as individuality, adversity and the country’s geopolitical situation, they all boil down to one word — army.

It is no coincidence that many of Israel’s successful entrepreneurs also distinguished themselves militarily. Allow me to elaborate.

* The military — and battlefield — experiences which shape the Israeli character demand that young adults take initiative, demonstrate leadership and handle life-threatening situations in real time, thereby engendering personality attributes and imparting IT knowledge that give them a leading edge when they enter the workforce.

* The Israeli military has an egalitarian ethos that encourages soldiers to challenge authority. This culture, translated to civic life, lends itself to challenging the status quo and being creative, innovative and self-reliant.

* By the time Israelis enter university, they have served in the army and tend to be more responsible and focused, with a clearer career direction, than their peers.

* The nation’s military and defence industries generate successful spin-offs in the IT and commercial sectors.

Google’s CEO Eric Schmidt has described Israel as the world’s second-best country for entrepreneurs, after the US.

Microsoft CEO Steve Ballmer commented that Microsoft is “an Israeli company as much as an American company” because of the size and impact of its Israeli teams.

Warren Buffett broke his decades-long record of not purchasing foreign companies by buying an Israeli conglomerate for as much as $4.5 billion. And almost half of the world’s top technology companies have bought start-ups or opened research and development centres in Israel.

This book explores the characteristics and qualities which combine to make Israel the ultimate start-up nation. It is user-friendly, teeming with case studies and vignettes, and a must-read for anyone interested in acquiring a deeper understanding of how this unique country works.

Vic Alhadeff is CEO of the NSW Jewish Board of Deputies.