A Culture of Innovation and Economic Success

Oct 13, 2010 - by Joel Lessem

Recently I finished reading Daniel Senor’s and Saul Singer’s book Start-up Nation:  The Story of Isreal’s Economic Miracle.  The book describes how Israel--a country of 7.1 million people, only sixty years old, surrounded by enemies, in a constant state of war since its founding, with no natural resources--produces more start-up companies than large, peaceful, and stable nations like Japan, China, India, Korea, Canada, and the United Kingdom.  Those start-up companies attract more venture capital than all of Western Europe.  Israel has more companies on the NASDAQ than those from all of Europe, Korea, Japan, Singapore, China, and India combined.  Why? Three key takeaways:

1. Agile Decision Making: Like the Israeli Army, Israeli companies give their staff a lot of latitude to make critical decisions without having to get approvals.  This environment motivates staff to be innovative and drive the business forward rapidly.  The success or failure of an initiative – can be explained after the fact.
2. Failure is an Acceptable Outcome:  Failure is much more acceptable is Israel than in the US or certainly more than places like Japan. An Israeli venture-capitalist will fund an entrepreneur on his second try. It gives Israelis the freedom to take risks and drive innovation.
3. Be Constructively Critical:  Israeli’s argue.  They are not afraid to openly criticize their boss or each other’s ideas.  It keeps everyone honest and on their toes.  It also tends to nip wrong-headed strategies and plans early on.

Everyone involved in building a business should read this book.  I have seen too many organizations where management wants to be perceived as infallible and staff grudgingly follows ill-fated company plans.  I have seen too many managers make a poor hiring decision and hang on to their new employee because they did not want to admit making a mistake.  Finally, I have seen too many companies where the employees are not motivated because they aren’t empowered and can’t affect change rapidly. Make decisions fast, fail but recover quickly and follow the philosophy that nobody’s idea is sacred!  Build an economic miracle out of your business from the ground up!