Monday, March 21, 2011

Start-up Nation by Den Senor & Saul Singer

Start-up Nation: The Story of Israel's Economic Miracle, by Dan Senor and Saul Singer, attempts to answer the question: how did a small, besieged country without natural resources or local trading partners become a world player in high-tech?  Israel is a country of about 7 million people and just over 60 years old; yet, it produces more start-up companies than countries like Japan, China and India.  It attracts, per capita, more than twice the venture capital investments than the US and thirty times more than Europe.  Aside from the US, Israel has more companies listed on NASDAQ than any other country.  What explains Israel's success?

Senor and Singer argue that the Israeli military is one key to Israel's success. In Israel, military service is mandatory. Young conscripted soldiers are empowered quickly to make hard decisions and improvise in difficult, unpredictable situations. The soldiers that stand out are selected by the elite military units for intensive training. The military also demands thoughtful and thorough debriefings of failed and successful missions alike.  Outcomes alone are not sufficient.  Every exercise and engagement is treated as a learning opportunity.  In the debriefs, senior soldiers challenge junior soldiers and vice-versa.  Hierarchy, tradition and the status quo are not accepted as roadblocks to finding the best solution.

The military's values help create a culture that empowers and nurtures entrepreneurism.  A failed venture is not a failure; it is an opportunity to learn for the next one.  Challenging existing technologies and business models is endorsed. 

Israel also creates breeding grounds for ideas--tight clusters of universities, firms and start-ups, coupled with strategic government support.  Together, these clusters foster innovation.  (See Steven Johnson's book, Where Good Ideas Come From for why clusters matter--video clip below.)

The strength of the book is the examples Senor and Singer share.  Whether it is the story of Shimon Peres and a young entrepreneur approaching senior auto executives about the electric grid for cars or the story of the unwillingness of one plant to allow the 1991 Persian Gulf War to interfere with its on-time shipments, it becomes clear why Israel is a unique story.

Recommendation: For the business person, there are lessons to be learned about how to run an organization successfully.  For the supporters of Israel, the book generates a sense of pride that Warren Buffet (who never buys non-US companies), Google, Cisco, Intel and many other high-tech companies look to Israel for innovative development.

Author interview:

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