Five Lessons from Israel’s Economic Miracle
“In addition to boasting the highest density of start-ups in the world (a total of 3,850 start-ups, one for every 1,844 Israelis), 6 more Israeli companies are listed on the NASDAQ exchange than all companies from the entire European continent.” — Startup Nation
What does it take to build a “Startup Nation” What is a startup nation either way? In their book “Start-up Nation” Dan Senor and Saul Singer exposed how Israel went from their humble beginnings to become one of the most entrepreneurial nations in the world. They showed that — despite your environment — with the right mindset and by developing a culture that promotes entrepreneurial thinking and de-stigmatizes failure you can become a hub for innovation and creativity.
Sometimes learning from the best in the world can teach us important lessons for our own projects and companies. Let’s see what Israel can teach us about entrepreneurship…
Before we do anything else, let’s set some context. The general reader might be familiar with the geographic location of the country, however, let’s refresh our minds:
As we can see many of the surrounding countries are areas in which we hear most of the unrest news in the Middle East. It makes us ask an important question: Why in the world would any entrepreneur want to start a company there?
A short answer given by Singer is that “that adversity, like necessity, breeds inventiveness”. But that doesn’t quite make it, does it? Couldn’t we also argue that many other countries have gone through similar or even more adversity throughout the years (e.g. Latin American countries). If that was the end of the argument we would have a very lousy book, however, Singer goes on to explain key entrepreneurial traits that have made the Israeli a powerhouse of ideas — maybe we could imitate some of these in order to achieve a similar level of success.
Five Key Entrepreneurial Traits:
- Chutzpah: Translates to “ gall, brazen nerve, effrontery, incredible ‘guts’”
- Rosh Gadol: Translates to “Improvisation over discipline”
- Davka: Translates to “the more they attack us, the more we will succeed”
- An Immigrant’s Mentality: “A nation of immigrants is a nation of entrepreneurs”
- Post-Battle Debriefing: Reflecting after every single project or venture
“Chutzpah”:
According to the Jewish scholar Le Rosten’s, Chutzpah — a word derived from German-Slavic- means: “gall, brazen nerve, effrontery, incredible ‘guts,’ presumption plus arrogance such as no other word and no other language can do justice to”
Somewhere along the way — either at home, in school, or in the army — Israelis learn that assertiveness is the norm, reticence or “being reserved” risks you being left behind by the competition.
Singer adds that: “You can tell a lot about a society based on how [its members] refer to their elites. Israel is the only place in the world where everybody in a position of power — including prime ministers and army generals — has a nickname used by all, including the masses.”
Why is this important?
From the age of zero we are educated to challenge the obvious, ask questions, debate everything, innovate,” says Mooly Eden, who ran these seminars. As a result, he adds, “it’s more complicated to manage five Israelis than fifty Americans because [the Israelis] will challenge you all the time — starting with ‘Why are you my manager; why am I not your manager?’” — Startup Nation
One of the many characteristics of entrepreneurs is assertiveness and having a bias towards action. It not only means to trust in your product but in your capabilities to follow through and achieve your goal. Israelis have come to develop these capabilities through a mix of assertiveness and defiance towards the established hierarchy.
“Rosh Katan” vs.“Rosh Gadol”
- “Rosh katan” behavior, which is shunned in Israel, means interpreting orders as narrowly as possible to avoid taking on responsibility or extra work.
- “Rosh gadol” thinking means following orders but doing so in the best possible way, using judgment, and investing whatever effort is necessary. It emphasizes improvisation over discipline, and challenging the chief over respect for hierarchy.
Why is this important for entrepreneurs?
In the vast majority of the professions and vocations, the people who succeed are not any cleverer than you. The adult world is not full of gods, just people who have acquired skills and habits that work for them — Matt Ridley
Many times when we’re facing a tough decision we tend to “shrink down to our role” and just take the smallest possible choice within our current duty. We think that those who are above us hold all the solutions for our current problems. Singer argues that by taking a “bird's eye view” on your project and going beyond what your current role states you will be able to take better decisions and work across different teams to deliver great solutions. The people above you are not gods, they’ve just mastered specific set of habits that has worked for them in their current role.
“Davka”
While some countries could have victimized themselves Israel proceeded to set their entire response to conflicts with one word: “Davka”
According to Singer “Davka means “despite” with “rub their nose in it” twist”. It means that “the more they attack us, the more we will succeed”
Why is this important for entrepreneurs?
The two real fathers of Israeli hi-tech are the Arab boycott and Charles de Gaulle, because they forced on us the need to go and develop an industry. — Yossi Vardi
By having an intrinsic attitude to keep going despite all of the circumstances, Israelis have already prescribed themselves one of the most important traits of entrepreneurs: resilience. It is no secret that one of the main reasons entrepreneurs fail — besides failing to execute the idea — is that they surrender when the tough gets tougher.
Wouldn’t we all benefit by seeing “obstacles as the way” and finding the hidden lessons besides all of our challenges ?
Having an “Immigrant’s Mentality”:
Israel is one of the most ethnically diverse countries in the world, Singer argues that the “immigrant’s mentality” has allowed them to not take anything for granted and dare to take the entrepreneurial path:
Why is entrepreneurship happening on the East Coast or the West Coast of the United States? A lot of it has to do with immigrant societies.
In France, if you are from a very established family, and you work in an established pharmaceutical company, for example, and you have a big office and perks and a secretary and all that, would you get up and leave and risk everything to create something new? You wouldn’t. You’re too comfortable. But if you’re an immigrant in a new place, and you’re poor,” Margalit continued, “or you were once rich and your family was stripped of its wealth — then you have drive. You don’t see what you’ve got to lose; you see what you could win. That’s the attitude we have here — across the entire population.”
The New Republic’s Leon Wieseltier wrote at the time that Operation Moses clarified “a classic meaning of Zionism: there must exist a state for which Jews need no visas.” — Startup Nation
Why is this important for entrepreneurs?
Immigrants are not averse to starting over. They are, by definition, risk takers. A nation of immigrants is a nation of entrepreneurs. — Gidi Grinstein
We’ve all heard of the “golden cuffs”, once you’re settled down with a comfortable job and a steady salary you’re more afraid to pursue your dreams and end-up taking the least challenging path.
At this moments it is important to ask ourselves “What if I had nothing to lose?” Millions of people — including your forefathers — had to start-over some time. When we’re aware of that, it empowers us to become more comfortable with the “immigrant mentality” and work to achieve our major objectives.
Post-Battle Debriefing:
Debriefing is a common trait of most Israeli entrepreneurs, in fact, they learn this from their mandatory 2-year stint with the Israeli military forces:
“The debrief is as important as the drill or live battle,” he told us. Each flight exercise, simulation, and real operation is treated like laboratory work “to be examined and reexamined, and reexamined again, open to new information, and subjected to rich — and heated — debate. That’s how we are trained.”
The effect of the debriefing system is that pilots learn that mistakes are acceptable, provided they are used as opportunities to improve individual and group performance. This emphasis on useful, applicable lessons over creating new formal doctrines is typical of the IDF. The entire Israeli military tradition is to be tradition-less. Commanders and soldiers are not to become wedded to any idea or solution just because it worked in the past.
Why is this important for entrepreneurs?
Most times when we finish projects we store all of the files and proceed unto our next venture. It doesn’t matter whether it went well or had some learning opportunities. Singer tells us through his book how Israelis have indoctrinated the practice of debriefing and extracting as much learning as possible from every single situation throughout their ranks.
Ray Dalio commonly uses the following formula to refer how he deals with these learning opportunities:
Pain + Reflection = Growth
This means that whenever you’re feeling pain, or you feel like you missed an objective this is exactly the best time to reflect and write about what are ways in which you can improve next time. By doing so, you just have trained your subconscious mind to be aware of this type of mistakes and prepared yourself for future opportunities.
Major Takeaways:
- Culture has an incredible impact in the entrepreneurial behavior of a country. By de-stigmatizing failure and seeing obstacles as opportunities you’re setting yourself up for success as an entrepreneur.
- By reflecting upon your mistakes or previous projects you will be able to extract powerful lessons that are going to increase your success on further opportunities.
- Have an “Immigrant’s Mindset’, remember that most of the people you admire started from the very bottom and through a sheer amount of “Davka” and a “Rosh Gadol” mentality they achieved success.
Complement this reading with Ray Dalio on Making Better Decisions or the impact of an entrepreneurial mindset in Latin American Culture.
Further Reading:
- Source: Start-up Nation by Dan Senor and Paul Singer
- Immigrant’s Mentality: The End of Jobs by Taylor Pearson
Andres Crucetta is originally from Venezuela, currently based in Texas. He writes about personal growth, decision making and business through his blog: The Weekly Acumen and in Quora.
