Could Israel Become the Next Japan?
American business consultant says different focus could turn Israel into global economic powerhouse
TEL AVIV - Israel could become the next Japan, says American business guru Michael Hammer, who believes the local entrepreneurial spirit must be directed at establishing long-lasting multinational corporations.
Israel's real challenge is to establish its presence on the global economic scene, instead of emphasizing short-lived achievements, Hammer says.
"Entrepreneurs here focus on building a successful product instead of a successful company," he says. "You cannot build an economy on short-term successes, it's too risky."
Hammer, who is a son of Holocaust survivors, is one of the most sought-after speakers in the United States, according to The New York Times.
He has been selected as one of Time magazine's 25 most influential figures several years ago, and is mostly known for coining the term "reengineering."
Hammer visits Israel often and has many relatives here. He says local companies must learn to operate against competitors, rather than narrowly focus on the introduction of new technologies into the market.
The developers of instant messaging software ICQ, he says, are a good example of brilliant entrepreneurs who sold a new technology and made a fortune, but failed to establish a local corporation to capitalize on their product.
"Israel has many scientists and engineers whose ultimate aspiration is to develop a product and sell it," he says. "This is how they view success."
'You cannot count on wisdom and luck forever'
Companies today need managers who know how to develop and cultivate long-term success, says Hammer.
"You cannot count on wisdom and luck forever," he says.
Switzerland's population is smaller than Israel's, says Hammer, but the country is still home to some leading corporations, such as Nestle. He says he wants to see multinational corporations springing up here, too.
Hammer acknowledges the difficult political realities in Israel, but says he views them as a challenge that creates opportunity.
"If you have lemons, make lemonade," he says.
The compulsory military service here can be seen as an advantage, he says, because it allows for the instilling of discipline and a solid work ethic.
Israel has many other advantages, Hammer says, including excellent scientific institutes, brilliant minds, a sense of patriotism, and unity.
"I'm daring to say that in my estimate, Israel should be the next Japan," he says.
Local work culture lacking
Israeli managers do not pay enough attention to the day-to-day operation of their business, says Hammer. A company like Finnish wireless giant Nokia for example, he says, invests great efforts in manufacturing and distribution.
"It's not a sexy area and doesn't get newspaper headlines," he says, "but that's how you build a company."
The Israeli inability to make the big leap also has to do with cultural issues, Hammer says. The local work culture often seems to espouse carelessness, he says.
"The focus has to be on quality and perfect performance every day," Hammer says. "As I understand, this is not necessarily a part of the Israeli business management culture."
High labor costs not an obstacle
Hammer says he agrees every large corporation starts from a small idea, but adds that a company can fully capitalize on an idea by selling, providing service, creating a customer base, and marketing.
"It's not glamorous," he says, "but that's how you build a big company."
Hammer also rejects the notion that labor costs are a major issue today. He says labor costs here are higher than in India or China, but still lower than they are in Europe and the U.S.
He points to computer giant Dell as an example of a company that was able to hit the big time through its operations strategy, despite high labor costs. Dell only produces to order, handles its own manufacturing, and avoids outsourcing, he says.
"It manufactures in the U.S., not in the Far East," Hammer says. "The company's success speaks for itself."
High labor costs, he says, also mean a high standard of living, and notes that both India and China are developing countries.
"I don't think Israel is interested in this status," he says.
