The Story of Israel’s Economic Miracle
In Israel, getting into business is not so much a matter of what university you went to but rather what military unit you served in. And that may be the single thing you need to understand about what makes Israel a leading center of entrepreneurialism and tech leadership in the world. So says the intriguing new book Start-Up Nation: The Story of Israel’s Economic Miracle (Twelve), written by Dan Senor (MBA ’01) and Saul Singer, a columnist at the Jerusalem Post.
Most Israelis in their late teens serve several years in the elite Israel Defense Forces, an experience that develops self-confidence, sophisticated analytical skills, and the ability to make decisions quickly. And unlike the top-down hierarchy found in the U.S. military, the IDF is a ground-up organization where local commanders are responsible for creating strategy, solving problems, improvising solutions, and protecting the lives of their men and women.
In other words, the IDF is a factory for developing potential business leaders, with many of the kinds of leadership skills underscored at HBS. And those skills are much in demand as soon as soldiers complete their military service. “Everything you need to launch a start-up will be a phone call away, if you have the right idea,” write Senor and Singer.
But the IDF experience is not the only reason for Israel’s business success. For one thing, Israel leads the OECD countries in the percentage of GDP earmarked for R&D, creating both a technological edge critical to national security and a civilian tech sector that is the main engine of the economy. Another plus is Israel’s cluster of great universities, large companies, start-ups, and “connective tissue” such as top-notch engineering talent and venture capital.
But perhaps more important than any other ingredient is the fact that Israel’s “economic miracle” is no miracle at all but rather the product of a calculated start-up mentality that permeates its history and culture. “Israel is the first start-up nation in history, the result of a conscious effort to build from scratch a modern reincarnation of an ancient nation-state.”
A number of HBS grads have contributed to the country’s success story, including Tal Keinan (MBA ’01), a cofounder of the nation’s first full-spectrum financial asset management firm, KCS Capital, and Tal Riesenfeld (MBA ’08), who is a founder of Tel Aviv–based EyeView, an HBS Business Plan Contest winner in 2008.
With plenty of war stories (literally) and powerful personalities to draw on, Senor and Singer craft an engaging study on the rise of one of the most powerful innovation economies in the 21st century.
