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Entrepreneurs are a unique breed. When most see seemingly impossible tasks, entrepreneurs see delicious opportunities. When current science or technology, business practices, products or services leave a void, entrepreneurs seek to fill that space with new inventions, new ideas and new ways of conducting business. Entrepreneurship is about problem solving, whether it be the problem of market failure, product failure or management failure, entrepreneurs exploit opportunities that others would rather pass by. It is entrepreneurs, whether as owners of their own company, division chiefs in a multinational corporation or team leaders in the laboratory that are critical to real economic growth; the growth that results from gains in productivity. Entrepreneurs can realize huge rewards from their innovations but more importantly productivity drives up living standards for all of us as the ability of workers to produce more leads to higher wages. Furthermore, innovation can be a global phenomenon as new technologies, whether they be in computer software, medicine, agriculture or elsewhere, can move across borders and into new markets in a flash.
Start-up Nation, a new book by Dan Senor and Saul Singer, clearly and effectively demonstrate the power of entrepreneurship in one small nation, the State of Israel. A nation often thought to be lacking in natural resources necessary for self sustainability, Israel has demonstrated that more valuable than plentiful water for agriculture or oil reserves for energy, the entrepreneurial spirit has propelled Israel’s economy by leaps and bounds. Despite geopolitical drags on economic growth due to conflict in the region, this entrepreneurship and innovation has fueled the growth of productivity in Israel around the globe through the products engineered by Israelis.
Start-up Nation, is a story of the incredible successes of small businesses home-grown in Israel that take the world stage as leading companies in their field. And it is the story of new enterprises within the largest high-tech multinationals in the world that operate intense research projects in Israel so to tap into the entrepreneurial, innovative spirit and scientific knowhow of the Israeli labor market.
It is also the story of the determinants of these virtues and strengths held by so many Israeli workers. Beyond the expected factors such a hard working labor force filled with engineers and scientists, Senor and Singer explore the role of the Israeli military in developing the skills for entrepreneurs to start up businesses as well as strengths to work hard. While typically, one might consider the military as an environment where soldiers learn to just follow orders, the unique emphasis on personal responsibility in the Israeli Defense Forces (IDF) creates opportunities for problem solving by those in the boots that are on the ground to develop the most effective plan of action. This training, particularly among the elite forces, results in soldiers who become managers and business owners driven to constantly overcome hurdles, seek new solutions and work faster and harder than their global competitors.
As Senor and Singer write, “The Israeli penchant for technological mashups is more than a curiosity; it is a cultural mark that lies at the heart of what makes Israel so innovative. It is a product of the multidisciplinary backgrounds that Israelis often obtain by combining their military and civilian experiences. But it is also a way of thinking that produces particularly creative solutions and potentially opens up new industries and ‘disruptive’ advances in technology.”
But beyond the role of military training and a highly educated workforce, Israel benefits from another factor important in fostering entrepreneurship: social networks. There is a strong commitment among Israelis to share knowledge and cooperate with one another. Entrepreneurship begets more entrepreneurship and the success of so many Israeli companies encourages more Israelis, buttressed by a willingness to share the “secrets of success” with one another, to start even more companies.
The book’s value extends beyond those interested in the fascinating stories of companies like Intel investing $3.5 billion in Israel so that Israeli engineers could lead the development of the Pentium processors or the fact that Israel has one start-up for every 1844 Israelis, more companies listed on NASDAQ than any country except the U.S. or more venture capital investment as the United Kingdom, a country nine times more populous. The book provides lessons about how to foster and even harness entrepreneurship, innovative energies and hard work for every country. And the book catalogues how Israeli start-ups have shared new innovations that save time, save lives and make work more efficient.
While at times the book yearns for a better copy write editor, the themes and lessons from the book are inspiring for those of us who hold Israel in high regard but also those who aspire to entrepreneurship and to those who seek to better understand the mix of factors that might help other nations foster more start-ups in the future.
Alex Brill is a research fellow at AEI. This article originally appeared in the American Council on Germany’s newsletter Transatlantic Dialogue.
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