It’s not luck or coincidence that some regions become flourishing business communities in a particular sector. Detroit is known for automotive expertise, Silicon Valley for tech, Hartford for insurance, Switzerland for watches, Germany for engineering.
Take a look at Israel, a country that’s celebrating its 70th anniversary this year; it’s the size of New Jersey and has a population of 8.5 million. Israel has more than 5,000 start-ups, averaging 640 new start-ups per year dating back to 1999—the greatest concentration of high-tech companies outside Silicon Valley, according to the Bank of Israel. More impressive: Since 2008, a majority of those start-ups are still in business. In fact, since 2012, Israel has the third most companies trading on the Nasdaq stock exchange, behind only the U.S. and China.
Uniquely, Israel has become a world leader in a range of sectors, including ag-tech, water-tech, bio-tech, med-tech, clean-tech, fin-tech, cyber security, energy (including electricity and solar power)—technologies that have a global impact.
Based on my experience in Israel, I think there are a number of lessons to be learned from the country nicknamed “Start-Up Nation” that could be applied to any country or region looking to stimulate innovation, cultivate its start-up ecosystem, grow its economy and become known for its unique market and industry strengths, influence and impact.
- Industry and academic institutions must work together. To generate growth businesses, Israel has found that it needs to get businesses, academic institutions and government working together to support efforts. It starts with more of an emphasis on patents than journal articles, followed by a concerted effort by technology transfer departments to find businesses that can commercialize the intellectual property. There’s a big emphasis on providing introductions and giving presentations (under NDAs), with lots of research that’s funded by outside companies.
- Enlist government support. From reducing barriers to providing support, governments can play an important role in start-up creation by fostering an innovation ecosystem. The mission of the Israel Innovation Authority is to “nurture and develop Israeli innovation resources, while creating and strengthening the infrastructure and framework needed to support the entire knowledge industry.” In part, IIA does that by offering partner matching services, whether for Israeli companies or those outside the country. (The U.S. government does offer similar services, but the IIA maintains an extensive database and range of contacts.) The IIA also supports 24 different incubators, 22 of them covering different technologies.
- Encourage graduates to start their own companies rather than find jobs. There’s a strong culture of independence—sometimes known as the Yiddish word “chutzpah,” which can translate to mean confidence—that encourages students to create their own businesses rather than find a job in a pre-existing company. After all, chutzpah is what you need if you’re going to establish your own company. It also requires innovation in addressing real-world global problems like helping farmers increase their yields while reducing the amount of water needed. At the same time, Israeli culture looks at a company’s “failure” as an opportunity to learn and improve, not as something shameful; that attitude enables its entrepreneurs to try again.
- Actively focus on innovation through networking. Since its inception, Israel has been a country defined by close, interpersonal and interconnected relationships and networks. It is a hallmark of Jewish communities throughout history and is exemplified within the Jewish homeland. These networks have numerous positive benefits, not the least of which is the fostering of innovation. Contrary to popular belief, innovation doesn’t only come from within companies or result from R&D centers. Innovation can come from introductions, interactions and partnering with people from other walks of life, companies and countries. In Israel, ideas emerge constantly from conversations from people within entrepreneurs’ networks, at meet-ups or in co-work spaces. The lesson is to be open about where innovation comes from, and don’t underestimate the power of good old-fashioned networks. Israel has become the Start-Up Nation in no small measure due to these tight networks, networks which other countries would be well served to emulate and cultivate.
In the words of the late Prime Minister Shimon Peres: “In Israel, a land lacking in natural resources, we learned to appreciate our greatest national advantage: our minds. Through creativity and innovation, we transformed barren deserts into flourishing fields and pioneered new frontiers in science and technology.”
As Israel celebrates its 70th birthday, we can and should learn many lessons from this remarkable country, not the least of which is how this nation, against all odds, has had the chutzpah to not merely survive, but to thrive. Every country, every region and, frankly, every single one of us, no matter what type of challenges we are facing or resources we might be lacking, would be well served to heed Israel’s example. The pathway to transform barren deserts into flourishing fields begins with creativity, evolves with innovation and is sustained with scientific and technological advancements. It is truly possible to foster such ecosystems, and Israel can help teach us how to pioneer these new frontiers.
Happy birthday, Israel!
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