According to the consulting firm CB Insights, Israel had a total of twenty unicorns or technology companies valued at more than $1 billion in 2022 that have not yet gone public. That is almost as many as France or Germany, countries with between seven and nine times the population. Seven times more than Spain, which has five times the population. Four times more than Japan, which has fourteen times more inhabitants.
How is it possible for a small country of barely nine million inhabitants, with hardly any natural resources, surrounded by enemies and at war for more than seventy years, to demonstrate this capacity for entrepreneurship?
This is the question that analysts Dan Senor and Saul Singer try to answer in their best-selling book “ Start-Up Nation : The Story of Israel’s Economic Miracle“. A highly recommended book for anyone who wants to learn about innovation, entrepreneurship and digital leadership. Because many of the explanations offered by the authors are not of a political or macroeconomic nature, but have to do with the prevailing values in Israeli society, which permeate the culture and leadership of its companies, and have made them the most innovative in the world.
One of these values is chutzpah, a word of Yiddish origin that is difficult to translate into our language and which comes to mean something like the insolence, impudence or even rudeness with which Israeli employees relate to their bosses. Far from being “well-mannered”, Israelis are accustomed to questioning established power and continually challenging their bosses.
An example of a practical application of chutzpah was experienced at Intel in the 1990s. At that time the big challenge in laptop design was to overcome what had come to be called the “heat wall”. Following the famous Moore’s Law, processors were being able to double their speed every twenty-four months, but this increase in speed was accompanied by an increase in heat generation that made their implementation in laptops problematic.
Engineers at Intel’s innovation centre in Israel found a way around the “heat wall”. Instead of focusing on the problem of processor clock speed, they came up with the creation of a dual-core processor that allowed performance to be tailored to the needs of the computer at any given moment. When the Israeli engineers presented the idea, the American managers threw their hands up in the air. For the past few years, the focus in the industry had been on processor clock speed, which even had a direct impact on Intel’s share price. According to Intel executives, a change in strategy could confuse customers and investors.
Israeli management therefore ordered the Israeli engineers to abandon the project. But the Israeli engineers’ stubbornness, boldness and persistence won the day, and in March 2003 Intel launched the Centrino, a dual-core processor that improved laptop performance without increasing the processor clock speed. Three years later, the innovation moved to desktops with the launch of the Core Duo, the successor to the Pentium, which secured Intel’s leadership for the next decade.
To be sure, the idea of launching a new processor against the existing market dynamics was a risky one. But as Dov Frohman, founder of Intel Israel, stated, to create a true culture of innovation “the hope of winning has to be greater than the fear of losing”.
Teachings like this make us reflect on the style of leadership we want to foster in our companies. The traditional leader model, a kind of omniscient being who makes all the company’s decisions and who demands that his entire team be aligned with his way of thinking, is incompatible with the new business reality. Companies need leaders who accept to be challenged by their teams and who not only tolerate, but encourage dissent and critical thinking. Leaders who encourage their teams to try new ideas and question the way things are done and who do not systematically promote those professionals whose only merit is that they have been obedient collaborators. Often, employees who are more creative and can bring more innovation to the organisation are also difficult to manage. Immature leaders often promote the people who are most helpful or aligned with them, not those who can bring the most value to the organisation in leadership positions.
The need to encourage dissident thinking is particularly necessary in companies facing transformation processes. In such situations, lack of dissent can become a real problem. It may mean that the change being sought is not radical, or simply that the opposition has gone underground.
In Frohman’s words, “If you are not even aware that people in the organisation disagree with you, then you have a real problem”.
