Substitute “Israel” for “Singapore,” and this speech could have been delivered by David Ben-Gurion.
Although Singapore’s military is modeled after the IDF—the testing ground for many of Israel’s entrepreneurs—the “Asian Tiger” has failed to incubate start-ups. Why?
It’s not that Singapore’s growth hasn’t been impressive. Real per capita GDP, at over U.S. $35,000, is one of the highest in the world, and real GDP growth has averaged 8 percent annually since the nation’s founding. But its growth story notwithstanding, Singapore’s leaders have failed to keep up in a world that puts a high premium on a trio of attributes historically alien to Singapore’s culture: initiative, risk-taking, and agility.
A growing awareness of the risk-taking gap prompted Singapore’s finance minister, Tharman Shanmugaratnam, to drop in on Nava Swersky Sofer, an Israeli venture capitalist who went on to run Hebrew University’s technology transfer company. The university company, called Yissum, is among the top ten academic programs in the world, measured by the commercialization of academic research. Shanmugaratnam had one question for her: “How does Israel do it?” He was nearby for a G-20 meeting, but he skipped the last day of the summit to come to Israel.
Today the alarm bells are being sounded even by Singapore’s founding father, Lee Kuan Yew, who served as prime minister for three decades. “It’s time for a new burst of creativity in business,” he says. “We need many new tries, many start-ups.”[86]
There is a similar feeling in Korea, another country that has a military draft and a sense of external threat, and yet, as in Singapore and not as in Israel, these attributes have not produced a start-up culture. Korea, clearly, has no shortage of large technology companies. Erel Margalit, an Israeli entrepreneur with a stable of media start-ups, actually sees Korea as fertile ground for his cutting-edge companies. “America is the queen of content,” Margalit said, “but it is still in the broadcast era, while China and Korea are in the interactive age.”[87]
So why doesn’t Korea produce nearly as many start-ups per capita as Israel? We turned to Laurent Haug for insight. Haug is the creator and force behind the Lift conferences, which focus on the nexus between technology and culture. Since 2006, his gatherings have alternated between Geneva, Switzerland, and Jeju, Korea. We asked Haug why there were not more start-ups in Korea, despite the great affinity Koreans have for technology.
“The fear of losing face, and the bursting of the Internet bubble in 2000,” he told us. “In Korea, one should not be exposed while failing. Yet in early 2000, many entrepreneurs jumped on the bandwagon of the new economy. When the bubble burst, their public failure left a scar on entrepreneurship.” Haug was surprised to hear from the director of a technology incubator in Korea that a call for projects received only fifty submissions, “a low figure when you know how innovative and forward-thinking Korea really is.” To Haug, who has also explored the Israeli tech scene, “Israelis seem to be on the other side of the spectrum. They don’t care about the social price of failure and they develop their projects regardless of the economic or political situation.”[88]
So when Swersky Sofer hosts visitors from Singapore, Korea, and many other countries, the challenge is how to convey the cultural aspects that make Israel’s start-up scene tick. Conscription, serving in the reserves, living under threat, and even being technologically savvy are not enough. What, then, are the other ingredients?
“I’ll give you an analogy from an entirely different perspective,” Tal Riesenfeld told us matter-of-factly. “If you want to know how we teach improvisation, just look at Apollo. What Gene Kranz did at NASA—which American historians hold up as model leadership—is an example of what’s expected from many Israeli commanders in the battlefield.” His response to our question about Israeli innovation seemed completely out of context, but he was speaking from experience. During his second year at Harvard Business School, Riesenfeld launched a start-up with one of his fellow Israeli commandos. They presented their proposal at the Harvard business plan competition and beat out the seventy other teams for first place.[89]
After graduating from HBS at the top of his class, Riesenfeld turned down an attractive offer from Google in order to start Tel Aviv–based Eyeview. Earlier, Riesenfeld had made it through one of the most selective recruitment and training programs in the Israeli army.
While he was at HBS, Riesenfeld studied a case that compared the lessons of the Apollo 13 and Columbia space shuttle crises.[90] The 2003 Columbia mission has a special resonance for Israelis. One of its crew members—air force colonel Ilan Ramon, the first Israeli astronaut—was killed when Columbia disintegrated. But Ramon had been an Israeli hero long before. He was a pilot in the daring 1981 air force mission that destroyed Iraq’s nuclear facility, Osirak.
HBS professors Amy Edmondson, Michael Roberto, and Richard Bohmer spent two years researching and comparing the Apollo and Columbia crises. They produced a study that became the basis for one of Riesenfeld’s classes, analyzing the lessons learned from a business-management perspective. When Riesenfeld first read the HBS case, in 2008, the issues it presented were immediately familiar to the ex-commando. But why had Riesenfeld mentioned the case to us? What was the connection to Israel, or to its innovation economy?
The Apollo 13 crisis occurred on April 15, 1970, when the spaceship had traveled three-fourths of the way to the moon. It was less than a year after Neil Armstrong and Buzz Aldrin had stepped off Apollo 11. NASA was riding high. But when Apollo 13 was two days into its mission, traveling two thousand miles per hour, one of its primary oxygen tanks exploded. This led astronaut John Swigert to utter what has by now become a famous line: “Houston, we’ve had a problem.”
The flight director, Gene Kranz, was in charge of managing the mission—and the crisis—from the Johnson Space Center in Houston. He was immediately presented with rapidly worsening readouts. First he was informed that the crew had enough oxygen for eighteen minutes; a moment later that was revised to seven minutes; then it became four minutes. Things were spiraling out of control.
After consulting several NASA teams, Kranz told the astronauts to move into the smaller lunar extension module, which was designed to detach from Apollo for short subtrips in space. The extension module had its own small supply of oxygen and electricity. Kranz later recalled that he had to figure out a way to “stretch previous resources, barely enough for two men for two days, to support three men for four days.”
Kranz then directed a group of teams in Houston to lock themselves in a room until they could diagnose the oxygen problem and come up with ways to get the astronauts back into Apollo and then home. This was not the first time these teams had met. Kranz had assembled them months in advance, in myriad configurations, and practice drills each day had gotten them used to responding to random emergencies of all shapes and sizes. He was obsessed with maximizing interaction not only within teams but between teams and NASA’s outside contractors. He made sure that they were all in proximity during training, even if it meant circumventing civil service rules barring contractors from working full-time on the NASA premises. Kranz did not want there to be any lack of familiarity between team members who one day might have to deal with a crisis together.
86
BBC News, “Singapore Elder Statesman,” July 5, 2000, http://news.bbc.co.uk/2/hi/programmes/from_our_own_correspondent/820234.stm; retrieved November 2008.
87
Quoted in James Flanigan, “Israeli Companies Seek Global Profile,”
89
Interview with Tal Riesenfeld, founder and vice president of marketing, EyeView, December 2008.
90
The information from this passage is largely taken from Michael A. Roberto, Amy C. Edmondson, and Richard M. J. Bohmer, “