A lesson about supporting innovation from Israel

How come some countries/organizations are more innovative than others? Good question and I would like to offer one insight on the topic having read a book called Start Up Nation, The Story of Israel’s Economic Miracle by Dan Senor and Saul Singer and having visited Israel last week.

The book analyses how come a country of just 7.1 million people, less the sixty years old and surrounded by enemies has so many start-ups and technological patents (there are more Israeli NASDAQ companies than from all of Europe combined for example). I was reading the book while travelling around Israel and honestly, with the exception of Jerusalem, it looks like any other Middle Eastern country. The buildings were not too well maintained, there were bits of rubbish at lot of places and the street markets were bursting with fresh food and with local people. I would not have thought that this is one of the most innovative countries in the world by the looks of it.

The book offers lot of good explanations why the Israelis are so successful, the main ones being determination/stubbornness (chutzpah in Hebrew) of local people, cluster-like environment with the government supporting venture capitalism and the fact that everybody has to serve in the army for three years where they gain real life leadership skills while creating a great network for life. That is all true but what fascinated me the most was something else. It was the coexistence of order and disorder.

I think this mix is what makes Israel so unique and cannot be found in almost any other country. Israel is a mature democracy with uncorrupted politicians, good set of laws enforced by effective courts and bureaucrats that do not demand bribes and do not act as obstacle businesses. At the same time, it seemed to me that Israel managed to retain the kind of infectious energy, organic innovation, buzz on the streets whatever you like call it that I have seen before only in emerging economies and that I miss so much in the Western Europe.

Western Europe became organized to a point that this disruptive energy got mostly killed. On the other hand India has plenty of this ‘positive disorder’ but its legal and bureaucratic systems are painfully slow and corrupt. Similar thing can be argued about China where intellectual property rights are virtually non-existent. It is therefore difficult to innovate, attract sufficient foreign venture capital and successfully monetize ideas in such environments for one reason or another.

The main take-away I got is that any country or organization that wants to grow through innovation has to put basic governance framework in place and make sure it is enforced well. But at the same time it has to leave its people with enough freedom to work organically and to provide them with a space to implement their ideas quickly, fail, start again and finally succeed. They have to let order and disorder coexist together.

You can find out more about the book here: http://www.startupnationbook.com/