4 factors that impact the ability to integrate an Israel based start up

The art of post merger acquisition is difficult regardless of cultural differences. When the culture of the Israel start-up is factored into the equation, the challenges of post merger integration become daunting.

This post will focus on 4 factors that will impact the ability to integrate an Israel based start up after its acquisition.

1) The Israel market has a crushing demand for top talent. So it really does not matter what type of stay bonuses are put in place after acquisition, there is a good chance that top talent will be lost. And because Israel start ups have so few processes and so much “oral law”, the chances are that not only talent will be lost, but also unrecoverable knowledge .

2) Israel is a very modern society and appears very western in its cultural accoutrements.. But Israel is not Western at all: relationships are more important than process, the “old buddy” network is impregnable similar to the Chinese old friend clique, and the communication style within the inner circle is very different than the communication with the outer one. Very few non Israelis get into the Israeli inner circle within the first 3-5 years acquisition.

3) Transparency is a rare commodity Like the Chinese, Israelis believe that transparency maybe foolish, especially when it gives HQ the possibility to screw you.

4) Israelis argue all the time about everything, both with one another and with their bosses. This is very time consuming when doing anything, large or small, because one cannot give “marching orders” to the Israel based manager and assume that things will happen. Corporate directive often encountered with the fiercest resistance due to lack of discipline and rugged individualism, the same rugged individualism and lack of discipline  that enabled the innovation to begin with!

My next posts will address what is to be done when acquiring an Israeli company.

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Working under bombardment

 

In this recent outbreak of Middle East violence, I have found myself working and living in areas under heavy bombardment.

I want to share with  readers some of these experiences, personal and work related.

1) Between missiles, life goes on. People walk or run to shelters, boom, and then back to work. There is constant smsing-texting and phone calls in order to ensure that friends and family members are ok, but multi tasking via messaging is part of life in Israel in any case.

2) One’s political view deeply impacts how the present conflict is viewed. The right wing sees the conflict as an inevitable outbreak in a one hundred year old conflict; the left believes that the present government (and those before) have frittered away opportunities that may have prevented this present round of violence.

Political issues are very rarely discussed, because politics tears apart relationships, and detract from camaraderie which develops under fire.

3) A sense of perspective creeps into life. When life can end with the next hit, how important is this work related issue that I am dealing with?

4) For some, one’s internal emotional world is calmer because the enemy is exogenic. As missiles pour down on your village and work place, one does not really need more noise than what rains down.

5) Schedules constantly changes.Work gets cancelled, rescheduled and decisions get “pushed out” till “this is all over”. Yet this does not phase anyone.

6) There is an amazing defense  mechanism: “nothing will happen to me”. Even more anxious people (like myself) adapt this defense mechanism and, it really works well. Apparently,  the more serious the threat is, the easier it is to be positive.

And a word of thanks to the many people who have asked me how I am doing.

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In what way does living in the Middle East impact how I practice Organization Development

Man is but a template of  the landscape of his homeland, wrote the poet Shaul Tchernichovsky. These are atrociously difficult times in the Middle East, days which have led me to think about this statement of his.

In this post. I want to delve into the ways that living in the Middle East has shaped the way that I approach the practice of Organization Development. For the sake of brevity, I shall limit myself to 3 major influences that the Mid East has had on my OD work.

1) The hopeless of solving problems teaches the importance of setting realistic expectations

The middle east conflict is insoluble. Religion, poisonous exclusionary  narratives, energy, water, righteousness, tribalism, world war 1 leftovers, Sykes-Picot  and world politics have created the ultimate cesspool for a “perfect” conflict to perpetuate itself.

Living in such a situation decade after decade leads to questions like: what can and cannot be changed? Where is the value: visionary goals and long term strategy?  What can be solved,  what needs to be managed and where is it wise to give up?

The reality of hopelessness breads a very healthy approach to setting appropriate expectations. I don’t tend to sell rose gardens.This realism on my part has led to trust being developed over the years.Clients know I do not bullshit them. I promise less and deliver more that  wow-wow yes we can optimists who live in places where the sky is the limit.

2) Chaos is a system

To get things done in the Middle East, one must understand how the “system” works, because nothing is the way it appears to be. There are accoutrements of western ways, western dress, technology and widespread use of English. But the Middle East ain’t Canada, the US, Germany, Britain or Switzerland. Understanding the  underworld of relationships. corruption, ethnicity and insider/outsider dynamics can shed light on situations which appear undecipherable.Underneath the veneer of the West is another system that has a rhyme and reason of its own. For all its foibles, it is what is it is, and it is the “currency” people use.

As an OD consultant, I tend to somewhat downplay the  organizational veneer, structure, process and HR sloganeering. Instead I tend to look at power/politics,relationships and trust, and Darwin.

I have no naive stars in my eyes which prod me to promulgate my world view about what organizations should look like. Rather, I work with what there is.

The mid east is all about survival, and equipped with this insight and applying it to organizational reality, so much falls into place.

3) Be pragmatic and get real

For many years, I was an Organization Development in the Israel Defence Forces. Liberated from commercial interests, I was free to practice OD “comme il faut”. Freed from “pleasing” the commanders for whom I worked,I learnt to challenge authority all the time. This has been a real gift to me.

However the real value of doing OD for an army of a country at war is zero tolerance for theorizing or pontificating, so to speak. Either the consulting is pragmatic or she/she is sidelined.

……………………………………………………………………………………………….

Living in the Middle East is a painful, frustrating and at times debilitating reality. However,I believe I am a better consultant for having learnt and practised OD in this hopeless yet fascinating neck of the woods.

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On organizational leniency

Case One: Einat comes to work late 15 minutes a day; her lunch break lasts longer than anyone else’s. No one has ever said a word.

Case Two: This month, Ori ordered a $40000 spare part circumventing Supply Chain. He does this from time to time. His boss emails him to “try to avoid” this type of behaviour.

Case Three: Zeev always waits till the very last minute to order his plane tickets, so that he will have a more expensive ticket and thus be eligible for an upgrade. Since Zeev travels a lots, nothing is said.

This post is a short case study on organizational leniency, IE, showing more tolerance than expected when things do not go well.

All government agencies are very lenient towards their employees; unionized shops can breed a type of leniency which leads to decay, and crony capitalism breeds a great deal of leniency which leads to economic catastrophes. In this post, I am NOT referring to the above types of examples.

Rather, I am referring to organizations in the private sector which are not unionized and where there is no crony capitalism, yet nevertheless leniency is displayed in the face of gross malfunction.

The case I will describe is the unique leniency of Israeli organizations.

A-What does this leniency look like?

1-The reticence to fire people unless absolutely necessary. Although this norm has changed since 2008, Israelis hang on to excess people much longer than North American organizations would.
2-“We are all guilty” syndrome. In other words, individual accountability is downplayed and to use an Americanism, it is very rare to “hold someone’s feet to the fire” due to an error. The ownership of malfunctions is very obtuse.
3) Working around a problem instead of fixing it.

B-Reasons for leniency

1) Having been the victim of aggression for so many centuries, there is a tendency internally not to “pin” anything on anyone and scapegoat.
2) There is a deep belief that if an organization is not lenient, creativity and commitment will wane.
3) Because life in Israel is very challenging, there is an expectation not to “throw people to dogs” just because of a work related error.
4) For many centuries while scattered all over the world, we learnt how to learn the system and “work it”. It was not our system. There is still lingering unwillingness to “be the system”.

C-Value of the leniency

1) More risk taking at work
2) Better team work
3) Lots of creativity

D-Damage of the leniency

1) Due to lack of consequence, there is corrosion of responsibility and accountability
2) The development of a “so what” attitude in the case of inappropriate staffing
3) Corrective action takes a long time because things need to get very bad to end the lenience.

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When creativity is applied inappropriately.

I live in a country with a very high level of creativity; there are thousands of start-ups in Israel. Many have performed exits and probably no one reading this post has not been exposed to Israeli technology (Waze, Viber, eg.)

The starts ups are fuelled by massive creativity, lack of discipline, lack of process, all of which enables looking at problems differently. Anyone who has ever worked or visited corporate Israel knows that meetings go on and on, with endless digression and associative thought, often resulting in either great solutions or total chaos.

The value of the creativity is innovation; the price of the innovative mindset is the lack of scalability, and the inability to solve simple problems, because simple problems requires routine. In other words, there are severe  limits to innovation if inappropriately applied.

In the last few days, there is an illustrative example of the inappropriate application of creativity.  Israel suffers from a horrendous housing shortage. Many politicians have attempted to solve this issue, but  very few politicians have ever suggested building more houses. The assumption is that via changes in taxation, this housing problem can be “outsmarted”. And of course, it cannot be. There is a SIMPLE supply and demand issue. But that’s too simple!

In the end, more houses will need to be built, yet this very obvious solution will be implemented only when every other alternative has been applied.

This  small example illustrates innovation, inappropriately applied. The housing shortage will continue due to a refusal to do the obvious. When inappropriately applied in business, poor use of innovation means loss of control, due to inability to scale via doing the obvious.

While I do follow politics, I have no personal political involvement whatsoever, and this post should not be misunderstood as taking a political stance.

You can follow me @AllonShevat

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The inability of Israeli organizations to scale innovation

There are endless examples of Israel based companies that innovate and yet fail to leverage and scale their innovation.

As a result, these innovative companies are sold, most often to US based firms who scale the innovations and make the big bucks, leaving only R&D center in Israel, which may  become downgraded to a continuous engineering site.

This short post looks at the reason that this happens.

1) Innovative people tell customers what they need.

I cannot count the number of times I have seen real creative guys kicking themselves in the ass by explaining to the potential customer how wrong they are in what they asking for, followed by an very detailed explanation of “real needs”. Routinely these companies overplay technical presales and underplay the importance of building communication based on respect for the client.

2) Innovative people misuse creativity because they cannot follow routine

Once an innovation has been cranked out, leveraging this innovation needs lots of rigour and disciplined routine to create scalability. Often, an organization that has used its creativity to develop a breakthrough will misuse this creativity to try and “reinvent” the routine necessary to scale the innovation.

It is not unfair to say that Israeli have no problem doing the impossible but have a horrible time of carrying out routine tasks. Scalability is based on disciplined repeated routine.

3) Innovative people are often very arrogant, and very hard to deal with.

And this arrogance and lack of acceptance of the limits of the human endeavour is exactly what enables the innovative mindset. Over the years I have seen some of my brightest clients wiped off the map because they knew not only  how to invent, but they also knew how to do everyone’s job better, which clearly backfires at  the stage when innovation needs to be linked to a growth platform by leveraging on someone else’s capabilities.

4) Israelis have invented great technology, yet the type of organizations which have been created is Israel not a scalable platform to leverage success. In other word, the Israelis developed technology which can be scaled, but Israeli organizational life cannot be scaled. This topic is too elaborate for this post, so I will just illustrate briefly.

  1. Israeli organizations tend to commit aggressively, yet are overly tolerant and  non-punitive, causing frequent sudden system crashes. (The implosion of the Israeli police force and IDB are good examples.)
  2. Structure, rules and processes are ignored, and in lieu of these, a “network” of relationships serves as the motor of getting things done, very similar to Chinese organizations.
  3. Israelis talk all at once, argue all the time, and the level of apparent conflict is very high….. except it is not seen as such IF you are an insider.

Thus, it is very hard for Israeli organization to go global and all so often, even after they have moved their corporate HQ address to the States, they get acquired because while the technology can be scaled,  the organization cannot be scaled as run.

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On Israeli “chaos”

This post concerns chaos in Israeli business culture. Not all Israelis are equally chaotic and clearly, there is more chaos in an R&D organization than in Finance or Supply Chain.

Yet Israelis as a society (and Israeli organizations) do embrace chaos. This post provides some background about the preference of chaos over order in Israeli organizations.

There are 5 widely used terms for chaos in Hebrew.

1) The Biblical term “tohu vavohu” (תוהו ובוהו)…null and void……as in “and the world was null and void”.  (Genesis 1:2)

2) “”Bardak” (ברדק) a Turkish borrowed word meaning messy and disorganized, although the translation is “brothel”.

3) The term “Kah-os”, (קאוס)clearly from the English chaos.

4) “Buka-umavulaka”, (בוקה ומבלקה) an Aramaic borrow word, a “high level” form of speech, also implying very deep chaos. Rarely spoken but often written. (The term originates in the Book of Nahum).

5) Balagan, yet another very popular borrowed word (from Russian)  to describe lack of order.

These words represents a linguistic need to differentiate between various degrees of the very low level of order in Israeli society.

There are many reasons for the chaos, some of which are:

1) A disdain for planning exists; planning is seen as a luxury of the opulent. Thus, with no planning, there is constant improvisation, which causes a “balagan”.

2) Over-reliance on systems is seen as stupid, and instead of systems, there is a massive use of relationships (including systemic corruption) to bypass systems. The orderliness that systems bring to chaos (Weber) is lost in Israel society.

3) There is a proclivity to re open decisions because nothing is very final, ever.This constant questioning of the status quo creates chaos.

4) Being an immigrant society, Israeli society has with too few shared behavioural codes and thus lots of things are explicit. This causes chaos in interactions.

5) There is a deep rooted belief that the individual must be empowered with ingenuity to work around barriers and obstacles to beat the system. At a societal level, this surely cases “buka umvulaka”.

All of the above creates a lot of creativity, and a low level of scalability and lack of discipline.

Managers working with Israelis must realize that the chaos is not something which is startling or upsetting, but rather a platform of interaction, preferable to order for the Israeli. Too much order, or even some order, is perceived as less useful than pliable chaos.

Naturally, there are many exceptions to rule, and you may very well know many Germanic Israelis and orderly Israeli organizations. Yet they tend not to be rule, rather the exception.

Dear subscribers,

In order to clean up the spam, all blog subscriptions were deleted and a new subscription system installed.

Please re register and sorry for the trouble.

Allon

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