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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7 thoughts on “The inability of Israeli organizations to scale innovation

  1. Structures, rules and processes are often a social engineering attempt to reduce humans to pre-specified modus operandi. It may well work for some but not for all as it seems. I wonder what’s wrong with that if after Israeli have fun being innovative? It is my understanding that start-ups managers may be effective at the birth of an organization but rarely at creating scalability.

  2. Question: “How good are Israeli innovation-driven companies with interdependence?. When high value is placed on interdependence – on aligning innovation with scalibility, both the innovators’ interests (funds to pursue innovation freely) and the investors’ interests (translating innovations into leading-edge scalable products/services for clients) can be met. Perhaps, some of John’s work on polarities can be useful here.
    Lévis

  3. With the right American CEO and a good blend and appreciation of mixed cultures – it can be done very well! 😉

  4. Pingback: 4 factors that impact the ability to integrate an Israel based start up | Allon Shevat

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