At the end of 2011, I moved from a relatively successful career in management consulting into an operational role within a pharmaceutical company. After a few months in my new role, I gave a presentation for which I received excellent reviews, from both fellow managers and the CEO of the company. Reflecting on my performance and the document that I had presented, I came to realize that the thinking I put forward, the overall trends I had described and my analysis of these trends were the result of numerous conversations that I had conducted during the preceding weeks, most with people outside my own company. The people who provided me with the most information and those who most powerfully challenged my own assumptions were members of a larger network of which I was a part. This network of people shared my interests and knowledge. It was created spontaneously, yet it flourished to the point that I could derive from it real value.

The notion of networks and their contribution in our day-to-day life has been studied and written about extensively, however this was the first time I had noticed its impact on my own work. Basically, an informal network is a platform for transporting large amounts of knowledge and information. Networks increase the value of collaboration as they reduce the price of searching for information, validating that information, and engaging with people in meaningful ways.

Within any given company, one can count dozens, if not hundreds, of these networks and they often expand beyond the company’s boundaries.

These networks are usually formed across a common theme. There are networks based on profession (e.g., networks of strategy or operation), some of which are based around a particular industry with participants from different and competing companies. Other networks include alumni groups from a particular university or a past company; still others are based on geographical origin, religion, and ethnicity. Among these different types of networks, the ones that people find most reliable, easy to use, and easy to get involved in, are those networks based on ethnicity. These are also the networks that are the largest and easiest to identify.

There are more than twenty million Indian people living abroad; there are three times as many Chinese people living outside Mainland China.

These people are disproportionately better educated and more highly skilled than their European and Anglo-Saxon counterparts. They are also well positioned in the business world, as they serve various functions across many large multinational corporations. Research conducted by UC Berkeley Dean & social network expert, Annalee Saxenien found that over half of all Indians working in Silicon Valley had advised entrepreneurs within India, and that eighteen percent actively invested in Indian companies. A second study, conducted by Taro Khanna, a professor at the Harvard Business School, found that firms that have contacts with members of the Indian diaspora have performed better than others in the same region. No other social networks offer the same reach nor value as those that are based on ethnicity.

Knowledge of the value of social networks is not new, nor is it exclusive to business. The Israeli secret service agency, the Mossad, is known for using Jewish networks across the world in order to obtain information and, in cases of emergency, transport goods and people.

This allows the intelligence organization to be one of the smallest in the world, yet at the same time the most effective and renowned.

Just like the Mossad, Israeli companies use unofficial networks constantly. They do so in two ways. The first involves tapping into the current knowledge of the network’s participants. This enables companies to understand and obtain the most up-to-date information about the industry, as well as analysis of recent moves different players strategies. The second way that Israeli companies use their networks is to establish trust and to collaborate.

To an outsider, the world may appear filled with borders and boundaries. Even in the developing world, collaborating is a challenge. Different regulations, procedures, languages, and customs make it hard to establish business relations that involve the transfer of money and goods. Even when dealing in countries where the rule of law is certain, the cost of potential litigation in these foreign places may reduce the probability of cooperation. It is human nature to deal with those we trust and in which we have confidence. Personal ties make risks easier to mitigate.

Elad is a Gilat alumnus. After he left Gilat, Elad formed a venture aimed at connecting villages in sub-Saharan Africa through use of a two-way satellite communication device. His company developed a cheap means of manufacturing and maintaining this equipment and his business model offers African small businesses the opportunity to lease the equipment and pay per use. It is difficult for any small company to conduct business in Africa, especially in rural areas of the continent, which are the places Elad’s company is most interested in.

Despite these hurdles, Elad is managing quite well, mainly thanks to a middleman, an Israeli named Eyal, who lives in Nigeria. Eyal runs an export business, and Elad trusts his middleman, partly because the two are ethnic kin, and partly because an Israeli middleman needs to maintain a good reputation. If a middleman cheats one Israeli, all the others with whom he does business will soon know about it. News travels fast within informal networks.

AS THE Indian diaspora creates incredible value to the Indian economy, so should the Israeli government understand and cherish its own diaspora. It should make an effort to ensure that the diaspora cares for its origin, and it should collaborate with the diaspora while helping its individuals achieve their own goals, regardless of their location. Currently, the attitude toward the diaspora is less one of willing collaboration and more of a notion of lost children that need to be guided home.

A recent campaign by the Israeli government expressed this clearly; a television & online campaign directed at Israeli expats, urged them to come back to Israel. One of the ads featured a young boy who attempted to get his father’s attention with the word ‘daddy’; he finds more success when he uses the word ‘abba’, which is Hebrew for father. The slogan for the campaign was: “They will always remain Israelis. Their children may not.”

This campaign caused consternation and disgust in expats and Jewish communities around the world, with the Jewish Federations of North America (JFNA) calling the adverts “outrageous and insulting” further they wrote, “while we recognize the motivations behind the ad campaign, we are strongly opposed to the messaging. This outrageous and insulting message could harm the Israel- Diaspora relationship.”

The question of culture

In the late 1980s a common saying in Russia was that a person who smiles a lot is either a fool or an American. During most of the twentieth century, this would not have faced much opposition. But in 1991, two years after the fall of the Berlin Wall, McDonalds made the decision to enter Russia. They found that this saying and the notion that one shouldn’t smile may pose a problem for customer service. In the midst of its preparation for the grand opening of the Moscow Pushkin Square branch of the restaurant, the first branch ever to open in Russia, McDonalds sent many of its new employees to Canada for training. During this training, McDonalds taught its new employees to prepare a burger, manage a register, deal with customers and seem cheerful and smile. McDonalds tried to teach its employees that smiling often was not only allowed, but desirable.

From individuals’ humankind formed tribes, from tribes it created societies, and from societies, it created rules. These rules define what is acceptable and what is desirable within a given culture (for example – smile). In the days of old, each tribe moved to a different place. Some moved north to Europe, some traveled east, all the way to Asia. Each tribe faced different challenges, and the way in which the different tribes dealt with these challenges defined their versions of these rules. Each challenge that they overcame customized that tribe’s beliefs about how the world works and why. These beliefs are subjective truths.

One good way of understanding the rules and beliefs of a given culture is to think about its stories and sayings such as the Russian saying, which has an historical meaning and defines the culture.

Seeking to understand how these cultural norms come to life and the role they play in business decisions, I turned to Dr. Devout Pattanaik, an Indian with a round face and a unique ability to deliver a lecture without ever pausing his infectious smile. He is a physician by education, but his career has led him to the most unusual position – Chief Belief Officer of Future Group, India’s largest retailer. After fourteen years of experience in the pharmaceutical industry, he says that he looks at both business and modern life through the lens of mythology. By thinking about the stories told in mythology, he tries to understand cultures and the beliefs that they hold. For Dr. Pattanaik, mythology does not necessarily need to involve gods and wars of old, but can include any truths that we create for ourselves that are based on our experiences, expectations, and perceptions. These stories are the foundation of all cultures.

According to Dr. Pattanaik, any attributes given to individuals are the result of a belief system within a given culture. These beliefs are subjective truths and, in general, people believe the notion that “my truth is always better than your truth.”

I USED to live on Rothschild Boulevard in Tel Aviv. I loved living there. Walking south to north on the boulevard, I would pass the first two houses ever built in Tel Aviv. Then, on the right, the house in which the Israeli Declaration of Independence was signed. Walking further, I’d pass a series of buildings inhabited by some of the most well-known venture capital firms in Israel and In between a series of cafés that are filled with entrepreneurs glued to their laptops.

For me Rothschild Boulevard represents not only the history of Israel, but also its future. It is a future of innovation, and it represents a journey from the past to the present. It is a journey filled with the tales told by the buildings on the boulevard. These stories are the foundation of a culture of entrepreneurship with unique characteristics, formed over the past century.

Many of the stories that originated from this boulevard can help us define Israeli culture. These stories are taught in schools and on tours; the greatest stories and the most influential ones, can be told and summarized in catch phrases. Some of these slogans have detached themselves from their original form in order to reappear in new stories that are told. Conducting many interviews, three such phrases or terms always seemed to come up. The first term is ‘Haval al hazman’, a Hebrew term, which can be translated, as ‘a waste of time’.

In Israel, this term is used so often that it has become an abbreviation (HVLAZ) as well as an adjective with both positive and negative connotations (which can be understood only by paying attention to the intonation of the speaker). The second term is ‘few against many’, and the last is ‘chutzpa’, probably the most famous Hebrew/Yiddish term known outside of Israel.

Haval al Hazman

The term Haval al Hazman has two meanings in modern Hebrew, the first of which is positive. When one asks about a party, movie, or event, one can respond that it was ‘Haval al Hazman’. This indicates that it was awesome. The second meaning is negative, and true to its literal translation- a waste of time. For example, one could say that a meeting was ‘Haval al Hazman’, indicating either that it was boring or that it was great and productive. How do Israelis distinguish between these two connotations? Usually, the tone of voice determines the meaning.

It is more interesting for our purposes, however, to understand how this term came about. The term originated in the days prior to the Second World War. Up until this time, the ‘Yishuv’, the early Jewish settlements in Palestine, had attempted to build a new society. Not a state, but a new type of society, one that would serve as a model for the world. They wanted to create a model in which the individual would be able to fulfill his full potential, while still being equal and working towards a common goal. As the settlements grew in land and operations, so did its need for new people. The Yishuv would not accept just anyone, as this was to be the beginning of a new society, only the best would be fit to be among its founders. The rise of the Nazi party in Germany quickly changed the Yishuv plans. Overnight, their mission moved from building a model society to providing a home and refuge to their fellow Jews fleeing Europe. These European Jews could not wait until the Yishuv finished building this home. As new immigrants from Europe flooded to Palestine, they were directed immediately to camps in order to build the new state and defend it.

The story tells us that as soon as these refugees reached the shores of Palestine, they were given a shovel, and a gun, and were pushed to shore rather than slowly disembarking their ship because ‘time is a horrible thing to waste’ – Haval al Hazman.

Few against many

The concept of ‘few against many’ is rooted deep into both Israeli society and Jewish history. It is a reoccurring theme in many Israeli stories. Most of these stories are of battles and wars, they might be as old as the story of the biblical, Joshua, who led the Jewish conquest of Canaan (the biblical name of Palestine), or as new as the story of the War of Independence or that of the 1973 Yom Kippur War.

The reoccurring theme is of a small fighting force that is successful when competing against a force two or three times its size. The notion of few against many is a feeling that many Israelis carry not only in military understanding, but also in the way that they conduct business. The Israeli businessman feels that he needs to prove that his company, though smaller than other players, is capable because of better resource allocation, time management, and pure wits.

Remembering that, for him, time is a horrible thing to waste.

Chutzpa

The term Chutzpa has been used in past to describe the ways in which Israeli businesses conduct themselves across the globe. It has since spilled into American culture (recently with former GOP presidential hopeful Michele Bachmann accusing US President Barack Obama of ‘having a lot of chutzpa’ with regards to government spending). The classic story of chutzpa has even been brought into the legal sphere when a young man was brought in front of a judge, accused of murdering his parents. The young man responded to the accusation by pleading for mercy on account of the fact that he is now an orphan.

Chutzpa involves changing the rules of the game when they do not serve your best interests, yet defending them furiously when they do. The term understands that the rules of society are just that – rules created by society. As such, they can be changed. Having chutzpa involves having little respect for traditional norms if they fail to serve one’s best interests.

The earliest example I could find for the use of the term was in the activities of Golda Meir, the fourth prime minister of Israel. In 1946, as head of the political department of the Jewish Agency, Golda Meir participated in high-level, multi-party discussions. Diplomats recall that on one occasion a member from one of the Arab states was expected to follow her speech. Because she did not want him to be heard, as Golda Meir stepped down from the stage towards her table, she pretended to not feel well and fainted, causing the discussion to end and the Arab representative to remain silent. The concept of chutzpa, of changing the rules that don’t suit your purposes, is also manifested in Israelis’ lack of respect for hierarchy. Israelis will respect hierarchy when its suits them. For example, during negotiations, they may refer to a superior in order to achieve better outcomes using the notion ‘I need to be able to sell this to my boss.’

However, if their boss does not agree, they may sign it anyway because the rule ‘you’re my boss and therefore I should do as you say’ does not apply in cases where the rules are not in one’s favor.

These three concepts, ‘time is a horrible thing to waste’, ‘few against many’, and ‘chutzpa’, can be understood to be the basic characteristics of the Israeli entrepreneur.

Often the first thing people notice about Israelis is their no-tie, casual approach. It is said that in Israel a man will buy a suit only once in his life and will wear it twice: the first time at his wedding and the second time at his funeral. Today, the groom would probably not even wear a suit, and open casket funerals are not custom in Israel.

The second thing people notice about Israelis is the directness of their communication. A few months after I started working for McKinsey, I participated in a meeting with a partner who provided me with feedback on some of my client work. I stepped out of that meeting feeling very good until my manger said, “Uri, let’s take a walk.”

We went around the building, and he asked me how I thought the meeting went, to which I responded: “Very well! I still need to work on a few items, but he was very pleased.”

My manager started walking a bit faster while he explained that the feedback we had just received was not entirely positive, even negative in nature. I was shocked, not so much from the feedback, but by the fact that I did not understand the subtleties of a conversation in which I had just participated. In Israel, people are direct. The speaker is responsible for the listeners – understanding, so he will attempt to be as straightforward as possible. His aim will be to communicate his messages as fast and as efficiently as possible. Again, time is a horrible thing to waste.

The last thing that may shock foreigners in Israel is a complete lack of tolerance for hierarchy. I was a soldier serving in the northern part of Israel in 1998 when a general named Erez Gerstein came to talk to us. As he entered the room, we all stood, waiting for him to instruct us to sit. He took off his hat, put his rifle on the table, and sat down, signaling us to do the same. He said that he wanted to hear from us not only what we saw in terms of Hezbollah activities, the Lebanese terrorist organization against which we were fighting, but also what we thought we should do about this situation. He finished his opening remarks by saying that he wanted to hear our thinking unfiltered. “No one has a monopoly on brain and wisdom,” he said.

Twelve years later, I was in the boardroom of an Israeli telecom company, accompanying a partner from Munich to a meeting with the CEO and some of his executives. One of the low-ranking executives began to have a side conversation with the CEO. The conversation turned into a loud disagreement and then moved from English into Hebrew. I started to translate for my partner, but I began to paraphrase when expressions involving the men’s two mothers surfaced. Two years later, this low-ranking executive became the senior deputy to this same CEO.

Uri Goldberg is a management expert, specializing in serving governments and corporations on strategy, innovations and economic development issues. He resides in Tel-Aviv.

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