THINK AHEAD!

Israel should follow good business practice by planning strategically for the future.

By SHLOMO MAITAL
Prime Minister Benjamin Netanyahu meets with Chinese President Xi Jinping in Beijing on March 21 (photo credit: REUTERS)
Prime Minister Benjamin Netanyahu meets with Chinese President Xi Jinping in Beijing on March 21
(photo credit: REUTERS)
In my  latest book, “Smartonomics: Simple, Powerful Macroeconomic Tools for Success in an Uncertain World,” there is a chapter titled “A Country Is a Business.” The point of the chapter is that countries are like businesses ‒ both use resources to make goods and services, create jobs and distribute income and wealth to their stakeholders.
Prosperous countries are run smoothly, like profitable businesses, by their leaders. Failed countries are not. Venezuela and Zimbabwe, for instance, are horribly managed and the people of those countries suffer terribly. The list of such countries is long.
But there is one key realm where many countries, Israel, in particular, do not resemble businesses at all − long-term strategic planning.
Great business leaders think and plan ahead strategically. Even small businesses do. But in the standard four-year election cycle of democracies, politicians are myopic, thinking constantly about the near term and next election.
This brings chronic underinvestment in such long-term areas as higher education and infrastructure whose fruits are harvested only when the initiating politicians are long gone.
Some 36 years ago, one of Israel’s best strategic planners, Samuel Bar-Zakay, at the time head of strategic planning for Israel Aircraft Industries, published an article in an academic journal on “A National Strategic Planning Model.” In it, he observed that “due to wars and other outside pressures, the Israeli politicians spend most of their time and resources dealing with short-range foreign policy issues.”
Little has changed since then.
Bar-Zakay proposed a sophisticated system for long-term national strategic planning, but it was ignored. And his poignant belief that “nations can be masters of their own future rather than its slave” remains, for Israel, a distant dream.
In the West, economic systems are crucially dependent on getting people to borrow and spend, rather than save and invest.
The result? The future is not what it used to be. In the US, the civil engineering society claims $4.6 trillion will be needed by 2025 to bring US infrastructure to an acceptable standard and fix crumbling roads, bridges, airports and railways.
I have some personal experience with national strategic planning. In 2006, I was part of a team led by the late Eli Hurvitz, legendary founder and longtime CEO and chairman of Teva Pharmaceutical Industries, and David Brodet, now chairman of Bank Leumi. The project was called Israel 2028: Vision and Strategy for Economy and Society in a Global World. Its goal was to build a pragmatic strategic vision and plan for Israel’s next 20 years. It was led by the S. Neaman Institute, where I now work, and supported by the US-Israel Science & Technology Foundation.
We worked on the plan for two years. The goal? Bring Israel into the top 15 countries of the world in gross domestic product per capita (today Israel ranks 32nd).
How? By achieving two decades of 4.7 percent per capita GDP growth; reducing social gaps; promoting education from kindergarten through college; boosting labor force participation among Arabs and the ultra-Orthodox; improving governance; dispersing innovation through traditional economic sectors; fostering knowledge-based industries; and improving national physical infrastructure.
All of  this sounds like motherhood and apple pie, but the plan was anchored in detailed pragmatic policies constructed by seasoned experts.
It was presented to all the government ministries, revised, and then in the early summer of 2008 was discussed and approved by the cabinet, led by then-prime minister Ehud Olmert. For a time, there was hope that Israel, like IBM or Microsoft, would at last have a long-run strategy. Then, the roof caved in.
On July 30, 2008, Olmert, facing corruption charges, announced he would resign.
On September 15, 2008, Lehman Brothers declared bankruptcy and the global financial system collapsed. A cease-fire between Hamas and Israel ended and war broke out in Gaza. Olmert’s successor as Kadima party head, Tzipi Livni, failed to form a government and elections were scheduled for February 2009.
Goodbye, Israel 2028. Short-term crises always seem to defeat long-term strategic planning in democracies.
Consider China: In 2016, President Xi Jinping announced China’s 30th five-year-plan.
Its mantra was “China Dreams” and it was an ambitious plan to make the country more innovative.
Part of that plan is China’s visionary New Silk Road, a trillion-dollar investment program to build bridges, ports, roads and railways linking Asia, Europe and Africa.
Free-market economists in the West often mock China’s strategic plans. It is no democracy, but its ability to plan and act longterm is exemplary. It is ironic that the country that is run most like a think-ahead business is governed by the Communist Party.
Hope springs eternal, however. In late 2014, Prof. Uzi Arad, a former head of research for the Mossad and of Prime Minister Benjamin Netanyahu’s National Security Council, who is now at the Herzliya Interdisciplinary Center (IDC), initiated a Grand Strategy Forum with 120 top experts joining the project. As with Israel 2028, the S. Neaman Institute and its chairman, Prof. Zehev Tadmor, provided support.
“The Grand Strategy for Israel project, in addition to social and economic issues, deals with statesmanship and national security, as well as science, technology and education,” Tadmor told me. “So, it is far more comprehensive than the Israel 2028 report.”
The Grand Strategy team has now produced and published another long-term strategic plan. Here are the main elements: Boost investment in education, especially technology education, and in R&D and infrastructure; create incentives to enter the labor force for those who are outside it; create more competition in monopolistic and oligopolistic sectors; work to resolve the Palestinian conflict; pass legislation to keep workers in vital infrastructure from striking; reduce tariffs; withhold exclusive import licenses; increase the share of GDP spent on the public by 1%; keep the budget deficit to 3% of GDP; cancel tax exemptions that have no social or economic purpose; introduce an estate tax; increase old-age pensions and pay child allowances only for the first three children; reform the budgetary process; supply detailed information to government ministers when the budget is debated; reduce the number of ministries to 15; establish a research unit for each ministry to help formulate focused knowledge; and set a quota for the number of bills each Knesset member can table (20,000 private bills were tabled in the past 15 years).
In speaking on behalf of national strategic planning, I repeatedly hear this pushback ‒ how in the world can one plan ahead when the world is chaotic and uncertain? Indeed, we do live in a VUCA world. The acronym VUCA means “volatile, uncertain, complex, ambiguous.” It was first created at the US Army War College as a military term that describes the world military officers faced at the end of the Cold War in 1991. The term was quickly embraced by management consultants.
The world today is indeed volatile, uncertain, complex and ambiguous, and the Middle East particularly so. How then should countries respond to this uncertainty? One response is to abandon all efforts to plan ahead. Why bother, if the world is so volatile and unpredictable? A much better response, in an ambiguous world, is to work out possible future scenarios and plan how to meet them. Uncertainty requires more and better long-range planning, not less.
The US Army War College counsels a five-step approach to a VUCA world: 1) anticipate the issues that shape conditions; 2) understand the consequences of issues and actions; 3) appreciate the interdependence of variables; 4) prepare for alternative realities and challenges; 5) interpret and address relevant opportunities.
IN THE Israel 2028 project, I worked with Clyde Prestowitz who, in the 1980s, had been US president Ronald Reagan’s chief trade adviser. Clyde was hired by the project as a consultant, and he and I visited and benchmarked small agile countries, such as Taiwan, Singapore, Switzerland and Finland, which excelled at thinking ahead. We brought home a shopping basket of proven strategic tools we felt Israel could and should embrace.
For example, years ago, Singapore sought out the global multinational company that did strategic planning best – Royal Dutch Shell. Before the 1973 Yom Kippur War and resulting oil embargo, Shell’s senior managers had envisioned precisely that scenario – an oil shortage and spike in oil prices. They had a strategic plan ready and waiting.
Learning from Shell, Singapore has been working on long-term strategic planning for nearly 30 years. It evolved from a Scenario Planning Office in 1995, directly under the prime minister, into the Strategic Policy Office (SPO) as work on foresight was linked to policy and budgets. The SPO tries to find blind-spot areas – what bad things could happen that might hurt us, and what can we do to anticipate them? Lately, other government ministries have launched similar planning groups.
As I write these words, sirens are sounding for a national earthquake preparedness drill led by the IDF Home Front Command.
Experts believe a major earthquake could occur in the next decade or two because Israel sits atop an earthquake fault line ‒ the Syrian-African fault. Detailed plans exist for pulling people out of collapsed buildings. A Canadian company, Nanometrics, was chosen to install an earthquake early-warning system to give a 10 to 30 second alert – enough time for many to get out into the open.
Strategically, there are other earth-shaking events that could wreak havoc because the political tectonic plates on which the Middle East rests are constantly shifting.
Why then, if we are so well prepared for an earthquake, is our strategic planning cupboard so bare? Will we pay a heavy price for our political leaders’ extreme myopia? What if a new Israeli ministry were to be created ‒ the Strategic Planning Ministry? Surely, in a bloated cabinet of 30 ministries, there is room for this crucial one. Its mandate: Think ahead. Far ahead. Develop scenarios and think about responses. Build long-term plans. Apply the five-step VUCA approach in all policy planning. As with corporate strategy, the way you implement a national strategic plan is far more important than the details of the paper plan itself.
According to the World Health Organization, myopia (shortsightedness) has become a global epidemic as children spend less time outdoors and more time in front of plasma screens. Apparently, outdoor time fosters release of retinal dopamine that keeps the eye from growing too fast and becoming myopic. The WTO predicts that by 2050 half the world will be shortsighted.
Nearsighted vision can be corrected with eyeglasses. I’ve worn them since I was a child. But national myopia is far harder to fix.
It will take a great deal of social and political pressure to get our leaders to think ahead. The Grand Strategy document is a good start.
The writer is senior research fellow at the S. Neaman Institute, Technion and blogs at www.timnovate.wordpress.com.