Israel can claim a dubious distinction, as the country with the greatest
instability and threats on its borders and in its region. In response, what
Israel needs, according to business gurus Yves Doz (France) and Mikko Kosonen
(Finland) is to learn how to dance “fast strategy” or strategic
Doz is a chaired professor at Europe’s leading business school,
INSEAD, based just outside of Paris. Kosonen once headed strategy at Nokia and
now runs Finland’s billion-dollar innovation fund SITRA.
The two are
authors of the 2008 book, “Fast Strategy: How Strategic Agility Will Help You
Stay Ahead of the Game”. They recently gave a workshop in Tel Aviv for local
managers, which I chaired. They were joined by Dr. Nira Adler, a senior
consultant at the Israeli branch of Deloitte professional services company. Doz
and Kosonen met here with top Israeli global managers, with IDF officers and
with Prof. Eugene Kandel, who heads the National Economic Council for Prime
Minister Benjamin Netanyahu.
Their key message: Most organizations are
ill-prepared to face the twin challenges of speed, in reacting to surprises, and
of change of direction, to adapt to those surprises. Not only can they diagnose
decision-makers with two left feet, Doz and Kosonen can help them learn to
foxtrot or even salsa.
They consult to several key nations, as well as to
Fast strategy for both businesses and for nations has
three elements, according to their book: First, “strategic sensitivity –
heightened alertness (to shifting trends and dangers)”; second, “leadership
unity (top leaders) working together as a team”; third, “resource fluidity –
dynamic resource allocation (to shift funds rapidly to meet new and changing
How well do Israel’s leaders and policymakers dance? Alas,
they stumble on all three of the strategic agility “steps”.
sensitivity: As it did most of the world, the Arab Spring took Israel by
surprise. As yet, no clear Israeli response has emerged to the rapid changes
occurring in the Mideast, especially in Egypt. America, too, has waffled, but
this is small consolation. So on strategic sensitivity, Israel
Leadership unity: Here, the score is even lower. In the past
year, the daily Haaretz twice ran an identical headline, “Netanyahu’s office
distances itself from [Foreign Minister Avigdor] Lieberman…” Once, last year, in
eschewing Lieberman’s wildly wrongheaded plan to aid the Kurdish PKK terror
group in Turkey, in retaliation for Turkey’s anti-Israel rhetoric, and again
last August, in renouncing Lieberman’s call to oust Palestinian Authority
President Mahmoud Abbas.
In most well-run countries, a loose-cannon
foreign minister would be instantly dismissed. In Israel, Lieberman’s Yisrael
Beiteinu party, with 15 Knesset Members, is apparently an indispensable part of
the ruling coalition, whatever Lieberman says or does.
The score for this key agility component is below sea level. The chronic crisis
in Europe and the sluggish American recovery have dragged the world into a
double-dip economic slowdown. Even China’s economy has slowed. The result has
impacted Israel’s economy, which is export-driven.
At the same time, Prime
Minister Netanyahu loosened his purse strings following the Trajtenberg Report
on social justice. As a result, a massive NIS 14 billion ($3.6 billion) gap
between budget spending and revenue has emerged.
What is needed is a new
2013 budget that cuts this deficit. But with elections in the offing early next
year, coalition partners stubbornly resist budget cuts and tax
Politics has set spending in concrete. Unable to pass a budget,
Netanyahu has called for early elections rather than next October.
last thing Israel needs right now is the paralysis of an election
A major offender in killing resource fluidity is Finance
Minister Yuval Steinitz’s pride and joy, the two-year budget.
good for long-term planning, the inability to adjust budgets yearly, to make
resources fluid and react quickly to global trends, is now deeply hurting
Israel’s internal stability. In California, Proposition 31 (on the November 6
ballot) calls for a two-year budget cycle. But Israel is not California and
Israel’s neighbors, Syria and Lebanon, are not Nevada and Oregon. And anyway,
Proposition 31 will likely be defeated.
In September, Netanyahu
instructed Harel Locker, director general of the Prime Minister’s Office, to
draft legislation enabling government ministries to fire workers or shift them
internally. Without such fluidity, Israel’s 676,000 public-sector workers (of
which 256,000 are government civil servants) are set in stone. But the
initiative has been stalled by, among others, the Histadrut Labor Federation.
On the upside, the budgetary paralysis
may ironically help resource fluidity. Without a 2013 budget, Accountant General
Michal Abadi- Boiangiu, normally ignored by the media, becomes a key player. She
can force ministries to cut spending and can also shift funds between ministries
to pay, for instance, for free age-3 preschool education, mandated by law but
whose cost is still unbudgeted.
I ask Doz and Kosonen which nations they
believe are strategically agile, worthy of benchmarking. They name Sweden,
Denmark, South Korea, and Singapore.
Denmark has deftly become a world
leader in alternative energy and in medical tourism. So has Singapore. The two
experts acknowledge that democracy is sometimes a foe of agility, not a friend.
Singapore’s oneparty democracy is minimal, but in spite of (or because of) that,
it renews its national strategy every five years, backed by agile deep pockets
(funded by massive compulsory saving) and often led by its current president,
Dr. Tony Tan Keng Yam, who holds an MIT master’s degree in operations
China’s one-party system too can impose rapid
Doz and Kosonen tell The Jerusalem Report
that of the three key
components of agility, resource fluidity is often the toughest for nations. As
Ireland, Greece, Spain, Portugal and Italy struggle to impose austerity and cut
budgets to control public debt, fierce public protests show how hard that
process is to implement. It seems a very tough nut for Israel to crack, too.
This basic asymmetry in democratic countries – easy to boost public spending,
tough to restrain it – sank Greece and Spain. Hopefully, Israel will not follow
I ask them why Europe hasfailed to shape a coherent
There, they say, the problem is lack of leadership unity. “What
is being done now in finance,” they tell me, “should have been done in 2008 and
there would have been no devastating [euro] crisis.” There is no strategic
mindset in Europe, they claim.
In 1993, Louis V. Gerstner became CEO of
IBM, inheriting $16 billion in losses and a failing global company. In his 2002
book, “Who Says Elephants Can’t Dance?”, Gerstner recounts his decade at IBM,
the turnaround he led and the high-level strategic agility IBM acquired under
his tutelage. The first thing Gerstner did at IBM was to redirect the company’s
attention to the outside world, to changing market conditions and to customers
who felt neglected.
Israel’s leaders need a dance instructor like
Gerstner or Doz and Kosonen. They should refocus on the Mideast and the world,
rather than on narrow parochial politics.
They need to learn more than
just an obsessive two-step (“Iran, Iran”), repairing relations with the US,
Egypt and Europe.
They need to waltz with Abbas, even if in desperation
he is seeking a unilateral declaration of statehood. In foreign policy, they
need to learn a smooth line dance, not step on each other’s toes. And they need
to offer a serious peace initiative.
In economics, they must rumba, to
adjust priorities as unemployment rises and exports slow.
learn how to dance, because it must. Let the lessons begin.The writer is a
senior research fellow at Technion’s Samuel Neaman Institute.