Israelis trying to amplify high-tech boom

TEL AVIV — Israelis make great entrepreneurs, but lousy managers.

That's the word from many of Israel's business and high-tech leaders at a time when Israel's technology sector is booming and there's a huge demand for good managers.

"High-tech industries are growing furiously, but many of them are being led by scientists with low managerial skills," says Rina Pridor, a program director at Israel's Ministry of Industry and Trade. "They're very brilliant people, but they tend to want to do many things at once. And they don't like to admit it when they don't know something."

A similar view comes from Sherry Cizin, director of development at Tel Aviv's Technion Institute of Management.

"Israelis are very good at improvising," Cizin says, "but when it comes to putting a disciplined process in place, they're a disaster."

As Israel's technology sector blossoms — tech exports totaled $10.1 billion in 1998 — many of the best Israeli firms are being snapped up by American companies, whose management expertise exceeds their own. AOL, Lucent and GE bought Israeli companies in 1998. Last October, Santa Clara-based Intel acquired Israel's DSP Communications for $1.6 billion.

While some see this kind of buyout as evidence of Israel's success in technological development, there are others — like retired Mjr. Gen. Amos Horev — who would like to see the country's brightest companies stay under Israeli ownership.

"Our start-ups are being sold too fast for my taste," says Horev, who has served as Israel's chief scientist and as president of Haifa's Technion — Israel Institute of Technology.

Horev holds up his mobile telephone — a Nokia — to illustrate a point. "The way we sell our companies, we'll never generate a Nokia in our country."

It's a fitting example. Finland, with a population smaller than Israel's, has been able to hold onto the hugely successful Nokia. If Israel is to develop its own Nokia, a new breed of managers — more disciplined, more market-driven — will have to be developed.

But how does one turn an unruly engineer into the Israeli Bill Gates? For a start, by tailoring business training programs to Israeli needs. There are currently over 36 MBA programs in Israel, but most are run by foreign schools that haven't bothered to adapt their programs to the Israeli market.

"They bring in case studies from GE and Microsoft, which have problems beyond the scope of Israeli companies," says Shlomo Maital, professor of international economics and finance at Technion.

Horev is even more dismissive of the foreign schools. "Many of them sell diplomas," he mutters.

Maital's department is developing its own case studies, which are based on Israeli businesses and geared to Israeli needs. "The idea that management is for MBAs dominates business education in the U.S.," he says. "Our approach is also to take engineers and teach them management skills."

One such engineer is Yekhiel Weinstein, whose company, APS, has patented a lightweight, flexible metal tube that can be rolled up. Supported by the Technion Entrepreneurial Incubator program, APS plans to use the tube to make ladders and stretchers that can be easily transported by emergency workers.

In many ways, APS is a typical Israeli start-up: It consists of two mechanical and three aeronautical engineers, none of whom has any prior management or marketing experience. "I'm a mechanical engineer, but I have to do marketing," grumbles the T-shirt clad Weinstein.

"Is APS going to be the next GM?" asks Maital, who has been watching the company's development. "Not unless it gets help."

While Maital's work at Technion focuses on training university students and incubator entrepreneurs, a new program at the Technion Institute of Management is targeting existing executives.

Lester C. Thurow, an MIT economics professor and dean emeritus of MIT's Sloan School of Management, heads the management institute.

The Technion Institute of Management was founded in 1987 by members of the American Technion Society chapter in Boston. To develop the new program, the chapter spearheaded an international committee that spent 10 years developing a program to help Israeli executives become globally competitive.

The result — a senior management program — debuted in 1998. Coached by an international faculty over a six-month period, five or six executives from a half-dozen companies gather in the institute's offices to work on case studies drawn from their own experiences.

As part of its training, the first class also spent a week in Singapore, looking at high-tech culture there.

"Singapore is small and surrounded by not-so-friendly neighbors, but they've managed to be successful in industry," Cizin says. "They're doing something we're not."

Service management — also not a highly-developed concept in Israel — was one thing the institute's class observed in Singapore. Touring an airport there, the class was impressed by the commitment to get luggage into the terminal in less than 12 minutes.

"As of yet, there's no one to learn service from in this country," sighs Cizin.

But that could soon change. With the Israeli business community becoming more management-oriented, it might not be long before an Israeli Nokia or Microsoft is within the country's grasp.

"We're doing something that's going to make a difference in Israel," Cizin says. "We're looking for companies that are built to last."