A survey prepared by Israel Life Science Industry for "Globes" for the ILSI Biomed 2011 conference shows that most investors and senior officials of Israeli biomed companies do not believe that they must appoint an American CEO in order to penetrate the US market. According to the survey, 50% reported that there is no need for an American CEO, 20% claimed that it doesn't make a difference and 30% claimed that a company looking to succeed in the market must have an American CEO (or European CEO if the company is in Europe.) The survey was conducted for a panel that took place this week at the conference which was be moderated by Dalia Megiddo. Two Israeli directors participated in the panel: Gamida Cell CEO, Yael Margolin, and VBL CEO, Prof. Dror Harats alongside two American directors: Chiasma CEO Frederic Price and Regentis Biomaterials CEO Dr. Alastair Clemow.
According to Megiddo, "Research in 2000 showed that Israeli companies that have American directors don't succeed in building an effective infrastructure. There is a lack of cooperation between the R&D department in Israel and the marketing department in the US, where each side develops a certain style and sometimes even competes with each other. Cultural differences just exacerbate the situation and lead to a lack of trust."
Almost all of those who participated in the survey claimed that it is important that a senior member of the management team be extremely connected to American culture, but that it doesn't necessarily need to be the CEO. It would be enough to have the president, the marketing manager or the CEO of an American subsidiary serve this function. Other participants noted that it is quite common today to find Israelis who are quite involved in American life after spending years working in the US and therefore having an American CEO is not compulsory.
Some respondents noted that it would be helpful if an Israeli company hires a successful American CEO that knows the industry well. However, they believe that the chances of that happening are negligible -- on the one hand because a quality American CEO would never agree to manage an Israeli company and on the other because the cultural differences would rip the company apart. In this situation, it is preferable to appoint a successful Israeli CEO, even if he doesn't know the American market as well.
Megiddo adds that, "The American CEO is usually brought in from the outside and Israelis don't like this. The companies that succeeded with such a scenario had more than one founder, one of which relocated from Israel to the US and spent time working in the US market and in this way bridged the gap. Megiddo also notes that it is important to build integrated teams with members from both departments and to have them collaborate on projects and meet often. "An American CEO is an investment, one that costs about a million dollars a year," says Megiddo. "Therefore, he should be chosen very carefully and the relationship between him and the company should be watched carefully."
Some of the respondents suggested an alternative model in which the Israeli CEO himself relocates to the US at the beginning of the business and market development stage so that he can immerse himself well in the American market. According to all the respondents, the most sought after CEO is a "returning Israeli:" ie. an Israeli who lived many years in the US and worked in key positions in the American market and is now returning to Israel, or a new immigrant (or not so new immigrant) to Israel who held a senior position in the worldwide biomed field. The only problem is this is a very rare commodity.
Published by Globes [online], Israel business news - www.globes-online.com on May 25, 2011
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