When I meet people from overseas, I often hear high praise for the Israeli high-tech industry. Israeli companies are perceived around the world as innovative, energetic, and as having a high capacity for improvisation, important qualities that many lack. When I hear these compliments, I smile politely, but something inside nags at me. These qualities, so characteristic of the Israeli high-tech industry, don't necessarily indicate substantial commercial potential and long-term strategic thinking. That is because of the local mentality.
Why is it that, despite the fact that Israel breeds some of the world's most brilliant brains, and despite unprecedented technological achievements and infinite daring, our mentality has not changed since the period of making the desert bloom? The answer is that most of the entrepreneurs, engineers, programmers and the rest knew how to harness creativity and enterprise to tactical successes, here and now. But in a globalized world, Israel will find it hard to prosper in the long term and succeed in the global economy unless its leaders steer the ship correctly. The country can no longer rely on the enterprise of a few individuals. It must define frameworks, set goals, and realize them.
The first stage must be long-term planning almost a crude word in an Israeli milieu. The country needs one thing that every successful company has and must have, namely vision. It has to decide, once and for all, what kind of economy it wants to create here in the decades ahead. In a world of spaceships there's no point investing in a workshop to build carriages. It's not right to invest in creating tens of thousands of old-fashioned jobs, at low wages, when in a few years' time those jobs may no longer exist.
The country must aspire to be an innovative, competitive economy with high productivity. The way to achieving this is not secret and not hidden: we must invest in knowledge-intensive industries; invest in and cultivate competitive, high-productivity industries; and above all, invest in education. Education is vital in order to prepare and cultivate the future generation of scientists and engineers, the life-blood of any advanced industry. If we want outstanding engineers, we have to start teaching children mathematics at a high standard from a young age. In a globalized world, innate Israeli cunning is very important, but not enough. Israel must train generations of citizens who can also plan and execute.
Another mission for our leaders is encouragement of investment in Israel by large overseas corporations. A small economy like Israel's will find it hard to survive without large international investors. To stay at the peak of technological innovation requires huge investment. The investment in developing the next generation of processors or developing a new drug could amount to hundreds of millions, and even billions, of dollars. These are investments that only giant companies can make. Another advantage to such investment is the spillover effect, the flow of knowledge from the large companies to smaller ones.
For example, over the years that Intel has existed, some ten thousand employees and students have left the company to found hundreds of companies that employ people at high salaries. That is part of the right model for a prosperous Israeli economy.
The state must take the initiative and act in this respect: it must find the companies it wants, and court them. In Ireland, for example, there is a government agency charged with attracting investment by foreign companies. We must internalize the rules of global competition, and not wait for economic miracles. We must attract to Israel knowledge-intensive industries that will stimulate the growth of the economy, in areas in demand, such as computers and electronics, life sciences and innovative medicine, as well as in areas looked on as "traditional". These are measures that will bring about a growing, flourishing Israeli economy.
We can't be the mischievous child any more
The most urgent economic-social problems in Israel today, as in many other places in the world, are the cost of living and inequality. The average salary in Israel is very low and does not allow many people to earn a decent living. The solution to that lies in expanding our knowledge-intensive industries and other high-productivity industries. We must continue to invest resources in absorbing haredim and Arabs into the Israeli high-tech community.
Co-opting these sections of the population, alongside substantial growth in the number of qualified engineers leaving the universities every year, and encouragement of major multi-national companies to set up development and production centers in Israel, will lead to the Israeli economy generating thousands more jobs and workplaces.
The Israeli economy can only be sustainable over the years if small companies become medium-sized and medium-sized companies become large. The Israeli government and the chief scientist must create incentives that will encourage start-up companies to develop within the country. This is in addition to companies that choose to make an exit. We must encourage the choice of a track in which jobs become economic anchors, and reduce the incidence of foreign companies reaping the intellectual property developed here without creating long-term sustainability in Israel.
The time has come for the Israeli economy to grow up. We can no longer be the mischievous, even if highly successful, child of the global economy. We also need a steady hand at the helm, orderly team work, and long-term planning. Strategy is not a rude word. The Knesset needs to pass stable laws governing the encouragement of inward investment that will not change every few years. The state needs to bring the major companies here, and not wait until they may happen to pass by and want to be here.
Above everything and before everything, we have to invest all our efforts in the education of the future generation from all sections of Israeli society, so that we do not wake up in another ten years and discover that we have been left far behind, or, worse than this, realize that it will take decades to put the situation right, if that is possible at all.
Shmuel (Mooly) Eden is a senior vice president and general Manager of Perceptual Computing at Intel Corporation, and president of Intel Israel.
Published by Globes [online], Israel business news - www.globes-online.com - on December 8, 2014
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