Silicon Wadi: A National Effort
Although people are quick to lump Silicon Valley and Silicon Wadi together simply as hotspots for tech innovation, it’s ultimately a discredit to both places. Silicon Valley came about thanks to eight people who wanted a free environment to develop their ideas and run businesses how they wanted. The Israeli counterpart, on the other hand, produced their Silicon Wadi and all their other startups through a national effort heavily involving the military.
The military, you say?
The most apparent image of Israel is still the conflict that involves most of its citizens with Palestine. It’s actually been through three wars since their economic shift yet their population has tripled. This isn’t typical of a country involved in armed conflicts. How have they sustained such growth? They have adopted a democratic organizational structure in their military.
Unlike any other military force in the world, Israel lets its lower-ranking officers make decisions when higher ranks aren’t’ around. What’s more, they have lesser officials for more soldiers so they really do want their troops to think for themselves. Soldiers do not have to salute officers, and privates can disagree with hierarchy. Through active and reserve duty, army units stay together for years. This constructs an influential national network of social and business connections.
Just like South Korea, they require their citizens to go through 2 – 3 years of military training before going to college. This evens the playing ground completely for people at that age where they can form connections and groups that can endure beyond their military stint. They group people into specialized units that focus on certain fields. There’s a field where most of the Silicon Wadi innovators come from, if you’re questioning how effective this is.
With one start-up for every 1,844 citizens, Israel has more new businesses per capita than any other country. Here are some examples: Unit 8200 is the Israeli military’s top intelligence team. As these soldiers move into the private sector, they use their know-how to create companies. They’ve launched several firms like: Checkpoint, now worth $5 billion and listed on Nasdaq, and Fraud Sciences, which PayPal acquired for $169 million. The Israeli army’s most selective unit is Talpiot, which is restricted to the top 2% of high school grads. Talpiot unit mixes military service with technological university training, and its militaries become “crossdisciplinary” leaders and problem solvers in the army and in the business.
The most important part of any military exercise in Israel is the debriefing. This is where cadets and officers get the chance to talk about the experience and the mistakes that happened. A debate always happens and people are able to speak freely. The chance to talk about what they’ve learned from their experiences builds the foundation of constructive criticism, team-building and consensus.
Then comes college
After military training, most people go to university, with 45% of the population attending. The Israeli government gives lots of value to education and innovation since they pour most of their efforts into helping entrepreneurs and startups.
Most of the kids who went through military training in those elite divisions go into college to learn tech, science and other fields that are in demand in Silicon Wadi. While other countries focus their education on what is needed, Israel wants is youth to start their own enterprises. With 70% of its population younger than 25 years old, it means that there is so much time for their efforts to mature.
Business model innovation at the government level
Another great way to demonstrate how Israel has adopted innovation and startup communities to support itself is how it changed its own government. In a broad sweep that demolished the old government system, Israel cut 400 jobs, changed their tax system and let financial managers take fees. This promoted the growth of investing and focused the money to venture capital for new businesses. Silicon Wadi has grown so much thanks to the overhaul.
One thing we could learn from Israel is that it changed its banks to help startups, it privatized its telecommunications and airline industry and it allowed immigration.
Immigration, is a key source of Israel’s entrepreneurial strategy. It boosted the country’s population from 800,000 at its founding to more than 7 million. From 1990 to 2000, about 800,000 individuals came from Russia. About one in three of these immigrants was an engineer, scientist or technician. Attracting new immigrants is such a high national priority that there is a ministry for that purpose. The country has benefitted greatly from its investment in new citizens.
From the start, Israel’s goal was to attract investors for its entrepreneurs and create more jobs. It instituted a lot of venture capital funds to give opportunities for innovators and investors to connect and create creative collisions.
Still, there are dilemmas
There’s a reason why Israel’s story is novel; it’s because armed conflict is still a reality. Even if there has been so much growth, it isn’t equal. Almost half of the population has been left behind and are unable to follow-up on their brilliant military training. What’s more, conflicts still arise and have left a lot of people still living in the state Israel was before the economic boom.
But in the end, what’s exemplary about Israel’s story is that its system is now hard-wired to accept the next Silicon Wadi, new ventures, risks and passionate innovators.