Israel Business Management

This morning I attended a meeting where the discussion surrounded social media, also known as social networking or Web 2.0. It is important to stress that there is a difference between how social media is used by businesses and how it is used by individuals.

While an individual may use these resources for staying in touch with old friends or relatives, a corporation is looking at the social media as a new PR strategy, an alternate method for customer service and a way to drive more leads.

The question is - Is Social Media the right strategy for your company?

Here are some things to consider:

Target Market - Are your customer or potential clients on that particular network? Or for that matter, are they on any? Recently, I saw that a company was promoting their product line for the mainframe on Twitter. I thought that odd, due to the fact that the nature of the mainframe person is the antithesis of the social networker. They are believers in very centralized systems and not very open to new paradigms. This company may have been better off promoting the products in other ways, while companies targeting young adults would do very well to use Twitter or Facebook, for example.

Time - These social networks require a lot of time to set up and maintain and due to the fact that your audience is global, there is no down time in a 24 hour period. Someone on staff has to monitor and respond to inquiries, "tweets" or solicitations. Do you have the bandwidth to do this? DO you have the budget to have someone full time on this project? Can you afford not to have someone on this?

Results - The question of measurement should be top of mind. What are you looking for out of social media and can it be measured? Then, if you can answer those questions, how will you measure it? I believe these are the toughest questions for business today in dealing with social media. One of the obvious ways to use social media and measure it, is PR. My friend, Alan Weinkrantz, has a presentation online that he gave recently at a conference on this very topic.

Social Media is gaining traction and will continue to evolve over the coming months and years. Do you have an idea of how to use it to your advantage???

My older boy recently had an assignment from his English class to choose a product and build a sales pitch to deliver to the rest of the class. For his product, my son chose chocolate. He did not want me to help in any way at all.

To be honest, my expectations for the sales pitch were around taste and maybe tying in how much he enjoyed chocolate (a reference sale - even though he may not really understand what a reference sale is.)

When I saw the finished product yesterday, I was shocked. He had built a real sales pitch. He had built up the needs - if you have a sweet tooth, you need the chocolate. He had a competitive differentiator - he focused on how his chocolate was healthier than others that are out there. He mentioned Vitamin D as an ingredient for healthy bones and teeth.

My son even built an incentive for the consumer to buy the chocolate immediately - a price reduction for a limited time only.

Aside from reminding of Bill Cosby's breakfast routine, which you can see below on YouTube, I started thinking of how many sales pitches I have heard or how many marketing materials I have read, where there is no focus on the need of the customer, but immediately the company starts with features and technology.

Take it from an 11 year old selling chocolate to other kids, understand the needs of the clients before you start your sales pitch.

As a bonus, here is the Bill Cosby routine - enjoy.

Companies need to think of how they will retain their customers for the long haul. As it costs far less to retain an existing customer than going out and finding new customers, companies need to cater to their existing users. These customers need to hear from your company more than once a year in a invoice asking for a maintenance renewal or a new upgrade that they have to pay for.

Don Peppers and Martha Rogers (who coined the 1 to 1 marketing strategy term) wrote a book about Return On Customer - where they discuss how to get the most value out of your customer in the long run. They focus on using the typical ROI (Return on Investment) formula for the ROI invested in each customer.

How many companies are familiar with how much they have invested to reel in that "big fish"?

In order to focus on each customer, you would need to know how much revenue they bring you and how much it cost you to acquire them or to retain them.

Though it is difficult to go through this exercise, it is very rewarding. Peppers and Rogers have 3 steps:

1. Uniform Tracking - This needs to be in place to track the advance of a company from the point of being a prospect to the time they become a paying client.

2. Marketing Allocation - This should be in place to know the cost per lead (COL) in a marketing program, but you may have to add in cost of a sales rep that may follow up with the client, a pre-sales person that had to fly out to help with a proof of concept (POC), etc.


3. Revenue Allocation - This is the easy part. You should already know how much money comes in from each individual client.

This may sound very complex on paper, but I can assure you that the outcome far outweighs the pain during the research.

Feel free to contact me for help on how to do this.

In last week's post, we focused on some of the challenges that an Israeli company faces trying to break into the US market (it also should apply to other markets as well - but we chose to focus on the world's biggest IT market.)

The New York Times (on May 20, 2009) had an article on the Entrepreneurial Edge of Israeli companies. The article focuses on the goal of Israeli companies. They want to become global brands. The companies that achieve this goal from Israel are few and far between. The article mentions Check Point Software, Teva Pharmaceuticals and Amdocs, but for a country that produces the second largest number of start-ups, three is not a very large number.

What can we learn from the article that can help us achieve those goals?

1. The Israeli companies have to be seen as in the market for the long-term, but today Israeli companies are seen as just people with great ideas. Israelis need to market themselves and the companies better. This will allow the US market to see the companies, not just as acquisition fodder, but as viable brands to buy products from.

2. The article makes a point of stating that Israel and the US have two distinct strengths. The Israeli companies are good at innovation, but American managers are good with strategy and scale. By joining the best of both worlds, companies can succeed.

Israelis need to learn the limitations of the local talent pool and to bring in the outside talent that can make them viable global brands.

One of the biggest challenges an Israeli company has is trying to expand past the very limited geography of Israel. A company that starts to sell a service or product in foreign markets has to take into account cultural differences, languages and added capital for investment.

First rule: Give it time and space. I have seen Israeli companies that pull the plug too fast, even when the business is headed in the right direction. Instead the management changes the personnel ruining what has already been done and effectively starting over.

Second rule: Hire good people. This may sound strange, but instead of following through on the dollars that are already to committed to the expansion, the executives cut the most important asset - the people that will run the new geography.

Third rule: Do not manage from afar. Though you do not want to smother the new operation, you do need to make sure that as a senior manager, you visit the new business. This accomplishes two things. One, it allows you to see firsthand what is really going on. Two, the fact that you are spending money and time to travel to the new business shows the level of commitment to the employees at the home office and to the newly hired remote workers.

Expansion is critical to any business and the limited resources of Israel dictate that global expansion is vital to any company. Just ensure you are managing the new business appropriately.

More to come next week.

With the economy today in a weak state and the unemployment rate in Israel expected to be higher than 8% by the end of this year, it is inevitable that some companies will have to say goodbye to some of its employees.

How can this difficult process be made any easier?

1. Regular reviews - The employee should never be kept in the dark as to where they sit in relative terms to the rest of the team or company. If the employees are regularly reviewed (in a constructive way), there should be no surprises that when the company does need to have a reduction in numbers, the lowest ranked employees are the first to go. I have been involved in small companies, in particular, where there is no review process (not even once a year!) and therefore, employees are surprised when let go (even aside from those economic layoffs).

2. Keep emotion out of it - The layoffs are due to the economy, not due to the personality of the employee. Keep the discussion at that level. Explain in a concise fashion why the company needs to reduce the numbers of employees.

3. No suspense - Once you have the employee in the room, make sure to start the conversation about the layoffs. There will be enough anxiety because of rumors in the organization already. Let the employee know where they stand.

4. Do not leave - Allow the employee to keep the discussion going as long as it is productive. The employee may want to vent or overcome some level of shock (even with the review process, the end may be sudden.)

All people need to be treated with dignity, even those that will not be with the company for mych longer.

This is the most difficult thing a manager has to do (especially as it has nothing to do with the employee per se). Do not make it any harder.

There was a wonderful commercial that ran on TV in the United States for FedEx (the shipping and logistics company).

You can see it here:


How many times have you had a good idea "stolen" by a manager? Now, how many times have you taken credit for one of the ideas or programs of someone on your team? Do you really know who has the good ideas on your team?

If you are taking credit for work done by someone on your team or one of your reports. STOP!!! This is not ethical and can be a career-ending decision if your manager finds out. On the positive side, if you do not take credit for their work, you can look like a mentor and an enabler of a great team and gifted talent.

If you currently manage someone that seems to be taking credit for what others do on your team, this needs to be confronted immediately. This is the opposite of the team atmosphere that you are charged with creating.

What can you do? Make sure that every individual has a task list of the items they are working on currently (they only need to supply you with the top 3 items). This will limit the amount of poaching. However, when they work as a team, it gets more difficult. Have them take notes at their meetings and hand in a version signed by all as the final copy. This will allow you to see how the idea came about and was flushed out.

Your manager is taking credit for your work. This is a little more delicate, but you can CC: his/her boss or send the email of the work as an FYI to his/her boss after sending it to them.

It is critical to remember that you do not want to embarrass your boss in any way. You can save all copies of the work and document everything. Then if your manager's boss ever tells you that he/she took credit for something - you can approach it with some humor - oh, he did (insert laugh), because I would love to show you how we developed that program/plan/project.

More to come on difficult work situations. These are more common then you think.

Today, Globes, the Israeli business newspaper, has an article about how there are currently 11 people seen for each job opening. By the end of the calendar year 2009, that number will grow to 14 people competing for each position.

Though, we can write about how a candidate needs to differentiate himself or herself to be more noticeable from the crowd, I think we will focus today's post on the corporation's viewpoint.

Let's assume for a moment that the "right" candidate is hiding amongst the 11 CVs currently sitting on the desk and that your company has not advertised somewhere that the "right" candidate cannot find you or you have engaged the correct recruiting or headhunting company for this type of job. More to come on this topic later.

So, we are confident that the right person is in the 11 CVs - less than a 10% chance to get this right.

Ask the right questions: First, start off with general questions to get an idea of who the person is. Then, work you way into specific questions that pertain to the job. You want to focus on how the person will fit into your company as a whole and then how the experience the candidate has will make them a fit for this job.

Make the person feel comfortable: Almost all candidates are nervous to some level and the job of the interviewer is to make them feel comfortable enough to answer the questions honestly and with a clear mind.

Take Notes: I had a manager a long time ago, who told his reports to always take copious notes at meetings. Though, I am not sure that every meeting warrants this approach, in a series of interviews that you will do, you will start to forget what made the early candidates stand out and you may even start to blend together some of the traits.

One of my earliest jobs was working for a job placement company in Israel. These are just a few of the tips that I learned to finding the right candidate. Contact me to find out more tips and tricks on how to find that next great employee.

In The Jerusalem Post this past weekend there is an interview with Maxine Fassberg, vice president of the technology and manufacturing group of the giant Intel Corporation and general manager of Intel Israel. Intel is the world's largest chip manufacturer and the employer that was named the Best Place to Work in Israel again this year.

In the eighties and early nineties, people studied Andy Grove (the CEO of Intel at the time) and his innovative management style and techniques. Gordon Moore, of Moore's Law fame, was a co-founder of Intel with Mr. Grove. So, Intel has been a company that we can learn a lot from.

Maxine Fassberg says that Israelis are good at putting out fires, but not good at planning for the future.

Companies need to have their business plan, sure. But, how many Israeli companies have a 3 year or a 5 year plan? I believe that most Israeli companies get distracted by the dynamics of the economy, normal course of business and also some unique bureaucratic issues in Israel.

But, a CEO or senior management in a company needs to remain focused and stick to the plan, if it has been validated and vetted appropriately.

Look at the best companies and learn from them.

One of my friends and a person that I have worked with professionally for many years is Alan Weinkrantz. He is a PR and social media expert focused on Israeli companies in the hi tech space.

In his well read blog, he has an entry about the resources needed internally in a company before running a PR or social media campaign.

First, there has to be a campaign. Again that word - strategy. There needs to be a full plan with a stated goal for the PR or social media campaign. This needs to be measured carefully as well, which brings e to my second point.

Second, the result needs to be measured. A lot of people state a quantitative value for the measurement (and this is the right metric for a lot of things - sales, hits, unique visitors, etc.), but to state that a company wants more articles than the past year is not a good goal. By gaining one more articles, the PR campaign would be a success, but if all the articles were in no name magazines or backwater towns' newspapers, would this really be a success? You need to incorporate both quantitative and qualitative goals - so you can measure the success and ROI on the campaign.

Third, Alan makes a wonderful point over the fact that there needs to be an on staff person who is the contact for the PR or social media agency. I have seen too many times where the hiring company believes that the PR agency should be as much of an expert on the goings on in the company as the internal corporate staff. This is too much of an expectation. They are an outsourced company and need to have access to the internal staff to get any information or data in a timely fashion.

Let me know your thoughts on how you have interacted with your PR agency and was there a successful outcome?

So, now you have a product or service. The next question is what is the route to market (RTM) for you product - meaning how will a customer buy the solution? Will the customer come to you directly and buy from a sales person or from your web site (this is a full discussion for a different time and day) or will they buy it from a reseller, retailer, agent or someone else?

1. How complex is the solution? If the solution is complicated, will require much hand-holding during the sales process or a lot of work for implementation - you may want to sell directly, at the least for the first number of sales (we will speak later about how to correctly enable the partners once you have chosen that (RTM)). If you are selling your product or service based on ease of use and simplicity, you cannot have a long implementation process and you may want to consider using a channel strategy to build more "feet on the street".

2. Make a market vs delivering into an existing one - If you are trying to create a new market or new solution (one not defined by industry analysts or the media), it is difficult to believe that someone outside of your organization will be successful selling the solution. If the channel is already selling similar solutions, they will be successful in selling yours.

3. Expense - In today's economic reality, companies need to judge every shekel carefully. Does the cost of having direct sales people on staff (probably backed by some pre-sales support people) outweigh a discount that you have to give to the agents selling on your behalf. Remember, acquiring the customer is very expensive and the agent may be able to give you access to a new customer for you, but an existing one for them. Also, remember that there is a cost to training and maintaining a good group of resellers acting on your behalf.

4. Trust - A buyer may not trust the marketing material form a vendor, as they assume the marketing material is self-serving. The partner may be a "trusted advisor" of the buyer and may be able to give an "independent" validation to the product or service.

5. Hybrid - Is It Really Greener - A hybrid model of both direct and channel sales can generate conflict. Who owns the client? What if they call on the same client? If a direct sales person is ready to close a deal, but the customer wants to buy it from a 3rd party, how does the direct sales representative get paid? Some companies therefore choose to develop a strategy to go 100% in one direction or the other. Others choose to allow partners to call on customers of a certain size, but block them from larger companies. Others offer "double compensation" to allow for a direct sales person to sell to the client, but the client can then decide to buy however he/she wishes.

There are some good ways to validate and measure what is a better RTM for your business. Contact me for some ways to do this for your business.

How can a company measure the marketing dollars that it is spending? For a start-up or small company, cash is the lifeblood that can not be spilled without getting some type of return. For large corporations, expenses are being held tighter than ever before.

So, in a short period of time, how can the spend be measured?

1. Google Adwords are an easy marketing tool for any company trying to drive traffic to its website or an online trial experience or download. See Google for more details on this Pay Per Click (PPC) program. The advantage of using something like Google for this is the ability to integrate with the other tools that Google provides, like Google Analytics. Your company can increase or decrease its spend by anlyzing the data that is almost in real-time. You can set a limit to monthly spend, if budgets are tightly watched, even if revenue spikes.

2. Gain a true understanding of the return - The way to do this is set a clear goal that can be measured. Is it sales (revenue), is it just lead generation (maybe for partners or even for internal sales staff), or another metric? Brand awareness is very hard to measure for most medium to small companies, so a different metirc needs to be chosen.

3. Plan for follow-up - You are spending money to draw people in. So, now that you have launched a program, what are the next steps with the lead? How are you going to "touch" the potential customer? Email, download of an asset from your site (white paper, picture, file, etc.). phone...You will need a well-defined process to gather your leads and funnel them to a qualification procedure (this could be run by sales or marketing or a joint tele-marketing group.)

4. Do not pull the plug too soon - Just like a development cycle of a product, no matter how much planning you have before your marketing campaign goes into production, there will be "bugs". Those will need to be addressed. This does not mean that you should not plan for what happens when you have a live potential client on the other end of the web, phone or other medium you have chosen. You may say to yourself that you should shut down the program due to these challenges, but I stress that you will never have a 100% perfect run on the first attempt. So, expect some hiccups and continue to fix and measure.

5. Ask for help - There are plenty of online forums of how to build your site to better garner leads. if you have some money, you may want to engage a consultant or firm to help plan and measure the program and its spend.

There is so much more to do and talk about with marketing, but let's stop here for this post.

As today marks the beginning of the Pope's visit to the Holy Land, I think it is appropriate to focus on why building great technology is not enough for a business to succeed. Just building the technology or solution is just a prayer (no matter what religion you are), it does not constitute a strategy.

Lots of Israeli companies are born because someone has the brilliant idea to create a solution. The only issue is that the problem does not even exist (or at the least, the public is unaware of the problem.)

A company needs to develop solutions to real business problems, especially in light of the economic reality that we live in today. Before staring out with huge capital investments, do some market research. This can be done informally, by speaking to friends and relatives about the proposed solution and whether they would be likely to make an investment in this type of solution (or switch from their current vendor to move to a new solution).

Do not underestimate the cost associated with switching an existing vendor. Although your proposed pricing may be 20% lower than others in the market, the buyer needs to consider the removal of the existing solution, the installation of your solution and the education needs so the staff can use the new solution properly. All of this may exceed the savings in the purchase of the solution, so you may not get many orders.

It is also important to remember that the best technology does not win (see this article which outlines what Sony thought was the better technology in the 70s during the Beta-VHS battle.) Partnerships are key to winning the key battles in market share. Adoption needs to be gained and maintained.

These are just a few of the reasons why good technology just fails to succeed. Feel free to comment with some more or look for them in future entries.

With today being Mother's Day in the United States, the biggest IT customer, I thought it would be appropriate to focus on the family in the workplace.

How can companies succeed in hiring the best people? HR executives or hiring personnel in a company need to consider who the best candidate for the position. Sometimes this is clouded by family members wanting or needing a job or by friends that find themselves in the same situation.

While family members and long term friends can usually be trusted (but see what happened to Dane Cook when he trusted his family member - http://www.cnn.com/2009/SHOWBIZ/TV/04/24/lkl.dane.cook/ ), they may not be the best candidates for a specific job. They may not have necessary skills or the most experience. Also,as we have pointed out in a previous post (http://israelbusinessmanagement.blogspot.com/2009/05/requirements-for-role.html), there needs to be diversity inside of a company's executives and personnel, so each problem can be analyzed and solutions can be found by people that approach problems differently.

Always look for the best candidate - that may not mean the candidate with the most experience or even the most skilled, rather the best team player. Testing by companies such as Trimetrix can help determine how a candidate will perform. Evaluate the candidate's "personability" instead of their ability.

The candidate should be briefed on the type of organization or project that they would be joining. Without this knowledge, the candidate cannot make an educated decision of whether they will be a fit for this organization.

A lot of times, we tend to talk more in "selling" our company to the candidate, instead we need to act like good salespeople and listen to the candidate. They will be expressing their wants and needs from a job. I am not just talking about salary and benefits. I am talking about their desires from a job (maybe this is a company that has flexible time and the ability to work from home.)

So, on Mother's Day, I ask you, are the friends and family indeed the best candidates for the job???

Over my years in the Israeli job market, I have noticed then when posting a job opening, there are a lot of companies that require a specific degree for the opening. For example, the job opening may be in sales management or even an executive management role, yet they demand a university degree in engineering for the role.

First, if this is indeed an executive role, the company needs to ask if the candidate will be involved in the product or service development side of the business. If not, the degree in engineering or other science related discipline is not going to help. As a matter of fact, the required personality may not lend itself well to someone who has a more mathematical or science brain.

Second, a good sales person can be trained on any product or service, with the correct investment (time, materials, etc.) The ability to network, manage a sales cycle, understand the needs of a client to match the product/service...these are the necessary components for a successful sales executive. If the company can not train the sales staff on its product or service, it will have a hard time getting the public to buy it.

Third, companies thrive on diversity. While an army needs all its personnel to march in one direction with no deviation or questioning of authority, companies need different outlooks to survive and plan for the future. Having all the staff come from the same background may sound like a good idea, but in the dynamic business world that we live in today, this is a bad idea.

These are just a few of my thoughts on the recruitment process. Feel free to let me know what you think.

Through living and working in Israel in the hi-tech business world, I have seen some great companies that have had average technology grow to global entities. Conversely, I have seen companies with great ideas and technologies that have not been able to generate significant revenue and have been acquired for their assets, or in some cases, gone out of business altogether.

My experience includes two stints with small Israeli start-ups, as well as senior management roles in one of the largest independent software companies in the world. My roles have included marketing, sales, business development and operations, as well as other disciplines. As a matter of fact, the only areas that I have not touched directly are coding the software, working as a member of the legal team and as a member of the finance department (though I interfaced with all of these in a multitude of roles).

I will try to focus on some of the challenges and lessons that I have seen in the past decade plus of hi-tech management experience in Israel.