Israel Business Management

I have been on the road for the last week or so. It is very interesting to see how the world has changed due to the Internet and the economy.

I stayed at a Hyatt last night in a room booked on Hotwire. The room rate was around $70, but if I had tried to book it directly, it would have been $150+ per night.

The Internet has commoditized most of the items we buy. Plane tickets, hotel rooms, rental cars, groceries, etc. All of these can now been researched online to find the cheapest price.

The economy has driven us to search even more carefully on the Internet. Where some people may have given their business to a travel agent, now, a buyer can do the research by themselves and save even more money by cutting out the middle man.

What is next?

In the past, we have had posts about Twitter and other social networking sites. The question that was center of mind was how does this apply to business.

It seems that an Israeli firm is ready to answer that question.

TwitterAnalyzer, an Israeli start-up, helps individuals and businesses get useful data about who is following them, what countries are they from and has useful graphs depicting activity.

Think of it as the Google Analytics for Twitter. Today, every web site is using Google's tool in some fashion (though other paid for tools may be used for incremental information.) Twitter Analyzer could be the same for Twitter (and there is no reason to assume that it would stop there - each social networking site would be the same.)

With a tool like this, businesses can start to take advantage of social networking, as they will have actionable data for their marketing department to analyze. The company can then tailor its social media message to the visitors and the geography.

Social Networking may have just gone corporate...

Are we seeing the end of the recession, have we hit the bottom or is the worst still to come? Looking at recent headlines in Israeli business newspapers, it is still difficult to tell.

Cisco announced earlier this week that it would be laying off 700 additional employees in their corporate headquarters and an unreported number from Cisco Israel.

Flash Networks announced that they will be laying off 25% of their workforce. Is that a generic sign of economic weakness or is it specific to the telecommunications industry?

SanDisk reported a profit for the first time in a year, but gave a grim outlook to Wall Street.

The mixed news makes it hard to see what the future will hold.

I believe companies will play conservative with minimal hiring, keeping a firm hand on any variable expenses and continue to look towards a brighter future. We have not hit the time (yet) for loosening the belt and further hires (on a grand scale) with economic growth.

But, I am optimistic that we can see the light at the end of the tunnel.

How well do you know your customer?

Last night, I flew EL AL Airlines from Tel Aviv (Ben Gurion Airport) to Newark Airport. While on the plane, I had a lot of time to think about building customer profiles.

Airlines have a lot of information (or potentially can have) on their customers.

They can grab credit card data (at time of purchase or confirmation) and save that data to ease the pain of buying an upgrade or a ticket for another flight.

They know the types of meals I like or want. So, when enhancements to that particular menu are made, the airline can broadcast the message to only those that need to know or want to know.

Airlines know what seat I like to be in. How can they use that information? I'll admit that I am having a hard time with that (aside from the obvious ease of choosing a seat or online check-in).

Airlines can even profile the customer based on their previous habits - do they like flying during the day or prefer red-eye flights? Are there specific destinations that are traveled to more often than other countries and cities/ if so, maybe a cross-sell to another partner (rental car, hotel, tour guide, specials on entertainment in that locale, etc.)? They know if I check in baggage or not (am I a light traveller or do I bring every option for wardrobe changes). Maybe they can offer specials on baggage fees.

It is clear that airlines have a lot of customer data and they use it. How much data do you have on your customer and how are you using it?

You have made the decision to have a corporate blog. Why? Probably because every competitor in your particular market space has one and you do not want to be left behind.

Let me ask you a question before you get started on your blog.

Are you commited to its success?

I am sure that you, without hesitating to think, have said yes.

But, do you realize what the commitment is to make a blog successful?

1. You need valuable content. If you intend to regurgitate the same material that is already on your web site, then you will not succeed. The readers will quickly learn that they do not need to wait for a blog posting, but can search the web site for particular content.

2. Regular postings. Though every day is not a requirement, you do need to commit someone in the orgnization to ongoing posts. It is easy for a company to say that they will do this at the start of the blog, but as time goes one, it does become more of challenge.

Solution: One of the ways to solve #1 and #2 is to develop an editorial calendar, with both dates when specific content will be posted and who the writer or contributor will be.

3. How will people find you? The same ways that you promote your web sites are used to promote the blogs, though the names may chnage slightly, but without ongoing commitment to optimization of the blog, it will fall behind the blogs of the competiton.

Solution: Highlight the blog on your web site. But, do not just rely on this. Submit the blog to Technorati and other blog-specific search engines.

4. Tie it back into to the web strategy. What are goals for your corporate web site and how does the blog tie into that strategy? Are there cross-links back into content-rich areas in the web site? Do you offer links (that may open a new tab or window) of vendor-neutral blogs or web
sites?

The decision to start the blog is an easy one to make, the commitment and investment to make it a success is much harder.

Recently a group of articles have been published about how Israeli companies that have been acquired have been successes. The successes cited include XIV and Diligence (acquired by IBM) and B-hive Networks (acquired by VMware).

It makes it seem so easy to have a company, sell it and have it integrated into a larger entity successfully.

However, it is not so easy.

The acquiring company needs to find a suitbale company, not only in the area of the solution and the price range, but culturally as well.

From a financial perspective, 50% of acquisitions end in failure by fiscal metrics (though some have estimated this number to be as high as 80%).

When the acquiring company fails to retain the acquired company's staff (especially when the acquisition is for intellectual property), they have paid a lot of money for nothing.

It could be that the acquired company was small and the employees liked working for small companies. The new company, being larger, will not be suitable for them.

A good integration plan will address this issue and others. The acquiring company is spending a lot of money on the purchase, but usally there fails to be a well-defined plan for integration.

These are questions that need to be answered, including:

• Leadership - This needs to be defined to prevent struggles for power both within the acquired company and the purchased entity.
• Accountability - Who is the person/body that initiated the acquistion and is that person/body going to be held accountable? When is accountability measured? How will accountability be measured?
• How does any new product or solution introduced by the combined company advance the current solutions by the stand-alone companies?
• How is communication to the new employees being carried out? Is it bi-directional?

These are just the start for a plan for the integration that will lead to a successful acquisition. How are you planning for and integrating your next acquisition?

Maybe it is time to rethink business and strategy. Given the world economy and the current rates of unemploment across developed countries and the fact that the recession surprised most business leader, maybe it is time to rethink what we do and how we do it.

This is the start of what will become a series of posts that will focus on the changing business environment that we live in.

Today, we can focus on the workforce.

We have seen layoffs in big corporations and small companies. People are trying their hands at starting their own companies. The workforce has expressed their dismay at their treatment (especially those that were long-term employees) during the economic distress. They have had salary and benefit cuts. Finally, they have been dismissed and laid off.

So, while those that were laid off start their own companies, the current employees are being asked to do more with less.

I believe this is the trend that we will see even as the economy bounces back. Companies will not replace what they have deemed to be fat, they will be more prudent with their hiring of middle management and want to keep their revenue per headcount at its highest.

This means there will be less jobs available and competition will be high. (This is the same trend we saw after the burst of the dot-coms).

It will mean that companies (by and large) will be prudent in investing in their future growth, in order to protect profitability.

Outsourcing will continue to be a trend. This will mean even fewer jobs in the US and even in Israel, but more in India and China.

It is always difficult to see what is coming around the corner. But, these are a few of my predictions for human resources.

Though the title of the blog is Israel Business Management, I reserve the right to bring up other topics and today is one of those days.

Yesterday, I had the opportunity to attend the induction ceremony at the International Jewish Sports Hall of Fame (IJSHOF). The IJSHOF is located on the campus of the Wingate Institute in Netanya, Israel.

The ceremony is held every four years to coincide with the Maccabiah Games, currently going on all over Israel (and adding to the traffic that is just typically a part of life.) So, the honorees could really have been inducted from 2006 until now. The inductees included Jason Lezak, the swimmer that gave Michael Phelps a huge assist in the quest for 8 gold medals in Beijing by overtaking the French swimmer in the anchor leg; Mitch Gaylord, the gold medal gymnast from the 1980s; Maury Allen, the famed sportswriter.

So, where does the pride come in?

First, I, personally, get a special feeling of pride when Jews accomplish feats outside of academia. Sure, I also feel pride when a Jew wins a Nobel Prize, but there is something added when the accomplishment is not tied to books. So, when there are famed Jewish athletes being honored for their sports accomplishments, I get a special feeling of pride.

Second, one of the inductees was Keren Leibowitz, a gold medal Paralympic swimmer. A clip was shown of her winning one of her gold medal races in Sydney and the awarding of her gold medal with the Hatikva, Israel's national anthem, being played in the background. Each time I hear the song at a sports event, again, that feeling of pride swells inside of me.

Third, on a personal note, my maternal grandfather, Haskell Cohen, was very involved in sports and Israel. He is also enshrined in the IJSHOF himself. It always gives me a sense of pride seeing what he worked for during his life and how much things continue to flourish in Jews, sports and Israel.

There were two athletes in attendance yesterday that I had to meet (though one I had met before):

Tal Brody, the legendary Israeli-American basketball player, who made aliya from the US and led the Maccabi Tel Aviv team to its first European title. There is not a middle aged or older Israeli who does not recognize Tal's famous quote, after beating the Russian basketball team. "We are on the map and we will stay on the map. Not just in sports, but in everything." This quote continues to be paraphrased or quoted, even as recently as last weekend by Prime Minister Netanyahu.

Dolph Schayes, the Hall of Fame NBA player, who had retired as the leading scorer of his era. Dolph is famous for his two handed set shot, at a time when the NBA was moving to jump shooters. He later became the supervisor for the referees in the NBA. Dolph also coached the USA Maccabiah team in 1997, when his son, Dan (later an NBA player himself) played center.

Separately, both of these men referred to my grandfather as the reason they got involved in the Maccabiah and, ultimately, with Israel.

As an American who has chosen to live in Israel, I know that my grandfather, though he passed on 9 years ago, looks down and feels pride at his grandson's home in the Holy Land.

With Haim Shani being named to a post in the Ministry of Finance, there is no clear successor to the CEO post at NICE Systems. Globes reported that there has been no right-hand man to Shani, so there will be many candidates mentioned over the upcoming months.

This has highlighted the importance of succession planning in a corporation for its executive management.

Companies have spent millions on plans in case of a disaster hitting their networks on business continuity. If so, why do companies not spend more time on planning what happens if one of the key executives is lost.

Sounds far-fetched...

Let me give you two examples:

One, the driving factor behind disaster planning for a lot of companies was September 11, 2001. When the planes crashed into the Twin Towers and into the Pentagon, there was a loss of business continuity. That led to disaster planning. But, companies, like Akamai, also lost key executives. What plans were in place for replacing those executives?

Two, we were on track to hit our quarterly number and all that was left was a signature of the CFO, which he assured us he would give after the weekend. The CFO died in a tragic para-gliding accident that weekend. I wonder if they had a plan in place for succession.

These are just two examples that highlight the need for succession.

Succession planning is needed for both large and small companies alike.

Obviously, succession planning allows companies to identify the replacements in case of an executive departure or loss.

But, it allows for preparation. Coaching and mentoring should be an integral part of the succession process. This can be formally (for example, management courses) or informally.

It needs to be part of the annual review process in HR. This will allow the plan to always stay current.

Make sure the identified successors are involved in the process. Too often, companies feel that they do not want to involve the successor. I am not sure what the fear is. But, if the successor leaves because he/she does not see their career path, you will have to start the process again.

There are many other factors and details to succession planning.

Haim Shani was an Israeli CEO held in the highest regard. I find it disappointing that he seems to have missed out on such a key strategic mission, like succession planning.

Recently, there has been an advertising campaign on Israeli radio, alerting companies to new proposals making their way through the legislative process. The proposals have to do with unions and how a company must allow representatives of a union access to the employees (if at least a third of the employees show interest). There is also a proposal that prison terms become mandatory if salaries are not delivered on time.

You can see more details on the proposed laws here.

Are these laws good for business overall? Does allowing unions almost free access to employees improve the economic situation? Does it help management-worker relations?

I believe that if Israel is to be successful, it must be a free market economy and not one overloaded with union and government involvment.

There are a number of reasons for this:

1. A number of years ago, Israeli labor was inexpensive to that in the US. That allowed work in areas like technical writing to succeed here. As the salaries here have risen and work has been found at cheaper costs in places like India, Israel has begun to lose these markets. Take the diamond business in Israel, where cutting used to be done locally. But, today, the Indians can do it far cheaper, so the nature of the diamond business has changed. So, the cost is no longer a driving factor in global business operating here. The factor is the "brain power" that is found here. There are very smart people here that can offer different values to companies than just cheap labor. But, is that enough to keep these global enterprises operating here if unions and government impose fines and jail time.

2. Unions can be good for certain businesses at specific times and in specific industries. But, there are downsides. Just look at the car companies in the US, where the unions were an albatross around their collective necks and the unions continued to feed off of the car manufacturers until it was too late. Only when union management realized that the companies were going to disappear and obviously in the process hurt those that supported the unions, did they come to the negotiating table to talk about concesssions. What industries will be destroyed in Israel if unions are given carte blanche to the work floor.

3. I was involved in layoffs in two of the more difficult countries in Europe - France and Italy. I can say from first-hand experience that it is hard to dismiss employees there during a layoff, so that the overall company can survive. In some companies, they have tried to close their operations completely and outsource the local market sales and support to 3rd parties, just to avoid the anguish and cost of dealign with the unions.

So, when the government steps in to make laws of this type, does it ultimately help the working population or is it just looking at the immediate situation with a lack of regard for the big picture and bringing more business to Israel?

Your home page is one of key pieces of real estate that your company owns. However, I bet, the executives agonized longer on the hanging of the logo on the building or the wall than the web page.

I see too many companies and marketing executives that seem to miss the fundamental principles of the home page. This is the "lobby" before the visitor enters your offices. It needs to be efficient in getting the visitor to the location that they desire.

You have many types of people that visit your web site. Let's take a look at a few.

• Existing Customers - These people are looking to one of the following: Buy more (maybe some type of peripheral, like a slip cover for a cell phone already purchased), need support in getting the item to work, need to have the item fixed, need to download new information or a latest version, etc.
• Potential Customers - They may need product information, they may want to see how customers like are currently using the product, or they may be ready to buy. Make sure you move them efficiently to the next stop on their journey.
• Press/Media/Analysts - You want these folks to feel special. they should have their own section, where a press kit is available, graphics that might be needed in an article or report.
• Investors - They want to know how the company is doing, so make sure they can find your financial information easily. Of course, if you are a private entity and do not want to share, you probably still want to have an email address for investors to contact you.
• Partners - This group makes you money by selling your solution for you. They break down into two groups - existing and potential. Each audience needs its own information. Make sure that there is an application or email for the potentials to get in touch with you. If it is too difficult, they will go to the next vendor.

This is just an example of how a home page needs to used effciently. Have a look at your home page. Is it laid out in a way that these groups can find their way easily and efficiently?

In reading this article in The Jerusalem Post, which talks about the LA Dodgers and their sponsorship of the Maccabiah in Israel this summer, I started thinking about corporate citizenship and why corporations feel the need the sponsor pet projects. Are the corporations expecting a return on this investment or is it altruistic?

Obviously, there are companies that spend their money on lobbying government for items that benefit them: immigrant issues (for cheaper labor), corporate tax issues, emissions enforcement, etc.

Those items are certainly not done only in the interest of the common good. The companies ceratinly can benefit from those issues, when laws are passed or amended.

But, what about corporations that support Habitat for Humanity, Save the Children, Catalyst and others?

There is even a for profit company that offers services on good corporate citizenship. It is called GoodCorporation. They themselves donate 5% of their profits to deserving organizations.

Cisco's CEO, John Chambers, says that the definition of capitalism is changing. The successful companies and individuals need to give back and it is indeed the right thing to do, but is also fundamentally good for business.

In a country, like Israel, where over 21% of the population lives below the poverty line (Source: CIA World Factbook), is enough being done by Israeli businesses to meet the responsibilities of a good corporate citizen?

The rest of that quote from John Kenneth Galbraith is "when you don't want to do anything."

Too many companies become paralyzed by the amount of meetings that are on a schedule and by the amount of people that are at each of them.

So, how can you run a meeting more effectively:

1. Invite only those necessary to the meeting. Too many meetings include people that are not involved in the decision making process that will go on at the meeting. Let the people execute.

2. Define the agenda. Although most meeting invitations are sent with a subject line, very few come with an agenda. So, you may have a general idea of the topic of the meeting, but you cannot prepare adequately because you have not received any action items to prepare.

3. Send materials out before. The people want to be prepared for the discussion and decision-making process. Let them review the meeting materials, so the meeting can be as productive as possible.

4. Start on time. This has become a problem in corporations. People live by their schedule, so be cognizant of the clock. This gives you the maximum amount of time and you do not lose people that may be needed at the critical closing moments of a meeting, due to them having to leave.

5. Make sure everyone has a chance to voice their opinion. I have been in many meetings where the "squeakiest wheel" convinces others of the "correct" choice by screaming over the others at the meeting. By ensuring everyone has a time to speak their mind (you may want to set a time limit).

6. Leave the PC, BlackBerry, iPhone, insert your own device here - back in your office. Only the person that has to show a presentation or something critical to the meeting should have their device. The other devices become a distraction to both the user and those around them. By leaving the devices out of the room, the attendees will remian focused on the task at hand.

Send me your ideas for making meetings more productive.

As companies look for their new employees, they look for people with integrity, teamwork, intelligence and the ability to get things done (execute).

But, there are other qualities that companies need to have in their salespeople. I can think of three distinct qualities that are mandatory.

1. Drive: I had a colleague that enjoyed having the potential recruit for a sales position pick him up at the airport, when he arrived. If he saw the applicant in an expensive car, it was a plus in this hiring manager's mind. He believed that sales people are driven by money and if they had an expensive car lease or big mortgage, the sales person was not going to be distracted by internal corporate politics or sit on the side to come up with execuses. They needed money on a monthly basis to meet their lifestyle.
2. Understanding: A sales rep needs to understand the customer's needs. I separate this from intelligence, as there are many intelligent people that do not have the patience to sit down with a client and hear their needs. Only then, can the sales person apply a solution to that customer's problem. At times, I have seen intelligent people that have lacked the ability to understand the challenge crash and burn in a sales post.
3. Trustworthy: You hope that your relationship with each and every customer will be a long one. In order for this to happen, there has to be trust between the sales person (representing the company) and the client. If the sales rep is not honest in what the company can deliver, the customer will inevitably bolt for another vendor. A good sales person sees the current deal as only one part in the overall customer relationship.

If you can find a sales person with these qualities, you will certainly have no problem growing your revenue, even in a down economy.

There has been much surprise over President Obama's involvement in Israel and the cities in Judea and Samaria. The reason people are surprised is the President has stated that he wants to allow countries to solve their problems themselves and to govern themselves without US interference.

So, why Israel? Though I have tried to keep this blog apolitical, I would like to take a look at this from a business perspective.

After all, President Obama is the CEO of the USA and should be planning the strategy and managing the country, while focused on only the top priorities.

So, is a country, like Israel with 7 million people, his biggest priority?

Obama has a national economic crisis, the Iranian and North Korean threats of a nuclear nature, a healthcare system in shambles, wars in Iraq and Afghanistan, etc.

So, is Obama focused on the wrong items or is he too inexperienced to know that there is a finite amount he can deal with at any one time?

I do not know the answer, but if you are an executive, are you trying to do too much or are you focused on the right strategic tasks right now?

How many different companies have touched the computer that I sit at as I type this blog entry.

The obvious ones are HP (the manufacturer) and Office Depot (the retailer). But, there are so many components that are built by different companies and even the completed solution from the time it left HP until it made it to me touched at least a distributor (or an importer, in this case).

A number of years back, Andy Grove stated that vertical integration was the new way of the world. Vertical Integration was the same thing that my mother told me years ago - anything that you are going to do, do to the best of your ability. Andy believed in this and if you could not do it well, you should partner with someone else that can do it in a world class fashion.

Today, people have looked to outsourcing as part of this strategy. Experts can reduce cost and deliver the goods at a cheaper price point then some company that does everything.

Vertical Integration is the multi-partner strategy that companies need to embrace. Your solution, no matter how broad, is only a piece of the customer's needs.

Let's take my computer as the example. I needed a new PC, as my old one passed on to a better place (I hope). So, I went with an HP laptop. It met my price point and had the performance features I wanted and needed.

HP certainly has done a good job of multiple partnering. They use Intel for a processor, NVIDIA for a graphics card, Microsoft for the operating system, Altec for speakers, etc.

HP designed the solution, managed the manufacturing and delivered a quality product.

But, after I got it home, I still needed all sorts of software, which had been on my old computer, and trying to use migration software for applications is dodgy, at best. I needed to install software like MS Office. I had a DVD of MS Office 2007, but had no idea where my license key is/was. I needed to find it on the dying system. I had to find all sorts of other utilities that I like or need.

HP's view of multi-partner is good, up until the point of delivery to the user, but they still are not completing the whole solution as the PC is just one part of my overall home computing experience: router, DSL modem, printer, other PCs.

As a vendor, do you think about just how to get your solution into the customer's hands, maybe the logistical part of the solution? If so, you probably are already using a multi-partner strategy, maybe without realizing it?

But, what happens when you or your partner walk off site after installation of your product/solution? Do you know how that completes the customer's needs? Are there other partners that you could include in the process to do a better overall job for the customer?

Maybe with a multi-partner strategy, "the more, the merrier" is really the new world order.