Start-Up Nation

In an ongoing series of content, we will post weekly comments on Start-Up Nation (a.k.a., the best-selling int'l. book on entrepreneurship) and explore a multitude of related topics and observations based upon the world around us.

Found in Translation

Before we talk about the end of Chapter Four, Military MBA has to take credit for helping GMAT to develop a recruitment program the authors mention in this chapter, which is called "Operation MBA". It took Military MBA over a year to help GMAC build out this program. Unfortunately, after we dissolved our official partnership with GMAT, it is our understanding that this initiative has been cut back at a time of such great need for military students.

Now back to the book and the end of Chapter Four. The topic I want to address is translation. The authors set the stage for my discussion with the following comment, "The capacity of U.S. corporate recruiters and executives to make sense of combat experience and its value in the business world is limited." The fundamental reason this happens is not only because military students are notoriously bad at translating their military skills, but also because the majority of businesses don't understand critical skills that are learned in the military. In the midst of this confusion, are MBA Schools and degree programs. They are the main supply bridge that develops business skills needed in military students and connects military MBA graduates with businesses who hire managerial talent.

Throughout the academic world, these types of translation challenges exist and they are currently being addressed. Mainly due to the Post-9/11 GI Bill and Yellow Ribbon Program, military vets have many more resources now than they have ever had on college campuses. To give you one other example take graduates of liberal arts colleges (LAC). Employers often consider grads of LACs to be overeducated and underemployed. Essentially, most grads can't translate their abilities and LACs have also been deficient in demonstrating this type of value to employers. Because I volunteer on a council to improve one such LAC's Career Development Center, I can say that there are several resources being deployed to help with this type of translation challenge. In a nutshell, translation is being addressed on multiple fronts. From early interventions designed to drive increased student awareness to sharing more translation resources such as activating alumni to applications of knowledge in the area of faculty, interviews and internships. Such translation issues, whether affecting military or LAC students, will be resolved.

The author's quote above is actually wrong in one sense. Namely, it is "combat experience" that employers appreciate. And, even though they don't fully understand it, they assign value to it. As CNN Money and Fortune Magazine reported earlier this year, "For the first time in several generations, employers are seeing an increase in young (military) applicants who know how to handle pressure and have the kind of management experience it often takes decades to acquire." This is absolutely because of military experiences on the battlefield.

In closing, I would say that this gap in translation will eventually close. Due to MBA schools providing requisite job skills, increased pressure on academia to deliver market-driven outcomes and hard-fought, battlefield experience earned by military students, there may never be a time like the present for military MBAs to be found, not lost, in translation.

The Next Generation of Leaders in America

"A young man who had not served would have a hard time getting a good job in business." Tom Brokaw, The Greatest Generation

There is a good comparison of four eras of war near the end of the chapter on Harvard, Princeton, and Yale. Public sentiment toward a war has varied during these periods and seems to determine how people in general value men and women who serve in the military.

Tom Brokaw summarizes the response of employers toward veterans following WWI above. Serving in WWII was a pre-requisite to getting ahead in business and civilian careers. Vietnam, as we know, drove a stake of disenfranchisement between the civilian and military sectors of our country.

The Cold War put us in limbo. According to Al Chase, who is quoted in Start-Up Nation, "Young officers could go an entire career without acquiring real battlefield experience. But the Iraq and Afghanistan wars have changed that." According to the authors, "The Post-9/11 wars have largely been counterinsurgencies, where critical decisions have been made by junior commanders...(they have) much more authority and independence from the division in their daily operations." Start-Up Nation quotes a military analyst as saying, "a junior guy who has been deployed multiple times will dispense with the niceties and challenge their superiors." We have mentioned this quality of challenging military authority before in posts that document Israel's economic success.

To say junior commanders of today are unparalleled in the breadth and depth of their capabilities is vast understatement. In the book, Nathaniel Fick (who is an MBA and former Capt. in the Marines) describes the "three-block war", which faced military leaders in Iran and Afghanistan as, "...passing out rice on one city block, doing patrols to keep the peace on another block, and engaged in a full-on firefight on the third block."

"Junior commanders in America's new wars find themselves playing the role of small-town mayor, economic-reconstruction czar, diplomat, tribal negotiator, manager of millions of dollars' worth of assets, and security chief, depending on the day."

According to the authors, veterans returning home from the new wars of today, "...are better prepared than ever for the business world, whether building start-ups or helping lead larger companies through the current turbulent period."

If being a veteran of WWII was a requirement for success in business over sixty years ago; veterans of today's new wars should be leading not only businesses, but also the economic recovery, governments, diplomacy and negotiations, financial & operational budgets and security. They are also more than prepared to spearhead community relations and peacekeeping initiatives. As our economy, businesses and country spiral out of control down a path of self-destruction no single segment of Americans today can effectively cope with the challenges we face. Yet, depending upon how we embrace and utilize them, military leaders have many attributes that will help us recover.

It is no longer an option, but I feel is a necessity, for all of us to help these leaders transition from the military into all walks of civilian life. It's part of our moral, economic, business and political recovery; not to mention an important payback on our investment of trillions of dollars in war since 9/11. What are you doing to make this happen?

American Business: Don't Waste Kick-Ass Leadership Talent

Chapter four is abundant with great quotes from accomplished business leaders who have MBA credentials and experience in the military. I would like to cite two more quotes in this post. First, John Lowry who's background is outlined in further detail below. Lowry mentions key attributes that separate military from traditional leaders in business. One such passage where Lowry drives home this point in Start-Up Nation is as follows: "The military is also much better than (only going to) college for inculcating young leaders with a sense of what he (i.e., Lowry) calls social range." According to Lowry, "The people you are serving with come from all walks of life.; the military is this great purely merit-based institution in our society. Learning how to deal with anybody-wherever they come from-is something I leverage today in business." His "all walks of life" comment can be easily backed up with data that show the U.S. military is the largest and most diverse employer in the world. When you lead or command, as young officers and NCOs do, you must effectively deal with diversity to be effective. Unlike with other pursuits at a young age where institutions talk a big story about diversity; in the military, you have no option but to live and experience diversity.

The second quote comes from Jon Medved, another Harvard MBA and successful business leader who has been mentioned previously in this section. In Chapter 4 of Start-Up Nation Medved doesn't hold back on his criticism of American business. "When it comes to U.S. Military resumes, Silicon Valley is illiterate. It's a shame. What a waste of the kick-ass leadership talent coming out of Iraq and Afghanistan. The American business world doesn't quite know what to do with them."

While directly know of some exceptions in the business world (i.e., General Electric, under Jack Welch; Eric Schmidt, CEO of Google; and the Silicon Valley venture capital firm Kleiner Perkins), Medved has a point. Let's not waste the leadership talent we know is coming out of the military.

Silver Lining in Gov't. Downsizing Means More Military Leaders in Business

Some choice words are spoken by Colonel John Lowry in Chapter 4 of Start-Up Nation. Lowry has been an active duty and reserve Marine for the past 25 years and he is a Harvard MBA. He also has had a successful second career as an executive at Harley Davidson. He has a reputation as knowing the demands of business and understanding leadership skills.

I have taken the liberty of highlighting some of Col. Lowry's quotes that resonate the most with me. They include, "The phrase 'It was not my fault' does not exist in the military culture." He continues to say, "No college experience disciplines you to think like that..with high stakes and intense pressure. When you are under that kind of pressure (meaning: in the field of battle), at that age, it forces you to think three or four chess moves ahead...with everything you do...on the battlefield...and in business."

Col. Lowry touches on the main differences between traditional and military MBAs. Namely, at a formative age, they learn leadership and have a more advanced way of methodically thinking through both problems and opportunities. Personal responsibility rolls into team mission and is off-the-chart compared to other experiences most traditional MBA students have. Throughout the section Colonel Lowry is profiled he speaks frequently about connections of military and applications in business. One begets the other. The question is as our economy sputters and budget of our government shrinks, will reductions in the size of our armed forces lead to more MBA enrollments and military leaders entering the world of business? For us and the sake of our national economic security, let's certainly hope so.

Labor Day

On Labor Day, it's apt to compare America's workforce with the best people other countries develop to compete in the world economy.

In Start-Up Nation, the authors compare Israeli military personnel with their American rivals this way, "By the time they get to college (a.k.a., Israeli service members), their heads are in a different place than those of their American counterparts...In the (Israeli) military, you're in an environment where you have to think on your feet. You have to make life-and-death decisions. You learn about discipline. You learn about training your mind to do things, especially if you're frontline or you're doing something operational. And that can only be good and useful in the business world."

I would mashup this content with a study conducted by The Economist and Korn Ferry Int'l. that evaluated CEOs (i.e., with and without backgrounds in the military) in the S&P 500. They looked at CEO performance across 1-yr., 3-yr., 5-yr. and 10-year periods of time. According to the study by the Economist Intelligence Unit and Korn/Ferry Int'l., companies lead by CEOs - who were formerly military officers - delivered 30 percent higher ROI (over 3-to-5 year periods) compared to S&P 500 companies CEOs not having military experience. The average tenure of ex-military CEOs was twice that of other S&P 500 CEOs. In every time period, CEOs of S&P 500 companies with backgrounds in the military outperformed their non-military CEO peers.

Are you starting to understand a recurring trend in these weekly posts?

University Education Meets Needs of Competitive Economy

Here is another revealing quote coming from Start-Up Nation, "...according to a recent IMD World Competitiveness Yearbook, Israel was ranked second among sixty developed nations on the criterion of whether 'university education meets the needs of a competitive economy'."

This is another item to ponder and challenge for the U.S. to fix. The last U.S. rankings I viewed considered 25 types of college students and ranked schools accordingly. Only 2 of the 25 rankings listed had anything to do with success or performance. Rather than report on schools with the "Horniest" students as Newsweek does in its September 5, 2011 issue, why don't we start up a U.S. college ranking on whether university education meets the needs of a competitive economy?

Israeli Army Goes to College

Mid-way through Chapter 4 there are two statements, one of which is data-driven and more factual, that are worth mentioning. Gary Shainberg, VP of Technology & Innovation at British Telecom is quoted as saying, "There's a massive percentage of Israelis who go to university out of the army to compared to anywhere else in the world." The Organisation for Economic Co-operation and Developement (OECD), quantifies Shainberg's remark by claiming that, "45 percent of Israelis are university-educated", which makes it one of the most-educated societies in the world.

Comparable percentages in the US would place us at half the rate of those receiving a university education in Israel. The next time you hear or read a story about jobs being outsourced to foreign countries, think about this for a minute or two. Given that the GI Bill established Higher Ed as we know it today, why has the U.S. failed to continue building a substantial pipeline from the military to college?

Self-Taught Talpiot

In an attempt to push excellence as far as I can, I mashup an Israeli program that has proven effective in developing leaders with what I feel is a relatively new concept now taking shape in the American system of Higher Education. In reality, I don't believe the results would be close to the same. However, that won't prevent me from trying.

Start-Up Nation reveals the internal workings of a "hyper-elite" military unit known as the "Talpiot", which according to the authors refers to "...the pinnacle of achievement." Officials there, "take a handful of Israel's most talented young people (every year) and give them the most intensive technology training that the universities and the military have to offer." Selectivity and intense commitment have whittled down the size of the program, which "has produced only about 650 graduates in thirty years." However, quality of the program is unequalled as these graduates have, "...become some of Israel's top academics and founders of the country's most successful companies."

I have written previously on how using the next generation of social media can help MBA applicants and graduates. Specifically, I mentioned an OpEd article which appeared in USA Today by Laura Vanderkam. The crux of the article rested on how to apply a college degree, which I believe is an increasingly vital topic to explore.

In her post, Ms. Vanderkam encouraged graduates to ponder their passions, think about jobs in terms of projects and understand where their talents add value for others. She also offered up a way to apply everything by 'crowdfunding your career' using the next generation of social media tools such as Kickstarter, RocketHub, IndieGoGo and PeerBackers. Since I published this piece, other influential people such as Thomas Freidman and Reid Garrett Hoffman (i.e., Co-Founder of LinkedIn, Board Member at Zynga and an early investor in Facebook) have rallied behind the concept of self managing both your education and career. What the Talpiot, crowdfunding, trends in education and advice on career development all have in common is their focus on projects.

My recommendation is to merge the advice of all these intelligent people and immerse yourself in working on broad, narrow and even mundane projects. I would agree with Ms. Vanderkam and have you think of jobs/careers in terms of a series of projects. I would also suggest you surround yourself in project-based learning and social technology applications.

Are you ready for your next project?

Economic Security

In wrapping up Chapter 3, there would be a void if I didn't talk about using military exposure, experience and gain to bolster our economic and national interests aboard. As a nation, we need to move past age-old, contentious arguments of how we inappropriately use our military forces to fight battles for oil in the Middle East. This misses the bigger picture, which the authors address when explaining how Israel has used entrepreneurial talent, technology and economics to, "open diplomatic channels to a number of foreign governments (and people) that historically had been hostile to Israel."

Today's military understands better than most national leaders that their mission is much broader than fighting terrorism, or using violent wars of destruction, in and between other countries. For example, Fast Company carried a cover story on Joint Chiefs of Staff Mike Mullen who was quoted as saying, "Our financial health is directly related to our national security."

The basic proposition here is how the military opens up national economies and as a result fosters friendly relationships among countries, organizations and people built on a broader platform of security and economic health.

U.S. corporations are already furthering their agendas abroad, but that has neither been good for jobs in America nor contributed in concrete terms to our national policy. The U.S. military should operate according to its strategic leaders, such as Admiral Mullen, and focus on mutual economic benefits between countries to achieve its goals of national security.

Global-Tech Warriors

In finishing Chapter 3, the authors make a defining statement about the success of startups such as Netafim. They attribute success this way, "Netafim's real advantage was having no inhibition about traveling to far-flung places in pursuit of markets that desperately needed its products." There is no doubt that distribution and locating customers plays a vital role in any business. However, as mentioned in my last post, Netafim also benefited from both a creative source of innovation and mechanism for funding. Still, in looking at markets in general, focusing on any of these items as the sum of Netafim's parts largely misses the point.

According to world-reknown Economist Thomas Friedman, the bigger picture playing out today is the merger of globalization and social advancement of the tech revolution. It is reaching far-flung places at a rapid pace and causing global changes in societies. Not just anyone is equipped to apply social tech globally across different countries and various cultures. Military leaders on the front lines, often having prior experience in combat, possess the right mix of attributes needed to succeed. Whether they are keeping the peace, building nations or running military maneuvers, our society needs these type of global-tech warriors to advance in the world.

Military Entrepreneurs

Midway through Chapter 3 of Start-Up Nation, the authors introduce a successful Israeli company called NetaFim. They use the firm as an example to reinforce the main point of this chapter.

However, you will miss a more valuable lesson if you keep with the authors' main agenda. More importantly, Netafim is an outstanding example of how to start a business venture and create economy. Every start-up venture springs from a great idea or reliable source. It also needs access to markets and capital to grow. Here's why Netafim was successful:

Sources of Innovation
The founder of Netafim, Simcha Blass, "...got his idea for drip irrigation from a tree growing in a neighbor's backyard, seemingly 'without water'. The giant tree, it turns out, was being nourished by a slow leak in an underground water pipe. When modern plastics became available in the 1950s, Blass realized that drip irrigation was technically feasible."

Netafim used what Peter Drucker in "Innovation and Entrepreneurship" cites as two sources of innovation: 1) new knowledge coming from modern plastics; and 2) innovation based upon need. In this case, the importance of water reaching arid lands for agriculture development.

It also reminds us of innovation based upon purposeful observation, which is how Fleming invented penicillin and
also how Velcro first started.

Capital, Markets & Resources
Blass also figured out a unique way to leverage collective communities called "kibbutzim" and apply politics to open up markets using shared resources and capital.

Military Background
Blass had little inhibition, knew how to apply knowledge to solve problems and was used to different countries/cultures because he was a leader in the military and traveled as part of national service to his country.

A Dozen Before 35

This post follows nicely on the heals of our previous commentary, which focused on the foreign travels of our military.

Midway through Chapter 3, Start-Up Nation quotes military historian Edward Luttwak who, "...estimates that many postarmy Israelis have visited over a dozen countries by age thirty-five." The authors then state that, "Israelis thrive in new economies and unchartered territory in part because they have been out in the world..."

Again, given multiple deployments in the Middle East, the U.S. military is well traveled. Most likely they all pass the test of a dozen foreign assignments before the age of 35. With peacekeeping and recovery missions, they may have also visited over a dozen countries during their time in the military.

I just had conversation with a former Capt. in the Marine Corps. He has been accepted into a joint EMBA degree program offered through NYU and two foreign schools, which reflects his global competencies and competitive leadership talents. He hopes to work for the U.S. government on strategic political, economic and security issues.

Separately, in a new survey of employers 83% were found to value military skills when they are effectively transferred to business. However, only 8% of veterans do transfer military skills to business successfully and the majority of those who do transfer to MBA school first.

The Marine Corps Capt. is an officer who is a well-traveled, proven leader with desirable attributes that many global organizations could benefit from. Yet, despite all this potential, he will probably end up paying for 90% of his MBA degree. A risk that no Israeli soldier will ever bear due to an open education system.

The real difference between Israel and the U.S.A. is not in military talent. It is in our companies, our government and our educational institutions who do not fully recognize and support their leaders and our future.

Field Tested & Well Traveled.

The next chapter (Chapter 3) continues on with a similar theme of global competitiveness. Here the authors reinforce their entrepreneurial agenda saying, "...Israeli companies are firmly integrated into the economies of China, India and Latin America."

While there have been previous, and frequent, references to the USA the authors seem to be deliberately focusing on growing economies of the future. This is very intentional. However, the context painted by Start-Up Nation here
has me thinking about two more important considerations: 1) How will America, or other first-order super powers, work with upcoming economies of the future the way Israel is with China and India?; 2) And, why is America missing its opportunity to leverage military personnel serving in the Middle East who are field tested and well traveled?

Clearly, the Israeli military has chutzpah, resourcefulness and resides within a culture that fosters meritocracy. However, it is also - as the authors aptly point out - an isolated, small country surrounded by enemies.

American soldiers are not closed in, or inwardly focused, they are externally-focused and immersed within cultures. They are also well traveled and far from home. This provides greater perspective and knowledge of different cultures. And they are stationed in locations where some of our brightest commentators in business, such as Fast Company, have identified the best pockets of creative talent in the world.

Not only are they immersed daily in different cultures and languages, our military are field testing technologies such as GPS and mobile telephony, living leadership and applying new and existing knowledge while servicing their country. Yet, as a country, we continue to focus on the consequences and not either the opportunities or outcomes of war.

Wildflowers blossoming in the desert.

Blurring the lines between cultures: civilian, military and different countries

In the remainder of a great chapter on "Battlefield Entrepreneurs", the authors discuss several important points that hinge upon the dependency Israel has on its reserve forces in the military. Or, as aptly stated in the book, "...reserve forces are the backbone of Israel's military."

This would account for the ability of the Israeli people to easily, and effectively, transition between military and civilian life. As the authors point out, "...in the reserve formations, the atmosphere remains resolutely civilian in the midst of all the trappings of military life." This allows everyone to be equals and fosters a keen understanding of one's self worth. In other words, "Israeli soldiers are not defined by rank; they are defined by what they are good at."

Small countries such as Israel can run merit-based societies and be entrepreneurial with their resources.

In a recent tweet, I wrote about what seemed to be an ordinary place in the Middle East-Doha, Qatar. However, places such as Doha, Qatar are becoming areas of global influence. They are like wildflowers blossoming in the desert. As America continues to invest heavily in the Middle East, I believe opportunities will avail themselves to military personnel serving aboard in these locations.

Openly understanding other cultures can give rise to merging the best of different cultures and to forming third opinions and solutions to problems. It also allows cohorts to form that have complementary attributes formed from different sets of skills. The military represents one area where America can potentially outsource and then reintegrate some of its most valuable resources. That is, assuming we know how to properly transition our military to productive lives following their national service. Let's do what we can and hope others get involved.

Leadership: No manuals, no textbook solutions.

There are several military operations described on the battlefield by the authors throughout the second chapter.
Most involve young commanders in their early 20s facing life-or-death situations who have responsibility over soldiers, innocent lives of civilians and vital resources. Each deals with an infinite number of dilemmas and decisions having good and bad outcomes.

Sandwiched in this discussion is a quote about 20-year old college juniors who have never really been tested to same degree as those who serve in the military, which underscores what a formative and valuable experience military service can be.

Schools try to teach this, but it is not the same. I am serving on a committee for the Career Development Center of a liberal arts college in Los Angeles that wants to implement “experiential learning” into its curriculum so when students graduate they will be more prepared for their careers after college. For years, Bschools have done the same thing. They label learning outside the classroom as "leadership" they try to develop in their students.

As I noted in my previous post, military students are unique because they already have been “field tested”. They come equipped with field experience and leadership, which allows them to learn and apply their skills and knowledge. It is this cumulative leadership in the field applications of life which helps them succeed in all pursue whether it is education or employment.

Best Engineering Execs in the World - Google CEO Sold on Military Leaders

The second chapter opens with a quote by Eric Schmidt, CEO of Google, which basically stands on its own merit. Schmidt, who was also one of four top CEOs interviewed by Fareed Zakaria of CNN for a economic blueprint to fix the U.S. economy called Restoring the American Dream (see March 28 post below), is extremely well respected because he has a successful track record in business.

In describing the Israeli military Schmidt says, "The Israeli tank commander...is the best engineering executive in the world. (They) are operationally the best, and they are extremely detailed oriented. This (assessment) is based on twenty years of experience - working with them and observing them."

The key to understanding this chapter is in the word "battlefield", which is unique to the military and formative to its members. Military leaders and the technologies, IP, work and decision-making processes, intelligence and communications they use are all field tested. This combination of knowledge, skills and application of both truly separates them everyone else in the world.

Persistence - Unlikely Sources of Innovation

The remainder of Chapter 1 written by the authors can be summarized as follows: How an informal culture, burying the ego, treating success or failure neutral and encouraging resistance as a leader contributes to successful innovation.

Below are quotes taken from the book which serve to reinforce the idea behind each topic:

INFORMALITY
"Israel is the only place in the world where everybody in a position of power-including prime ministers and army generals-has a nickname used by all, including the masses."

EGO
As the authors advise, "get(ting) past the initial bruise to the ego is immensely liberating." It results in these advantages: you know where you stand, no one talks behind your back and don't waste time on bullshit.

SUCCESS & FAILURE
"In the Israeli military, there is a tendency to treat all performance-both successful and unsuccessful-in training and simulations, and sometimes even in battle, as value neutral."

LEADERSHIP
"The goal of a leader is to maximize resistance and encourage disagreement and dissent." On the premises that, "...resistance can itself be a big problem" and there is value in knowing those individuals on your team who disagree with you the most.

Persistence - Keep the chutzpah coming.

In the first chapter, the authors introduce a new term. They call it chutzpah. Rather than a term, I would actually say it is a characteristic, trait or attribute. Scholars refer to it as Yiddish and having German-Slavic origin. Its closest meaning in English is, "gall, brazen nerve, effrontery, incredible 'guts', presumption plus arrogance".

U.S. military leaders learn a well-respected version of this when they serve, but seem to lose their chutzpah and become less assertive when they transition to the private sector.

Why is this happening? Perhaps we don't value them, or support their leadership, enough once they leave the military? Perhaps we misunderstand their composure and quiet confidence and assume they can't relate to ordinary daily life? Perhaps former military people haven't learned what assertiveness means in the new environment they find themselves in?

I believe it stems from the same faulty assumptions and beliefs that former officers have when they transition to corporate America. And why talented people chose to avoid listing military experiences in their professional bios.

Whatever it is, it must come to an end. We significantly limit future contributions of important people by upholding such stereotypes as "military". We must work toward mutual respect and find common-ground understanding. As for military leaders, they too must shed old stereotypes and beliefs, and move on to a future life where their contributions serve to impact a new type of mission.

Military-to-Business Starts Here.

On my last mashup, I wrote about "a more efficient system of transferring military officers and personnel into business and industry." One fundamental change that needs to happen to allow this system to work is basic awareness. Awareness is two-sided. Those who have skills/knowledge/backgrounds need to communicate with those that value these attributes.

In Israel, military personnel and officers seem proud of their backgrounds in the military and use it as a common foundation to future success in business. I don't believe this is happening in the U.S. to the degree it must to create the system we need to effectively transition our military resources; which, by the way, we invest in heavily as a country.

If we don't have basic recognition and reference to the military no one will value what happens in the military. If you talk to both sides, as I do on a daily basis, you realize that most questionable assumptions made about military service are wrong and due to lack of awareness. Just this week I heard a Director of Career Services at an MBA school tell a student to put military experience at the top of their resume. That's where it belongs.

Introduction

Later in the introduction the authors talk more directly about the transfer of skills and knowledge from the military-to-business community in Israel. They also broach the subject of outsourcing work to Israel by U.S. companies and suggest that it is not simply IT services or call center types of jobs which are outsourced. Because of its military, the Israeli economy is producing what former CEO Lou Gerstner refers to as new industries characterized as high-paying, high-skill jobs. In comparison, developing countries such as China and India are building commodity industries and related jobs.

In Fareed Zakaria's CNN Special, Restoring the American Dream, CEOs in business agree that America needs to retain its lead in generating higher-order industries to drive our ongoing economic recovery. A missing component, according to CEOs such as Gerstner, is education that leads to a new level of skills required to move up the economic food chain.

Later in Start-Up Nation, the authors discuss the role of Higher Ed in Israel, which we will address further in upcoming posts. So far, the U.S. continues to be #1 in the world in post-secondary education. As much as the authors like to speculate on what has happened in Israel as being unique, I would contend that America has a better culture for Entrepreneurship and system of Higher Ed. Now all we need is a more efficient system of transferring military officers and personnel into business and industry. I will write more about all of these topics in future posts.

Introduction

I would like to briefly explore the subject of productivity and how economic growth in nations of the developed world had recently been fueled by speculation and debt-based consumer spending. As the authors correctly point out, this is neither real growth nor productivity. So how do we get back to real growth and productivity that produces jobs and gets individuals and organizations out of debt?

I ran across an excellent report on this subject in CNN this week by Fareed Zakaria called Restoring the American Dream (RAD). I would recommend listening to this podcast. This will be a resource, and there will be others, I use again in my upcoming posts. Zakaria is originally from India and he has a global perspective on politics, business and economics that is often insightful. He also collaborates with Thomas Friedman (Economist, best-selling author of The World is Flat and a reporter for The NY Times) who, irrespective of political controversies, is knowledgable. The underlying solutions from RAD are correct; which are to shift from consumption to investment and invest in research and technology. So, how does RAD relate to Start-Up Nation? Both the book and the report talk about economic problems/opportunities and propose different, yet connected, types of solutions.

Remember the authors raised this basic question, "Why has innovation in American industries (read: productivity and real growth) not taken advantage of investment in military resources?" One of the solutions Zakaria outlines in RAD, on how to pay for investment in research and technology, is to impose a tax on consumption. Why don't we put these resources and needs together? If a bridge, or conduit, was built now in America (as it has been in Israel and before in America) we would not need to impose a consumption tax to invest in our future. If we would commercialize military technologies, training, systems, processes and applications we could recapture our investment many times over and produce commercial innovations needed to fuel economic growth and sustain our future.

Throughout RAD, Zakaria and guest CEOs such as Eric Schmidt (Google's CEO) and Lou Gerstner (former CEO of IBM/American Express and Harvard MBA) discuss how the DoD and DARPA were instrumental in formation of several key industries such as semiconductors, the Internet, GPS and mobile telephony. Yet, they don't connect the dots. We have recaptured our investment in defense spending before, why can't we (and other countries) do it again? This is also where the stories told in Start-Up Nation enter into the picture. Where there is overlap, there is convergence and ultimately solutions to problems. There will be more coverage on this subject in future posts. Please send an email to me with any thoughts you may have.

Preface

The following quote in the introduction of Start-Up Nation called out to me because, rather than focus on Israel, the authors cite the plight of America. In the book John Kao, a former professor at the Harvard Business School, says, "We are rapidly becoming the fat, complacent Detroit of nations. We are...milking aging cows on the verge of going dry...[and] losing our collective sense of purpose along with our fire, ambition, and determination to achieve."

I have heard this "spoon fed" commentary before in civilian and private-sector markets where our leaders are becoming complacent, but what about our military? Its influence remains key to our future in several important areas. Look around the world and you see the military playing vital roles in security and defense, recovery from unprecedented types of both man-made and natural disasters, and it is doing its part to constructively build nations. The military is not fat, it will become a leaner organization. In fact, for years Robert Gates has been proposing ways to downsize the U.S. military while the federal government will increasingly be pressured to cut military spending from the budget.

This takes me back to a question originally raised by the authors in the preface of the book, which generally challenges the private sector to more effectively use the military for innovation and economic growth. Why isn't this happening? In many of my upcoming posts, I will take on this central challenge and attempt to provide solutions and insight.