Howes: ‘Start-Up Nation’ teaches MI lesson in teamwork
Tel Aviv, Israel — In a basement wine bar here, hours before wheels up back to Detroit, more than 20 Michigan CEOs huddle one last time to consider the entrepreneurship embedded in the Start-Up Nation.
What, if anything, could be extracted and implemented back home? Could the Israeli model of public-private partnership, a shared vision between business, government and aspiring entrepreneurs, stand a chance of being transplanted to a state still prone to competing rivalries and bickering partisans?
Are the makings of a Michigan entrepreneurial brand — a business-led revitalization of Detroit, startups in Detroit and Grand Rapids, powerful research universities, a legacy of technical competence and next-generation mobility in the indigenous auto industry — already there?
“What do we have,” asks Mark Murray, co-CEO of Meijer Inc. and a co-chair of the Michigan CEO Mission to Israel, earlier this month. “How do we expand understanding of it, and is there a branding opportunity to do that?”
The answer: probably. But the lesson of the CEO mission to Israel, one of the most entrepreneurial eco-systems in the world, isn’t whether Michigan business leaders can extract a mojo inextricably tied to the nation’s resilient culture, its unique geopolitical predicament or the influence of military service on its burgeoning business community.
Each is uniquely Israeli, a confluence of forces creating a dynamic environment for innovation sought by smart money from around the world — all despite continual security concerns, occasional fusillades from Gaza, intermittent stabbings in the West Bank and recurring strategic disagreements with the Obama White House.
The lesson is in the seeing. It’s in using the experience as a lens to scrutinize more closely Michigan’s economic and entrepreneurial landscape, its assets and its liabilities. It’s summoning the humility and candor to learn from the seeing, then using the perch of leadership to share the vision from Detroit and Ann Arbor to Lansing and Grand Rapids.
Smart money isn’t flooding to Israel because investors are dumb. Something unique to a handful of places in the world is happening here. Because Michigan and its largest city paid a heavy price for their Big Company-ism and willful misunderstanding of competition, they need all the insight they can get to avoid making the same mistakes again.
The strength of Israel’s entrepreneurial culture, defined by history, geography and the ethos of the Israeli Defense Forces training, is undeniable. It breeds a toughness, a togetherness, an accountability, an innovative spirit and a sense of purpose not easily replicated outside their tiny patch of land in the Middle East.
That cumulative experience, the CEOs agreed, is no more easily exported than the Michigan experience, good and bad, with the auto industry’s manufacturing of affluence, entitlement and complacency; the state’s century-old legacy of entrepreneurship; its rich natural resources, including fresh water; and its resilience in face of municipal bankruptcy and automotive collapse.
“Never underestimate the power of culture,” says Sandy Baruah, CEO of the Detroit Regional Chamber. “The power of Israel’s culture of collective action, shared sacrifice and risk-taking have fueled its world-leading innovation and economic prosperity despite the lack of natural resources and location in one of the world’s most difficult neighborhoods.”
Second, government need not be the enemy of business or job creation. From the mayor of Jerusalem to the nation’s chief scientist, the message here is consistent: public-private partnerships, supported by strategic government investment in business, are a cornerstone of Israeli economic development.
Even in the famously fractious world of Israeli politics, politicians and the public generally coalesce around the proposition that startups and expansion of other companies drive job creation, job growth and higher revenue from income and corporate taxes. They invest for the longer term and for future generations, not for the next election cycle.
In other words, the Israelis’ public-private approach to economic development, born of necessity, is the exact opposite of what passes for economic development thinking in Republican-controlled Lansing these days.
“They’re not having philosophical debates” in Israel “about the role of government in economic development,” says Doug Rothwell, CEO of Business Leaders for Michigan and chairman of the Michigan Economic Development Corp. “They’re all in. That’s a whole different level of engagement.”
Third, leaders can drive change if they have the courage to do so and the ability to articulate their rationale. As Michigan CEOs gasp when told so-called “angel investors” in startups received a 100 percent write-off of their investments in the year they are made, the chief scientist calmly explains how the economic benefits outweigh the costs to the treasury.
“It’s strategic to the country,” says Avi Hasson, Israel’s chief scientist. “It’s not in any way partisan. In the case of Israel, we had no choice. No local market. No water. A defense challenge. You don’t need to create a sense of urgency in Israel. We have it.”
Michigan? Not so much. Not when its automakers are booking record profits in the United States; or when its bellwether city, Detroit, appears on the mend; or when its unemployment rate is running a decade-long low.
Fourth, living in a tough neighborhood and gutting through tough times are not automatic disqualifications for success. As Michigan and Detroit have learned well, adversity tends to build resilience and cooperation more than resignation — lessons demonstrated repeatedly during a week in Israel.
“They are all on the same team,” says Chip McClure, a longtime auto supplier CEO who now heads Michigan Capital Partners, “all focused on the same objectives.”
In short, Israelis demonstrate a sense of cohesion around their entrepreneurial space, namely the roles of private capital and public support, that business leaders and politicians in Michigan would envy — if they bothered to pay attention.
They should. The net effect is more economic dynamism to change the prevailing narrative about Michigan and its largest city; creating more jobs and more opportunity to bolster the economy; establishing the building blocks of growth and diversification, counterweights to the cyclical nature of the auto industry.
Leaders of the mission to Israel already are mulling ways to build a one-stop portal for would-be entrepreneurs looking to build businesses in Detroit or southeast Michigan, in part because the existing support network for startups is fragmented.
Next week, representatives of United Hatzalah, an all-volunteer emergency rescue service the CEOs visited in Israel, are scheduled to meet with representatives of Mayor Mike Duggan and the state Department of Health and Human Services to continue talks about adapting the concept for Detroit.
And Wayne State University President M. Roy Wilson, inspired by the aspiring young entrepreneurs the group met at IDC Herzliya, is exploring ways his school can expand its support of entrepreneurship and “move the needle even more so.”
“Entrepreneurs are more born than made,” he says. “They’re wired in a certain way. If we can identify those who are likely to thrive in an entrepreneurial environment, those kids could stay in Detroit and work their way into the American dream ... and be part of the economic system.”
Daniel Howes is a Detroit News columnist and associate business editor. Watch for his columns through November on the Michigan CEO mission to Israel. His column runs Tuesdays, Thursdays and Fridays. Catch him 3 and 10 p.m. Thursdays on Michigan Radio’s “Stateside,” 91.7 FM.