Innovation lessons from Israel

When the Global Innovation Index ranking was announced last week the expectations were high. India, many believed, would break into the top 50 league for the first time. It came close, ranked 52 among 130-odd economies. Nevertheless, its performance was commended as it topped the Central and South Asian region for the ninth consecutive year and its growth — from 81st rank in 2015 to 52nd this year — is the fastest by any major economy. What is also significant is that India continues to outperform on innovation relative to its gross domestic product (GDP).

However, the biggest news from the rankings this year (which saw Switzerland retaining its top position) was Israel breaking into the top 10 list — first by any country from the Northern Africa and West Asia region. It was not an easy journey for the ‘Startup Nation’ which has given the world innovations such as drip irrigation, USB drive, firewall (cyber security) and precision farming to name a few.

Israel, which came into being around the same time as India in 1948, has a lot of lessons to offer for its ally — especially when it comes to converting challenges into a competitive advantage. With a population of just 8.5 million, it has a very small domestic market.

Though located in an area that is home to earliest of civilisations, its enterprises cannot look at broadening its market by exporting to neighbouring countries as Israel is surrounded by enemies. That apart, it is endowed with very little natural resources including water. Its 22,000 square kilometre area is predominantly arid, fit to grow almost nothing.

Any other country with such adversity would have given up and become dependent on allies for survival. Not Israel. Its policy-makers decided early to invest in human intellectual capital and create a knowledge-based economy. By doing so they hoped that Israel could become home to technology focussed industries that do not depend on natural resources that their country sorely lacks while, at the same time, offering products that could be easily exported (despite an unfriendly neighbourhood) to meet the demand anywhere in the world.

Focus on education

They also had an unfailing faith that the intellectual prowess so developed will solve many of the country’s pressing challenges — be it water scarcity, agricultural development or national security.

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Read Summary by Maggubhai

  • Israel has become the first country from the Northern Africa and West Asia region to be in the top 10 innovative countries as per the Global Innovation Index ranking.
  • Israel was already a pioneer in making drip irrigation systems, USB drive, firewall (cybersecurity) and precision farming to name a few.
  • They began to nurture their innovation culture by investing a good amount in education that is almost 7 percent of its GDP in number. As a result, Israel has the largest number of hi-tech startups per capita than any other country in the world.
  • To tackle the security issue the country invested heavily in cutting-edge technologies. Today, the Israeli military is a national incubator and a significant catalyst for innovation. Israel also controls as much as 10 per cent of the global cybersecurity market.
  • They believe in a trait called ‘Chutzpah’ which means failure is accepted in the society and you are encouraged to try again.
  • India which ranked 52 in that index has challenges in food, energy, water and national security. They can take lessons from Israel to tackle these issues.