By Yap Shiwen. A version of this article was published on The Online Citizen. Republished with author’s permission.
While funding, talent, and business environment contribute to startup success, there are many intangibles that have a role to play as well. One factor is culture capital, which are non-financial social assets that promote social mobility and entrepreneurship.
Examples of this can include education, intellect, style of speech, dress, cultural literacy or physical appearance. To compare the significance of cultural capital, let’s look at Singapore and Israel.
Both are similar in that they share a conscription-based military and exist amidst majority-Muslim states that have been at odds with them at one point or another throughout their history. They have no natural resources to speak of. Both also have a history as immigrant nations and former British territories, with diverse cultures co-existing and integrated into a single identity.
Israel and Singapore share comparatively small populations relative to their neighbours, with both being relatively young states with no significant natural resources. Yet Israel produces more startups than socioeconomically stable and larger societies like Japan, China, India, Korea, Canada and the UK. The Economist noted in a 2010 review that Israel had more high-technology start-ups and has a larger venture capital industry per capita than any other nation.
Singapore possesses a higher GDP per capita than Israel since the 1980s as one of the ‘Asian Tiger’ economies. Based on IMF estimates of GDP per capita in 2012, adjusted for purchasing power parity, Singapore’s stood at USD 61,000 against Israel’s USD 32 300.
It is also noted for the legal infrastructure, ease of funding available through state-sponsored channels for aspiring entrepreneurs –local and foreign — as well as enjoying international connectivity.
However, Israel’s start-up sector continues to enjoy more success in generating and sustaining startups. It is noted for the number of acquisitions made by global MNCs. Examples include Objet and ICQ, two Israeli firms acquired by overseas investors.
Two key differences that emerge upon a brief review of Israel’s and Singapore’s culture are the following:
• the freedom to question assumptions
• military service culture
These differences are most critical in comparing the two nations.
The freedom to question assumptions
Jewish culture maintains a scholarly, legalistic tradition that relies on questioning established conventions and wisdom. This process of questioning assumptions is based on achieving greater understanding of the roots and rationale of assumptions, with the aim of eventual improvement and progress.
This active thinking process allows people a greater depth of understanding and the ability to shift perspectives. A certain level of cognitive versatility is instilled as a result.
People are expected to ask questions, have the freedom to question assumptions and can do so without social or legal penalty, by and large. They can explore ideas, receive feedback and crystallise their thoughts into more viable concepts.
By contrast, although Singapore is heterogenous and without the cultural binding of Judaism, the dominant culture is Chinese, specifically with a state-supported slant towards Confucianism.
Prevailing cultural and social attitudes discourage the questioning of conventions and assumptions and the legitimacy of government policies.
In short, it is like Dubai, attracting foreign businesspeople, professionals and academics, but with a culture and political system that discourages risk-taking. To question conventions is to invite penalties.
To look out how the differences in intellectual freedom manifest in everyday life, we can examine the national conscription systems in place in both countries.
Military service culture
The IDF In Israel and the SAF in Singapore are conscription-based militaries, with most male citizens serving the military forces prior to higher education or further work. Both Singapore and Israel are reliant on maintaining large reserve forces, rather than having standing armies.
Within the IDF, there is a culture that encourages entrepreneurship and leadership. It is perceived as a source of creativity, risk taking, and innovation. For example, Israeli lieutenants have greater command autonomy compared to foreign counterparts in other militaries worldwide.
There is significant downward delegation of authority, resulting in deliberate understaffing at senior levels. This also results in intense competition, such that only the most competent reach senior officer status.
Since all Israelis have a chance to serve in the IDF, competition for key units is intense, with the IDF able to screen for and select the most talented individuals. Unit 8200 and the Talpiot Program are two particular schemes that produce disproportionate numbers of entrepreneurs and innovators.
Unit 8200 is an Israeli Intelligence Corps units responsible for signal intelligence and decryption. According to Forbes, its former members are responsible for founding tech startups like ICQ, Check Point, Gilat, NICE and AudioCodes, amongst others.
The Talpiot Program identifies recruits with high academic ability in science, technology, engineering and mathematical disciplines as well as leadership potential. They are then allowed to pursue higher education during their IDF service term, concurrently undergoing field training before being deployed to either a combat position or technological leadership role.
Some graduates of this program include Arik Czerniak, the founder of Metacafe; Yoav Freund, a professor at USC San Diego and winner of the 2003 Gödel Prize; Marius Nacht, co-founder of Check Point Software Technologies and Eli Mintz, Simchon Faigler and Amir Natan, founders of Compugen Ltd.
Other schemes that operate along the same lines, designed to optimise the IDFs human capital as much as possible, are the Academic Reserve Program, IAF Pilot Course, Israeli Naval Academy and Havatzalot Program. All of these offer degree courses combined with field training.
Military services develops attributes like discipline, the ability to communicate to large groups, teamwork, psychological and physical resilience, improvisation and mission orientation, technical and knowledge competencies for diverse vocations, amongst many other qualities.
Openness to criticism also keeps people situationally aware and informed, humble, as well as psychologically flexible and adaptable to alternative solution methods.
The reliance on reserve forces also ensures chaos and an anti-hierarchical ethos is maintained, due to the presence of civilians from diverse backgrounds. IDF personnel learn to be open to questioning, arguments and diverse opinions, as well as having the skills to deal with chaos and disorder. These are attitudes that transfer to civilian existence and business lives.
The IDF also aids in developing the extensive social networks and social capital crucial for founding and developing businesses, given the relationships forged during military service.
The SAF, by comparison, focuses heavily on standardised routines. There is a systemic reliance on Standard Operating Procedure (SOP), as well as adherence to rules and regulations. Rather than downward authority delegation, there is significant upward delegation, resulting in a certain level of organisational ‘bloat’.
What may be symptomatic of this in the SAF is the introduction of the Senior Lieutenant-Colonel rank in 2009. Within the organisational culture, risk is discouraged, due to heavy demerits and disincentives imposed on risky behaviour by personnel.
Another area of concern is the fact that good performance and competence are often rewarded by imposing heavier workloads on high-performers, causing burnout.
To illustrate this, we use the Monkey Cage analogy, shared by Associate Professor Freek Vermeulen of the London Business School. Successive monkeys that are introduced into a cage are discouraged from getting a banana due to the penalty of water hosing imposed on monkeys that try to do so. In turn, the first generation of monkeys deter the rest.
The existence of scholar and nonscholar tracks is a problem. Scholars are placed on an accelerated promotion track due to their academic achievements, while non-scholars face degraded career progression. This difference causes morale issues in the organization and leads to apathy.
While the scholar scheme is accessible to some degree, via such scholarship and incentive programs as the Local Study Award, Merit Scholarship, Overseas Scholarship and Defense Merit Scholarship, they are otherwise inflexible and emphasize heavily on the academic achievements of individuals, rather than leadership potential and actual competence.
US military scholar Captain Sean Walsh pointed out some institutional weaknesses within the SAF. One of them is the low motivation to serve by a significant portion of conscripts. This is caused by an inability to articulate defense policy and its necessity to students, leading to dismissal of such communications as government propaganda.
This creates a highly bureaucratic organization with heavy emphasis on discipline and routine, rather than one with personnel adaptable to chaotic situations. As a result, the entrepreneurial drive is inhibited at the formative stage of individuals’ lives, across broad segments of society.
Reform the SAF
Culture underlies many of the informal support structures and networks that enable the success and sustainability of startups. These factors do not necessarily exist in isolation.
For example, Singapore’s orderliness and efficiency is contrasted with the Israeli tolerance for chaos and their ability to thrive and capitalize on that chaos.
To succeed and sustain the startup sector, Singapore needs to learn from Israel. It needs to make reforms and develop the competencies and cultural capital that Israel clearly possesses.
Changing the organisational culture of the SAF and encouraging greater intellectual freedom, are keys to boosting startup growth and entrepreneurial activity in the long run.
In the end, many of the necessary reforms are known quantities and within reach. It’s up to the government to determine a cost-benefit ratio that balances business interests and public interests against political costs, and harness the political will to implement needed reforms.
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