Mr. Stef Wertheiner greeted us at the massive Iscar R&D facility. Iscar makes cutting tools for the Metal industry. They believe in the Motto “Where Innovation never stops!”. Iscar believes in improving productivity through innovation. They innovate by bench marking their products with their current products and competitors’ products. They follow the concept of Modularity which is to limit change in production & machine costs.
According to Mr. Stef Wertheiner, Iscar’s business model is like the razor blade model. Iscar is customer oriented business with the following principles:
- Cost Cutting
- Customer Relationship
- Improving productivity
One of the examples of customer oriented business is that Iscar demonstrates live action of the tools of the company at its R&D sites.
Mr. Wertheiner believes Mr. Warren Buffet who purchased the company for $4 billion was impressed by three aspects of Iscar:
- Level of innovation
- Human Factor
- Profit Margin
Mr. Giora Yaron the Chairman and Founder of Itamar welcomed us to the company office. He had Engineering and management background with a PhD in Physics (Flash Memory). Mr. Yaron talked about the possible reasons for Israeli going hi-tech and sighted Israeli military as a primary reason. The companies which develop technologies for the Israeli military also look for ways to commercialize it. Thus he got the idea of the non-invasive “Pill cam”.
Mr. Yaron also pointed out to the importance of academic infrastructure as a launch pad for Israel hi-tech industry. He noted with satisfaction that the Government support through Yissum was important and massive. He also complemented the government in Israel for jump starting the Venture Capital (VC) industry. Government matched every dollar to dollar of VC investment with its own money.
There was one important deficiency in the Israeli and that was of management due to the commanding style of management gained by most of the Israelis from their military careers. This gap or deficiency was filled by the multinationals. Most of the Israeli companies are registered in Delaware because of similarities of law.
According to him, Israel main industry focus had changed several times over the years. In the 1980s, the main industry changed from Communications to Data Center. In the 1990s, the main industry was Internet Applications industry and 2000s the Software Industry. Some of the important outcomes were companies like Check Point and Galileo.
Finally, Mr. Yaron talked about the rise of Chindia (China & India) which provide low-cost highly educated work force. This brought a lot of competition to the Israeli companies but the high-end focus has helped Israel stay afloat and in some cases on top.