John Vogel is an adjunct professor at Dartmouth's Tuck School of Business.
Can you guess which country is second only to the United States in the number of companies it has on the NASDAQ? Here's a hint: it's not India, Korea, Singapore, or Ireland.
The answer is Israel. As Dan Senor and Saul Singer write in their in a fascinating new book, Start-Up Nation: The Story of Israel's Economic Miracle, "In 2008, per capita venture capital investments in Israel were 2.5 times greater than in the United States and more than 30 times greater than in Europe… Israel's economy has also grown faster than the average for developed economies of the world in most years since 1995."
In explaining Israel's remarkable economic success, especially in the area of creating innovative companies, Senor and Singer do not offer a simplistic explanation. Rather they describe a combination of things including: national pride, strong social networks, an international perspective, and a culture where it is OK to fail, and where subordinates feel empowered to challenge their managers.
A critical thread in their analysis turns out to be national service. Senor and Singer believe that part of Israel's success in creating successful, entrepreneurial businesses can be traced to the fact that every 18 year old is obligated to spend a couple of years in the military. The authors quote Gary Shainberg from British Telecom, who marveled at the maturity and practical skills of the young Israelis who work for his company. Shainberg commented, "Nowhere else in the world do people who work in a center of technology innovation have to do national service." National service gives the young Israelis problem-solving skills, interaction with a broad range of people, and an invaluable network. After their military service, many of these young people go on to college and graduate school with a better perspective on what they want to do and the leadership skills and life experience essential in starting and building a company.
I am not recommending that the United States adopt the Israeli model. We react negatively when we are told that something is "compulsory." Nevertheless we can learn from Israel's success and adapt it to our culture and norms.
Today, we have excellent models of how national service could work. For example, AmeriCorp provides young Americans with an opportunity to make a difference in areas such as education, public health, and disaster relief. As Michael Brown, the CEO of City Year, pointed out in a Feb. 15, 2012 article in the Huffington Post, "AmeriCorp taps the energy and idealism of America's youth." Last year almost 600,000 young people applied. Similarly, Teach for America provides a different kind of opportunity for national service where recent college graduates apply to teach in challenging public schools across the country. Last year 48,500 young people applied, including 17 percent of the graduating class at Harvard.
National service is not the silver bullet that will solve our nation's unemployment problem and guarantee an endless stream of innovative new companies. But Israel has one of the lowest unemployment rates in the world as well as a record number of successful start-up companies. AmeriCorp, Teach for America, and the U.S. Military are great examples of ways for young people to do national service. Sadly, instead of encouraging national service, we put up barriers. Hundreds of thousands of talented young people are ready to take on difficult and vital work in our communities at modest salaries. But unlike the Israeli government, the U.S. government provides so little support that only 14 percent of those who apply to AmeriCorp or Teach for America get the opportunity to serve. We can do better.
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