Overcoming the Israel-America Business Cultural Gap

In the Israel economic development profession, there is an accepted axiom that the cultural differences between Americans and Israelis often kill a deal no matter how great the Israeli technology and how strong the need in the U.S. market.  Heartbreakingly, I have seen this paradigm come into play so many times that I literally cheered at a recent Conexx-sponsored Atlanta seminar for the presentation on Understanding the Israeli American Cultural Gap delivered by Kobi Rasner, author of a new book on this important topic.

Kobi is uniquely qualified to offer insights and tips on how to overcome the culture gap. He was born and raised in Israel, and following high school, he spent a summer with the Israeli Scouts in Hendersonville, North Carolina to work at the Young Judea camp.  He returned to Israel to serve as an officer in the IDF Tank Corps, and after the Army in 1974, he met and married a New Orleans girl.   The newlyweds went back to the U.S. where Kobi studied pre-med at LSU-New Orleans.  While there, he started selling Israeli jewelry throughout the Southeast, and was successful.  When he didn’t get into med school, he went into the business full time, learning the American way of doing business where he “swam like a fish in the ocean” during 13 years of living in the country.

After selling the business in 1987, the Rasners came back to Israel, and for three years, Kobi struggled because, as he says, “I lost my Israeli DNA and no longer thought like an Israeli“.  He felt Israelis were aggressive, direct, and somewhat tricky, and found that they rejected him as a potential employee or businessman.  In 1990, knowing he couldn’t succeed as a “mediocre Israeli”, he decided to use his American experience and thinking to help Israeli companies reach the U.S. market.  Thus was born Synergy Overseas, an Israel-based consulting firm he has run ever since.

Kobi’s first breakthrough project was with Cycle Group, an Israeli company that recycled wood waste and had invented a new kitty litter product.   This was a classic site selection process where he helped the company establish a U.S. production facility near Greensboro, North Carolina to be closer to their customers. Over the years, Kobi has helped 10 Israeli manufacturers to land in the U.S. including a few through M&A.  Among them were Plasan in Vermont, Oran in Virginia, and Shalag, Spuntech, and Syfan in North Carolina.  He considers Oran and Shalag to be two of the most successful in terms of the least frustration since he feels there is a direct correlation between Israeli management who listen to advice and their success in setting up a U.S. operation, pointing out that “The more they think they know, the harder they fall!”  Almost all had cross-cultural issues that inhibited success.  “Americans need to be managed by Americans—Israelis need to adapt”, but they all have been successful businesses in terms of creating jobs and profit.

Kobi’s book, Selling Horses to Cowboys, has been published in Hebrew, and he hopes to find a U.S. publisher since the material is as relevant to Americans as it is to Israelis. It took him 7 years to complete, and he based his “dissertation” on his years of selling product in small towns and cities in the South and having interactions with many American business people.  He points out that Israelis understand the Europeans as Christians but don’t comprehend the difference with U.S. values and culture and the differences between Protestants and Catholics much less Jews.  In preparation for writing the book, he had to study history to understand the deep values and major documents of the Founding Fathers including the Constitution and Declaration of Independence, but did not reference previously written works on the American-Israeli culture gap such as Lucy Shahar’s Border Crossings that was not, in any case, devoted to business practices.

In his book, Kobi covers a wide variety of factors that affect the American-Israeli business culture gap including:

• Polychrons vs. Monochrons in intercultural communication including the fact that there is no Hebrew word for “deadline”.
• High Context vs. Low Context communications cultures with the amazing discrepancy between the number of words in the two vocabularies (400,000 in English to 40,000 in Hebrew).
• Value gap between the American Protestant work ethic of life in “black and white” and Israel’s “50 shades of gray”.
• Different legal environments where Israel has no constitution, no punitive damages, and where the lawyer’s role as business advisor is as important as the legal.
• Opposing approaches to trust where Israelis start with a profile of suspicion and Americans start with 100% trust that can quickly degrade to sudden death.
• Project management where the Americans expect on-time and on-budget practices, and the Israelis expect changes.
• Different verbal and physical styles reflecting intimacy and distance.
• Opposing negotiating postures where the Americans view the NDA as a platform for trust and the Israelis as an exercise in paranoia.

The trend today is for Israeli companies to buy existing companies in the U.S. and then reconfigure them.  M&A now is the biggest part of Kobi’s business, and he typically works with 2-3 clients a year.  He points out that M&A represents another cultural gap challenge for many Israeli managers who are not experienced in American culture, and lacking awareness of the intensity of the competitive environment of acquisitions in the U.S., they tend to downplay information about competing bids as “scare tactics”.  Instead of adapting to the American style, Israelis try to negotiate in a fashion similar to how it is done in Israel, and this usually creates an erosion in trust by the seller who doesn’t understand the Israeli way and tends to prefer competing American bidders.

“Israelis are not always respectful of American valuation metrics, and try to fashion their valuation on other metrics including one not present in the USA—emotions.  As a result, the opening bidding gap they’re accustomed to tends to turn off and even offend the American seller and reduce his interest to zero.  An extended period of bargaining, sometimes ad nauseum, is also typical of the Middle Eastern negotiation style which runs against the grain of most American sellers,” Kobi says.

At age 62, Rasner plans to continue serving Israeli companies seeking to establish U.S. operations either through site selection or M&A.  However, with the publication of his book, he envisions consulting with U.S. companies and giving talks / workshops on cross cultural differences.  He also would like to use the same methodology to work with American corporations having operations or markets in other countries or companies from those countries wishing to enter the U.S.

As important as his book is to Israelis doing business in the United States, it should be equally vital to Americans doing business in Israel or with Israeli companies.  Let’s hope for its speedy publication in English to help avoid many more inter-cultural clashes that keep America-Israel business from reaching its full potential.