Former Israeli prime minister sees partnership

Ehud Olmert makes a point during a dialogue with Hwang Chang-gyu, distinguished chair professor at Sungkyunkwan University. By Park Jong-geun

Former Israeli Prime Minister Ehud Olmert expects a synergy between Korea and Israel by sharing advantages with each other.

“Korea and Israel have in common that they both lack natural resources and have security risks,” Olmert said. “The two can be great partners.”

Olmert expressed his envy of Korea’s big companies and large society.

But he said his country’s geopolitical circumstances caused people to think outside the box and create start-ups that are generating billions of dollars and are leading the economy.

In a dialogue with Hwang Chang-gyu, distinguished chair professor at Sungkyunkwan University and former Samsung Electronics chief technology officer, Olmert said some Korean companies are surprisingly creative, but the country needs to establish a creative environment that can impact the whole society if it wants a “creative or innovative economy.”

The 68-year-old Olmert visited Seoul last week to share his ideas about creativity with Korean audiences at the 14th World Knowledge Forum.

Following are excerpts from the dialogue.

Olmert: Israel is not a big market. There are only 8 million people. So we know we have to focus on where we can have relative advantage. So we have to create things that can be successful in much bigger markets. And new technologies, almost by definition, have better chances than old technologies. Why? When I use the old technologies, we were doing it, America was doing it, Britain was doing it, France was doing it, Germany was doing it for generations. Now what can I do better in that area? Very little. There are three factors that contributed to Israeli success in what is known as high tech. No. 1 is the circumstances of the Israeli life. For 65 years, Israel has been fighting for its existence. The situation around us is different. For the past 65 years we were small, and we had to bear many enemies. So the only way to succeed was to remain always edgy, on alert, breathless and impatient to try to find solutions that can make up for the difference in our size and fortunes.

Hwang: The history of Korea’s small and medium businesses (SMEs) is quite short compared with Israel’s. However, now we have a very positive change in the cultural atmosphere toward start-ups in Korea. They have a lot of improvements to simplify procedures for new businesses and raise loans. That is very positive, but I think Korean start-ups have relatively fewer chances to make fortunes through successful M&A deals compared with Israeli companies. We need to encourage M&A deals involving fragile companies that need more funding, to stimulate the ecosystem for start-ups.

The second thing, more important, is fear of failure, which blocks risk taking. Israel’s education system, also entrepreneurship, is a model for Korea. Silicon Valley is a product of failures. Failure of a start-up is kind of a stigma in Korea. But in Israel’s Silicon Valley it is quite different. That is a usual process. They try to have a chance to achieve that. That is the difference between Korea and Israel.

Olmert: No one likes to fail. Everyone wants to succeed. It’s not that Israelis take more risks than others. All of Israel is one big risk. The creation of Israel was a risk. Now, Israelis are very strong economically and we have companies that sold for billions of dollars. And income per capita is $30,000, which is fairly high.

The reason why Israelis have this courage to build on potential failure is that the ones who build all these startups are children in their 20s. At a young age, you don’t calculate failures like when you are in your 40s when you have a wife, two children and commitments. Then, you are less prepared to take risks. That’s No. 1.

No. 2 is this is how we started this progress. We developed compatible mechanisms of the government to assist people who are prepared to risk failure by entering into this.

The Ministry of Industry and Trade is in charge of the chief scientist. Every year, the chief scientist gives hundreds of millions of checks to all kinds of start-ups on the basis of professional examination by top experts, who are not part of the government, who are trying to look into different ideas and sort out which look promising.

Seventy percent of them will not succeed. Thirty percent will succeed by making a reputation for the entire country.

The 30 percent is more or less the average of everywhere in the world. Not only the 30 percent, but Israel has most start-ups per capita. We have more start-ups than Japan has, Korea has and Great Britain or France or Canada - you name it.

Hwang: Many things. Eighty percent of Korea’s GDP basically comes from conglomerates. Now, we put more emphasis on start-ups and SMEs. Without the competitiveness of the start-ups and SMEs, Korea cannot be an advanced country in terms of technology. The important thing is Israel has its own competitiveness even with start-ups, but in Korea the synergy effect between conglomerates and start-ups is something we have to solve. There are many systems or laws for conglomerates because they have big markets globally, big R&D organizations. At the time, we were talking about some collaboration in one of Korea’s strengths and one of the strengths and advantages of Israel, some cooperation or synergy effect of the two countries.

Olmert: There is no question about it. Synergy is essential for both sides. That’s why it seems inevitable. It’s just a matter of time. I trust their [Korea’s] enthusiasm and the dynamics of the people of Korea in general and the business community. Other countries are showing signs of fatigue. But you must understand that Samsung was not always the largest electronics company in the world. For Samsung to remain the largest electronics company it has to be renewed all the time. If it doesn’t renew, it will not remain the largest. Philips was the largest electronics company, but where is it now? Why? Because the affluence of their achievements made them somewhat heavier and thicker.

So now, if we can combine the energy and desire to expand, which characterize Korea - Korea is a relatively large society with 50 million population, also having difficult circumstances like the nation’s division, no natural resources - it’s the only way you can continue this success, innovation combined with these strengths, and the infrastructure that Korea has built, can be a great prescription for you and us. So we should work together.

If I look at some of your companies like Samsung, Hyundai, Doosan and SK, all these were created by private individuals. They started from nowhere. They started not too many years ago.

You started earlier than us, you need big companies essentially because you need bigger markets, and you have to produce a lot. What we [Israel] can do is to sell ideas, we don’t need big companies. This has triggered Israel to think outside of the frame, outside of the box, to survive. To think about what no one has thought. To propose what no one else has proposed. To create something no one else has created before. This gave us the strength to hold against the odds that we were fighting.

BY SHIM JAE-WOO, SONG SU-HYUN [ssh@joongang.co.kr]