Role of military in the entrepreneurial ecosystem

By Alexander Maune | May. 16, 2023 | 8 Min read

Alexander Maune

ENTREPRENEURSHIP is viewed by many as an engine for economic growth. Therefore, it is critical to encourage entrepreneurial behaviour by creating ecosystems which connect various key players of the economy. These ecosystems must create value by connecting the main actors in a well-defined region to develop start-ups.

A well-functioning entrepreneurial ecosystem is a driver of economic prosperity, innovation and national competitiveness. The success of such an ecosystem depends on the interconnectedness of policies and synergistic interrelationships among its stakeholders. The military is viewed as a key player in such an ecosystem. Its role has been recognised in several technological breakthroughs that have changed human life globally. It has been used as a breeding ground for several start-up companies. Credit is often given to the military’s role in the success of the high-tech industry globally.

For example, Israel is named a start-up nation or innovation nation because of the number of start-ups that have emerged as a result of the establishment of the innovation ecosystem anchored by the military. The military has long been known as an incubator for high-tech firms started by former soldiers with some entrepreneurs using their military knowledge to develop physical tools as well. It is important to note that a number of start-ups are emerging from the military with spill-over effects to the private sector and civilian life. Several global entrepreneurs are people who retired from the military or have indirect connections to the military. Many start-ups are based on technical innovations that originated in the military. In its 2011 report, the US Small Business Administration states that over 2,4 million small businesses in the US are owned by retired military officers.

Why the military?

About 30 nations have compulsory military service which lasts longer than 18 months. Most of these countries are developing. Among first-world countries, only three require such a lengthy period of military service: Israel, South Korea and Singapore. These countries have instituted national service policies where young girls and boys at the age of 18 undergo military training for at least two years in special military units before going to university. These young boys and girls come out of these units more mature to solve any life challenges. The national service programme has produced men and women who have founded start-ups which have changed human life globally. Research collaborations between government, private sector, academia, and the military have helped produce cutting-edge technologies globally.

In a study titled: Best Practices and Lessons Learned in ICT Sector Innovation: A Case Study of Israel, Daphne Getz and Itzhak Goldberg described the players in the Israeli innovation ecosystem model based on two key economic sectors (research — universities and commercial — private sector) that include physical resources such as funds, equipment and facilities as well as human capital, such as students, faculty, staff, industry researchers and industry representatives.

Both are crucial to the ecosystem’s success. The institutional entities participating in the ecosystem include the universities, transfer technology offices at universities, some of the colleges, business schools within the universities, business firms and enterprises, venture capitalists, industry-university research institutes, government supported centres of excellence within the universities, the military, and, last but not least, government and local economic development and business assistance organisations and funding agencies.

According to Israeli Prime Minister Benjamin Netanyahu, the Massachusetts Institute of Technology houses one of the military units where cutting-edge researches are carried out in collaboration with the academia. Israel, for example, has done what no other country has done to purposefully integrate its private, scholarly, government and military cyber-expertise in the middle of the Negev Desert, to create a cyber-security ecosystem that has cemented its place as a major digital power. This has brought research universities and large firms, a talent pool drawn from around the world, military units, and access to venture capital and government research and development (R&D) funding into proximity. This ecosystem, according to Senor and Singer in their book: Start-Up Nation — The story of Israel’s Economic Miracle, is one reason for Israel’s success.

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In addition, the authors contend that Israel has a unique entrepreneurial culture that combines individualism, egalitarianism and nurturing. Senor and Singer views the military and its impact on the lives of all young Israelis as central to the creation of the culture, skills and personality traits that help the entrepreneurial spirit to flourish. Not surprisingly, most of the Israeli technology companies that trades on the NASDAQ are either founded by a military officer or have alumni situated in key military units. The Israeli military unit (Talpiot) has been nicknamed the “Israeli Defence Forces (IDF)’s incubator for Israel’s future chief executive officers”.

What is the Talpiot?

The Talpiot is a unit which takes the process of extreme selectivity and extensive training to an even higher level, especially in the realm of technological innovation in the IDF. The name Talpiot comes from a verse in the Bible’s Song of Songs that refers to a castle’s turrets; the term connotes the pinnacle of achievement. Talpiot has the distinction of being both the most selective unit and the one that subjects its soldiers to the longest training course in the military — 41 months.

The Talpiot programme was the brainchild of Professor Felix Dothan and Professor Shaul Yatziv, both Hebrew University scientists. The professors approached then IDF chief of staff Rafael “Raful” Eitan with a simple idea: take a handful of Israel’s most talented young people and give them the most intensive technological training that the universities and the military had to offer. In order to make it work, the army partnered Hebrew University to teach the young cadets physics, mathematics and computer science.

The academic training they receive goes beyond what the typical university student would receive in Israel or anywhere else—they study more, in less time. During their next seven years of service, Talpiots become military R&D experts. Talpiots have also been very active in space, developing new satellite systems and high altitude high resolution cameras that can be used to shoot images that then go to Israel’s intelligence services. After intensive training, these soldiers are put in highly sensitive, secret and responsible jobs, developing and using cutting-edge technologies. After their service, many stay on to become career soldiers while others venture out into civilian life and are either snapped up by high-tech corporations or set up their own start-ups.

Edward Luttwak, a military historian, estimates that many post-army Israelis have visited over a dozen countries by age 35 giving them international exposure that is critical in creating successful businesses. The Talpiot graduates, for example, have gone on to create dozens of successful corporations that have changed the world. Among them is Check Point Software Technologies, founded by Marius Nacht in the Tel Aviv apartment of a friend’s grandmother. It became a US$15 billion company that now keeps much of the world’s computer systems and mobile networks safe behind a firewall. Compugen helps drug companies create more effective pharmaceuticals through its one-of-a-kind DNA sequencing process. Another early corporate success was the XIV storage system, developed by members of Talpiot’s fourteenth class and sold to IBM for a reported US$350 million. Apple is another company that took advantage of a Talpiot creation — buying memory company Anobit from Talpiot graduate Ariel Maislos for almost US$400 million. Listings on US exchanges and nine-figure exits have become the norm for Talpiot-created start-ups.

Key to any technological success or breakthrough is the creation of a well-functioning entrepreneurial ecosystem. Africa’s military needs to work hand in glove with other key players of the entrepreneurial ecosystem to produce meaningful technologies for the continent and world at large through research collaborations. Huge military budget allocations need be used to produce meaningful state-of-the-art technologies. This can only be done through research collaborations with the private sector, academia and the public sector. The military plays a critical role in economic development and growth. It is a kingpin in the technological development of a country. Research has shown how important this element is in the entrepreneurial ecosystem of a country. An enabling environment is critical where the military units can work together with the academia, the private sector and the public sector.

Research must be encouraged between the military units, academia, the private sector and the public sector. There is need for mutual understanding and a sense of trust among all the players for an entrepreneurial ecosystem to flourish. Given the number of cutting-edge technologies that have emanated from military units, the private sector, the academia and the public sector need to collaborate with the military through research to provide solutions to economic and social challenges.

Military’s role

The military as an institution is globally recognised to instil core leadership values including loyalty, duty, responsibility, selfless service, honour, integrity and personal courage. These are seen as the main ingredients that account for success in entrepreneurship.

The military is conducive to multifaceted experiences with a variety of physical, mental, interpersonal and professional tasks in a system of rapid mobility between tasks, roles and places. Gray Shainberg (2008), vice-president for Technology and Innovation, British Telecom reasoned that by the time students finish college, they are in their mid-twenties; some already have graduate degrees and a large number are married. “All this changes the mental ability of the individual. “They’re much more mature; they have got more life experience. Innovation is all about finding ideas,” says Shainberg.

Innovation often depends on having a different perspective. Perspective comes from experience. Real experience also typically comes with age or maturity. But in Israel, you get experience, perspective and maturity at a younger age, because the society jams so many transformative experiences into Israelis when they’re barely out of high school. By the time they get to college, their heads are in a different place than those of their counterparts. Shainberg further argues: “In the military, you’re in an environment where you have to think on your feet. You have to make life-and-death decisions. You learn about discipline. You learn about training your mind to do things, especially if you’re frontline or you’re doing something operational. And that can only be good and useful in the business world.”

In the military, young soldiers are given the opportunity to manage projects with sizeable budgets and carry out work for which quality, reliability and resilience under stress are paramount. The system allows youth to grow and maximise their potential, the demands of the job help make the young “managers” more mature and capable of learning a great deal rapidly.

The military is credited for improved problem solving capacity, better ability to cope with physical difficulties and emotional tensions, enhanced independence, self-confidence, and a greater willingness to take responsibility among its cadres. Experience with critical events, encounters with more dilemmas, and exposure to different ethnic cultures broaden the soldiers` personal and social horizons.

Military service provides specific competencies that are transferable to entrepreneurship. The military training acquired serve as an important asset in the development of entrepreneurial quest, success, and potential to create start-ups. Start-ups have been recognised as significant creators of wealth and employment in a country. Military units in collaboration with universities must create intensive training courses such as “boot camps” which train entrepreneurial and programming skills.

While several men and women that make it through the special military units would have been a success in life without the programme, everyone agrees the military gives them a tremendous network advantage, one of the most powerful weapons for business success.

Alexander Maune is an IoDZ member as well as a Talmudic and Zoharic scholar, lecturer, researcher and consultant contactable on [email protected].