The Inconvenient Truths of Jewish Innovation
The Inconvenient Truths of Jewish Innovation
And five ways to solve them, once and for all.
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Is it not mind-boggling that Jews are among the most innovative people across the world, and that real innovation in the Jewish world is mostly uncommon?
In fact, the only real innovation — which I define as innovation that consistently achieves impressive scale, widespread consumer adoption, and ongoing engagement — to come out of the Jewish world during the last few decades was Jdate in the 1990s, and then Jswipe in 2014. Both were acquired by Spark Networks, which operates a variety of niche dating platforms (meaning it inherently has nothing to do with the Jewish world).
“The difficulty for the Jewish community is to innovate without succumbing to faddism,” Amy Sales, formerly of Brandeis University, wrote as part of a research assignment back in 2007. “The community regularly shifts focus from one sub-sector or enterprise to another, always in search of the next ‘big thing,’ the ‘magic bullet’ that will make Jews out of its children.”1
Fifteen years later, has anything really changed? Especially against the backdrop of our Jewish world’s mounting and in many cases unprecedented challenges — which Jewish Funders Network President and CEO, Andrés Spokoiny, recently described as “a crisis of potentially devastating consequences” that requires “dramatic urgency”2 — such as:
Dropping Institutional Affiliations
Shifting Jewish Ethnography
Israel-Diaspora Relations
Unengaged Younger Generations
Lack of Transformative Leadership
Jewish industry executives and donors incessantly chirp about innovation — and more broadly, about “moonshots” — yet seem to rarely engage in the uncomfortable and uncertain work of making it come to life. By and large, I believe this is precisely why we are experiencing so many mounting and in many cases unprecedented challenges. Or as the great Stoic philosopher, Seneca, famously said:
“It is not because things are difficult that we do not dare. It is because we do not dare that things are difficult.”
The Four Types of Innovation
Many people who work for, volunteer at, and/or generously support Jewish organizations will read this piece and adversely claim that such organizations are indeed pursuing innovation. And they would be absolutely right, because there are actually four types of innovation:
Basic Research
Sustaining Innovation
Breakthrough Innovation
Disruptive Innovation
Generally speaking, most innovation happens within the sustaining variety, “because most of the time we are seeking to get better at what we’re already doing,” according to Greg Satell, the international bestselling author of Mapping Innovation. “We want to improve existing capabilities in existing markets, and we have a pretty clear idea of what problems need to be solved and what skill domains are required to solve them.”3
In this regard, the Jewish world is simply a product of the environment, so to speak, which helps us understand the reason most Jewish organizations are the masters of sustaining innovation. That is, they tend to get better and better at providing things people want less and less.
“When that happens, innovating your products won’t help,” Satell wrote. “You have to innovate your business model.”
Yet, this elementary advice creates two quandaries for many Jewish organizations:
They don’t have a legitimate business model to begin with; and
Innovating one’s business model (AKA disruptive innovation) involves serious risk-taking and tangling with the unknown, to which we know such organizations seemingly have allergic reactions.
Hence why the organizational strategy of many Jewish organizations — especially established, mature ones — is not effective for real, disruptive innovation. This isn’t my opinion, though; it was researched at length by Clayton Christensen, the late Harvard University professor and businessman who coined the term “disruptive innovation” and authored the international bestselling book, The Innovator’s Dilemma.
According to Christensen, established, mature firms firms purposely focus their resources on the status quo. To expect their processes that accomplish the status quo to also nurture real innovation “is akin to flapping one’s arms with wings strapped to them in an attempt to fly,” he wrote. “Such expectations involve fighting some fundamental tendencies about the way they work and about how their performance is evaluated … These are the reasons why great firms stumbled or failed when confronted with disruptive technology change.”4
What’s more, a calculated focus of resources on the status quo causes “innovative people to flee an organization,” Amazon founder Jeff Bezos wrote in his book, Invent & Wander. And in the Jewish world’s case, I would argue that our status quo repels innovative people from entering the professional Jewish world altogether.
“Our natural aversion to change can lead us to defer any change that isn’t perfect,” said Noam Wasserman, the dean of Yeshiva University’s School of Business. “We let the enemy of the perfect solution be to do nothing. We are handcuffed by hope that we will indeed encounter the perfect situation.”5
However, perfection is a myth and thus unobtainable. Change is always hard because it deals with the unknown. To break the handcuffs of perfection, Wasserman suggests the “staging approach” — breaking down a big decision into smaller ordered sub-decisions, and treating each smaller item as an experiment. Successful experiments receive further resources and attention; unsuccessful experiments are abandoned, and the resources and attention are redeployed to other efforts.
This is exactly what Daniel Libenson, the founder of Judaism Unbound, said in his ELI Talk: that the future of Jewish leadership is “building prototypes and experiments … which can evolve and change and grow and ultimately be a new Jewish future that comes from the outside in.”6
In the private sector, this is known as research and development (R&D).
R&D in the Jewish World
According to Investopedia, research and development includes activities that organizations undertake to innovate and introduce new products and services — often the development process’s first stage.
“The term R&D is widely linked to innovation both in the corporate and government sectors,” Will Kenton of Investopedia wrote. “R&D allows a company to stay ahead of its competition by catering to new wants or needs in the market … Without an R&D program, a company may not survive on its own … Corporations experience growth through these improvements and the development of new goods and services … Companies spend billions of dollars on R&D to produce the newest, most sought-after products.”7
According to public company filings, these companies incurred the highest research and development spend in 2020:
Amazon: $42.7 billion
Alphabet, Inc. (parent company of Google): $27.6 billion
Huawei: $22.0 billion
Microsoft: $19.3 billion
Apple: $18.8 billion
Samsung: $18.8 billion
Facebook: $18.5 billion
Let’s take Amazon as an example. As of the time of writing this essay, Amazon has a market cap of $1.22 trillion, which means they spent approximately 3.5-percent of their market cap on R&D in 2020. Imagine what the Jewish world, which spends around $25 billion8 in the U.S. alone, would look like if we spent 3.5-percent (nearly $900 million) on research and development.
In its defense, the Jewish world is marked by a whole lot of research. You can find a plethora of studies and data sets about Jews and the Jewish world every year from a variety of research bodies, such as the Pew Research Center, The Reut Institute, academic institutions, nonprofit organizations, and various types of foundations. The problem is that the Jewish world does a whole lot of research and a whole lot less of development. R without the D is like one hand without the other, like the Diaspora without Israel.
One of the reasons for this is because the parties tasked with doing the research are not developers, per se. This puts other organizations — who might be “better” developers — in a precarious position, since the research was not commissioned by or did not otherwise involve them, even though it very much relates to their organization and its mission.
We saw a near-perfect example of this when Leading Edge, a firm that helps Jewish organizations be more efficient and effective, published a survey about Jewish organizational workplace culture. As part of their findings, only 65-percent of Jewish organization employees believed leaders will support the organization in taking action as a result of this survey.
“We know that who does the research matters…” said Stacie Cherner, director of learning and evaluation at the Jim Joseph Foundation.9
In his international bestselling book, Skin in the Game, Nassim Nicholas Taleb refers to this type of problem as one of asymmetry: one actor gets the rewards (i.e. funding for conducting research), and another is stuck with the risks. He encourages people to “focus on symmetry and risk sharing” because “forcing skin in the game corrects this asymmetry.” For now, this widespread lack of “skin in the game” — i.e. having a measurable risk when taking a major decision — is a worrisome blemish in the Jewish world that must be addressed if we are indeed serious about tackling our mounting challenges.
Another reason why the Jewish world does a whole lot of R and whole lot less of D is because Judaism and its parts (i.e. the State of Israel, Zionism, Diaspora Jewry, political and social activism) have been relegated to nonprofits, NGOs, and government entities around the world. In fact, a report by The Reut Institute found that, of all the organizations in the fields of Zionism, hasbara, Diaspora Jewry, and the like, only three percent are businesses.
The issue with the predominance of nonprofits, NGOs, and government entities is that these types of organizations’ structure — compared to private-sector enterprise — inherently creates a myriad of compounding problems, such as:
Silos of assets such as consumer and donor data, fundraising, strategic messaging, and audience follow-up strategies and activities
Financial splintering (donors spreading their funds across an increasing number of similar organizations)
Bureaucratic inefficiencies, such as slow and arduous decision-making processes
Workplace cultures that favor hierarchical opinions and conventions over testing and data
A “one size fits all” approach in a world where consumers increasingly prefer individualism, interpersonal interactions, and hyper-customized options
Capital mismanagement and underutilization
Politicizing over productivity
Taleb says that actors must bear a cost when they fail the public, yet multiple people have told me that Jewish nonprofits, generally speaking, don’t measure significant and relevant outcomes. Instead, they often use “vanity metrics” to save face in front of their donors.
One organization, which produces Jewish media for YouTube and other platforms with a budget of more than $5 million in 2021, noted the rather impressive numbers of YouTube video hours and video views in their annual report. But they failed to mention engagement metrics, such as average view duration and average percentage viewed (collectively known as “engagement”) — both made available by YouTube — therefore eliminating opportunities to analyze the actual effectiveness of their activities.10 Or maybe, just maybe, they don’t want this analysis to take place…
In the private sector, conversely, we know that actors who do not perform well business-wise bear many costs, such as being put on notice, getting fired, demotion, and/or diminishing worth of their shares.
The good news is, we now live in a world of permission-less leverage — a direct contrast to the times when leverage was a matter of other people’s time and money, principally in the form of labor and capital. Nowadays, these barriers to entry have virtually vanished, allowing anyone with an internet connection and internet-connected device to build leverage, and do it much faster than conventional firms. This is precisely how, with literally zero working capital, we founded and launched our startup, IZZY – Stream Israel, and grew to 30,000-plus paying subscribers in less than 18 months.
Here’s another example: A new $1.8 million, four-year grant was created by a notable foundation that “aims to elevate the field of Jewish education through academic research.”11 My team and I, on the other hand, were able to come up with an efficiently implementable, globally scalable strategy and plan of action for “elevating the field of Jewish education” within no more than four months and essentially zero capital in hand. (If you want to see this strategy and plan of action, please email me and I’ll be happy to send it to you!)
“The old rich can throw their weight around with hundreds of employees and millions in capital,” Sah Kilic wrote in an article about permission-less leverage. “But with the advent of software and new media, you have Davids turning into Goliaths.”12
What the Nonprofit Jewish World Gets Wrong About For-Profit Organizations
Since proudly launching IZZY as a for-profit startup in 2020, I’ve unfortunately learned that the term “for-profit” is basically taboo in much of the Jewish world.
I can’t tell you how many people ask me if IZZY is a nonprofit, because this is the overwhelming standard in and among the Jewish world. Time and again, I proudly confirm that we are a for-profit startup, because recurring revenues create self-sustainability, self-sustainability creates growth, and growth creates greater impact of our mission: to enhance the world’s relationship with Israel.
This is one of many facets the nonprofit Jewish world gets wrong about the private sector: that organizations in the private sector also have missions to deliver non-financial impact. In fact, it has been repeatedly demonstrated that social and economic progress function together. During the 1300s in Florence, a “reciprocal credit system” was created which rewarded those who supported each other. As a result, their society flourished. Diminished self-interest and elevated trust and trade superimposed a commercial revolution.13
Societies with a high level of trust are richer than those with a low level of trust. Norway, a relatively rich country, for example, has a 65-percent trust rate among people. On the other hand, Peru (a very poor country) has only a 5-percent trust rate among citizens. For this reason and others, it would be amazing if we saw a higher level of trust in the Jewish world!
“Social and economic progress work together to make the world better,” Matt Ridley wrote in his international bestselling book, The Rational Optimist: How Prosperity Evolves. “Many people assume that social and political progress ultimately controls the economic progress a society makes. In reality, economic progress is the greater force [in] pushing society forward.”
Ridley mentions a number of prosperity-linked observations which I believe the existing Jewish world — mainly, the nonprofit sector — would be wise to adopt, such as:
1. Expansion of trade has led to the spread of trust among nations, resulting in the creation of wealth.
Translation for the Jewish world: Expansion of cooperation and collaboration between organizations and sectors will lead to the spread of trust, resulting in the creation of vital resources and impressive accomplishments.
2. Innovation and trade have put a stop to overpopulation and famine.
Translation: Innovation and cooperation/collaboration will put a stop to financial splintering, as well as the redundancies of multiple organizations serving similar constituents with similar products, services, and experiences. They will also put a stop to valiant organizations which suffer from lack of resources and therefore do not have what it takes to create transformative, lasting impact.
3. Cities have helped the spread of ideas through increased innovation.
Translation: Technology will help the spread of ideas through increased innovation.
4. Improvements in efficient energy use have been synonymous with human progress.
Translation: Efficiency improvements, typically a hallmark of the private sector, will be synonymous with progress in the Jewish world.
5. Trade and innovation makes poor countries wealthier, without increasing environment damage caused by climate change.
Translation: Cooperation/collaboration and innovation will make less-abled organizations more effective, without increasing damage to other organizations involved.
6. The level of sharing of ideas and living standards are directly related.
Translation: The level of sharing of ideas and progress in the Jewish world are directly related.
7. Without trade, innovation does not happen.
Translation: Without cooperation/collaboration, innovation does not happen.
Other facets that the nonprofit Jewish world gets wrong about the private sector include enlightened self-interest, a philosophy in ethics which states that people who act to further the interests of others ultimately serve their own self-interest. In the private sector, this is called serving the customer, a trademark of brands like Starbucks, Apple, Amazon, Zappos, and many others. In the Jewish nonprofit world, I find all too often that organizations are, first and foremost, really just serving themselves, often at the expense of their constituents and would-be constituents, as well as other like-minded organizations.
Dr. Erica Brown, Vice Provost of Values and Leadership at Yeshiva University, wrote that Jewish leaders “talk — always — about how much money we’re raising, but not about the problems we’re solving. In the words of leadership expert John Kotter, we are overmanaged and under-led. We organize, staff, program, and plan when we first need to create a bolder and more inspiring vision, set directions, align people, motivate, and heighten impact.”14
Another facet that the nonprofit Jewish world gets wrong about the private sector is the notion of competition. In the private sector, competition produces innovation, progress, and transformation. Hence why monopolies are legislated against in many capitalistic economies. But in the Jewish world, we know many organizations favor prohibition of competition, trying to mark their territory and keeping other organizations out of it.
“It is, of course, understandable why legacy institutions would want to assess whether [prohibition of competition] would protect their core interests against new entrants,” American Jewish University President, Jeffrey Herbst, wrote. “However, it is also problematic. It is very hard … to encourage innovation … while arguing against competition. It is not only existing institutions that can innovate; indeed, they are the least likely to be successful in changing the way of doing business precisely because they have been successful in the past and will find it hard to evolve.”15
In one story, a rabbi based many hundreds of miles from American Jewish University in Los Angeles called a university employee to complain. A congregant, the rabbi explained, was taking an online course from AJU’s Miller Introduction to Judaism Program, instead of a similar course taught by his synagogue. The distant rabbi argued that AJU was violating the precept of hasagat g’vul (literally “removal of a landmark”) which originally applied to moving land dividers, but has been extended over the centuries to warn against “ruinous competition” that threatens the property and commercial rights of others.
“Of course, for a university based on Jewish teachings and values to be accused of violating an ancient precept is disturbing,” Herbst wrote. “In fact, in the future, we plan to significantly increase the online courses offered out of Los Angeles because of the extraordinary demand that we have had for online offerings since the start of the pandemic. Our digital platform — created in the first weeks of the pandemic to provide general education — went from nothing to more than 60,000 registrations from people across the country and in 41 nations, demonstrating the ability of digital programs to reach previously distant large populations in a short period of time.”
Herbst pointed out how the news industry was completely unprepared for the digital disruption and responded from a position of weakness. We now know that the internet attacks local intermediaries situated between the “product” and the “consumer” with services generated at enormous scale out of Silicon Valley and Israel, for example.
Whether Jewish institutions that serve as such intermediaries, “now that they have been warned and observed the ruins of other neighborhood institutions, can do better is a central question for the Jewish future,” Herbst wrote.
He also pointed out that the prohibition on competition is particularly at odds with the idea of “creative destruction” championed by Joseph Schumpeter, an Austrian-born political economist who served briefly as Finance Minister of German-Austria in 1919 and then emigrated to the U.S. — becoming a professor at Harvard University. According to Schumpeter, the “gale of creative destruction” describes the “process of industrial mutation that continuously revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one.”
Herbst likened “creative destruction” to Silicon Valley’s mantra, “move fast and break things” — which he wrote is “the most recent update of Schumpeter’s vision, albeit with even greater expectations of the velocity of change. While Judaism has warnings against some excesses of Schumpeter’s vision … Judaism itself has benefitted from an openness to experimentation and adaptation of new approaches, in America and in Israel.”
“The issues around competition have suddenly become extremely relevant to the Jewish communal world,” Herbst added. “The pandemic has made digital learning and observance far more common than before, opening the possibility for many for the first time to participate in institutions far beyond their own communities.”
A fascinating statement titled On Live Streaming and Competition, posted by Rabbi Ariel Stofenmacher on the Rabbinical Assembly’s website in June 2020 noted:
“A new reality emerges, as the ease of cyberspace generates closeness, and every ‘virtual minyan’ and ‘virtual classroom’ is at the distance of a click in any and every computer all over the world, breaking physical boundaries and barriers. We are all now in the same neighborhood.”16
Rabbi Stofenmacher’s statement notes that new competition gives more choices to congregants, but also throws synagogues into a newly competitive world.
“It is crystal clear,” he wrote, “that there is a tension between offering people more diverse options and allowing congregations to serve their own constituencies and to maintain their sources of institutional livelihood.”
Similarly, the Central Conference of American Rabbis, the leadership organization of the Reform Rabbinate, considered the issues around competition in a response, titled Solicitation of Synagogue Members by Other Jewish Organizations. The rabbis queried:
“When another Jewish organization asks our members for financial support or seeks their participation in its programs or activities, does it ‘violate the boundaries’ that define and protect our synagogue community?”17
They answered the potential violation of hasagat g’vul by arguing that, under certain conditions, “Jewish law allows an existing business to restrain the entry into its market of a potential competitor, on the grounds that the competitor would destroy the livelihood (mekape’ach et parnasato) of the existing business. If the level of competition is not ‘ruinous’ — that is, if the entry of the competitor would not necessarily drive the existing merchant or artisan out of business — this restriction does not apply.”
The Reform rabbis claimed that, short of ruinous competition, it was inappropriate to establish barriers to entry, saying:
“When we actively discourage the participation of our own members in the work of other Jewish organizations (and, indeed, in the work of agencies in the general community that feed the hungry and care for the needy), we declare that our congregation is somehow isolated from the concerns that those groups address. A good synagogue, one that is truly committed to the cause of Torah, mitzvot, g’milut chasadim, and tikun ha’olam would not send such a message to its own members and to the community at large.”
Furthermore, Herbst correctly asserts that a clear definition of “ruinous competition” does not exist.
“If a new entrant causes a synagogue to lose 90-percent of its revenue, that is certainly ruinous,” he wrote. “What about 20 or 40 percent? Such declines in revenue over a short period of time would certainly be an enormous challenge and would greatly weaken many organizations, but would they be ‘ruinous?’”
“However, in economic competition a third actor appears: the consumer or congregant,” Herbst added. “One organization’s ruinous competition is simply another offering a price reduction or potentially more attractive services for the consumer. Jews or those who seek to learn more about Judaism flocking to new providers of learning is partially a sign that they have not been adequately served by the status quo. The best response by incumbents is to ask what is missing rather than suppressing the signal by contemplating limiting the competition.”
“What is needed is more competition rather than less,” he continued. “Rather than possessively erecting boundaries, we should be constructing abundant onramps for people who are searching and who can be enticed to enlist, enjoy, and embrace our institutions. Recasting competition in spreading Jewish knowledge as a service to an ever more diverse population that may not see their future with traditional institutions rather than a threat is one of the best ways to serve the Jewish future.”
How to Solve the Inconvenient Truths of Jewish Innovation
Solving the inconvenient truths of Jewish innovation is a two-prong approach that requires (a) the reversal of existing trends and practices combined with (b) the introduction of new or different trends and practices. I’ve distilled them into five foci: