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 When: Monday afternoon, 3:00 pm
Where: Iscar’s headquarters, Tefen Industrial Zone, in the Western Galilee
Who: Dr. Moshe Goldberg, manager of marketing, training and engineering support; and Gideon Laymon

Iscar is a B2B business producing tools for the metal industry. Before getting there it was very hard for me to conceptualize what they do and how to wrap my brain around the idea that this was innovative and hi-tech. Every time I heard the name I kept thinking about electric cars because we heard so much about Better Place and Better Place’s name only talks about their concept (make the world a better place) not their product; there seemed to be a missing piece to my cognitive memory which was easily filled by the constant juxtaposition of our highly anticipated upcoming visit to Better Place with our equally hyped upcoming visit to Iscar: Israeli car – Israeli electric car. This was further reinforced by the lack of any tangible product with which to associate Iscar. I heard about tools but I couldn’t imagine how that would be something innovative enough to attract Warren Buffet’s attention. Even when we got there and started browsing some of their most innovative products, I was still associating “big drill bits” with “giant machines at construction sites that make incredible amounts of noise and are able, through updated technology, to move more concrete and earth at once”. It just seemed like a nice manufacturing company and I still couldn’t understand what all the hype was about.

It was only as we started hearing more about the company that it dawned on me that I probably never have, and likely never will, actually come across their products in real life. They don’t sell anything to consumers; it is strictly tools designed for the manufacturers in the large metal industry. We experience the products produced using their products. Now, I was able to grasp the hi-tech innovation involved. Iscar stands for “Israel carbide” as in tungsten-carbide: the hi-tech material used on the cutting tips of the tools that are able to withstand the extreme temperatures caused by the intense friction (more than 1,000 degrees Celsius!) Click here to link to an article by Dr. Goldberg about the science involved. Click here for another article.

After hearing a little bit more about the company and going on a tour of the plant I understood why there was a high level of security around the plant and why we were politely instructed not to take any pictures.

One of the members of the class asked what Buffet liked about Iscar that prompted him to make his first overseas investment. Dr. Goldberg answered:

  • The level of innovation
    • Iscar customers expect new products every 2 years
    • We took a first-hand tour of the large R&D department where employees are grouped in clusters to work on different projects. While there I noticed a group of about 6 employees hovering around a computer, and several people moving from sector to sector clearly discussing their ideas with other employees.
  • The human factor
    • Many of the factors discussed in Start-Up Nation that lend themselves to Israel’s innovative culture
  • Profitability
    • I was a little unclear exactly what he was referring to with profitability, but he must have meant that Iscar’s business model allows for a higher profit margin than other companies in its industry.

Pictures: We weren’t allowed to take pictures of the plant or the products but we have some pictures of our meeting with Dr. Goldberg.

Our meeting (courtesy of Prof. Bachenheimer)

The outside of the building, displaying the company’s motto (courtesy of Nikhil)

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