With U.S. unemployment still hovering above 9%, there is a lot of hand wringing about innovating our way out of economic malaise. If the economy can create enough start-up companies, so the thinking goes, the benefits will be enough to swamp out poor policy decisions by politicians who created the economic mess in the first place.

Alas, no one really knows the formula for mass-producing start-up companies. Efforts aimed at recreating cradles of innovation like Silicon Valley have generally produced mediocre results.

So it is useful to analyze parts of the world where start-ups do, in fact, flourish. The country that probably holds first-place honors in this area is Israel, which has the highest density of start-ups in the world, 3,850 at the most recent count, one for every 1,844 Israelis.

It is fair to ask what kind of environment breeds these sorts of figures. And that is what Dan Senor and Saul Singer did in a recent book called Start Up Nation. One thing that becomes immediately clear from their research is that most countries would have a difficult time duplicating Israel’s prowess at minting start-ups.

But perhaps the biggest point in Israel’s favor for nurturing start-ups is the fact that most of its citizens serve in its military, in various capacities, well into their 30s. For one thing, pervasive military service breeds healthy questioning of orders regardless of who gives them. One reason: In civilian life, a lieutenant might well report to one of his sergeants. And Israel’s size (it is a bit larger than the state of New Jersey) oftentimes forces its residents to pick up multiple skills. Their jack-of-all-trades mode of agile thinking works well in many start-up settings.

There is one area in particular where the U.S. could learn something from the factors driving Israel’s start-up mentality. In Israel, a person’s academic past is often less important than his or her military past, say Senor and Singer. Elite forces are trained in finding cross-disciplinary solutions to specific military problems. The same knowledge and experience is ideal, they say, for creating new companies.

That isn’t to say the U.S. services don’t impart the same kind of training, but, “When it comes to U.S. military resumes, Silicon Valley is illiterate,” say Senor and Singer, who go on to remark about the waste of excellent leadership talent coming out of Iraq and Afghanistan: “The American business world doesn’t quite know what to do with them.”

A typical experience is that noted by one American vet who managed large numbers of people and equipment in a war zone. After explaining all this during a job interview, the response was, “That’s very interesting, but have you ever had a real job?”

That kind of attitude doesn’t bode well for the 1.4 million U.S. citizens on active duty and 800,000 reservists whose military training could help reverse the current economic gloom.

— Leland Teschler, Editor

Copyright 2010, Penton Media Inc. All rights reserved.

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