Who on earth is Jacob Harpaz?
Jacob Harpaz? Who's that, most of you are asking. His name doesn't appear in the papers. Everybody's heard of Iscar, which Warren Buffett bought from its founders, the Wertheimers, at a company valuation of $5 billion. But although it's the most successful company in Israel, nobody knows who its CEO is.
That's because Harpaz keeps to himself. No interviews, no photos. He doesn't attend "events." It isn't that he has anything to hide: He's perfectly pleasant and charismatic, and has achievements that few in Israel can parallel. He just isn't a spotlight seeker.
Nobody at Iscar talks with the press. Ever. But I had the fortune to join Buffett's tour of Iscar's plants in China and South Korea. I spent three days with them, watching their dynamic and seeing their unique organizational culture. Which included Harpaz pleasantly avoiding all questions. "Ask Eitan [Wertheimer], ask Buffett," he'd smile.
I persisted, dogging him for three days. The first night, at Dalian, was the strangest. One of the Iscarites told me by the bye that management was having dinner with a Chinese businessman who owned a tungsten mine. Iscar uses tungsten powder to make its blades, and at the time, it was in short supply and being rationed by Beijing. Iscar desperately needed the Chinese tungsten, and in China, doing business involves drinking.
We went to a restaurant. I found myself sitting with Harpaz, Wertheimer, the Chinese businessman and his translator. Harpaz was focused like a laser on one thing only: making the Chinese businessman happy.
After half an hour, the ceremony began. The Chinese stood up and toasted Iscar (I think, heavens knows what he actually said), raised his glass and said, "Gan bei!" He downed the lot and signaled for more. One after another, all the Iscarites arose and repeated the ritual, toasting the businessman.
When my turn came, Wertheimer gave me a tip that saved me: "Say you're sick and mustn't drink, because once you begin, you'll be expected to continue all night. If you don't drink, they'll think you're rude." I obeyed, then signaled Harpaz. He arose, toasted in Hebrew and Chinese, drank, and signaled for the next round. The ritual lasted almost an hour. En route a lot the Iscar managers broke, except for Harpaz. He kept drinking, to keep the businessman happy.
The lessons from that night include: 1. At Iscar they'll do anything, but anything, to achieve their goals. The client (or in this case, supplier) is king. 2. If you want to be CEO of Iscar, you have to be able to drink like a fish all night, even if you got up at 6 in the morning with Warren Buffett. 3. Harpaz has an iron stomach.
I got back to the hotel a wreck. Early the next morning I found Harpaz and the Iscarites fresh as daisies. You'd never think this cheerful crew, completely innocent of posturing or self-importance, were one of the best managements in the world, according to Buffett himself. Yet they talk about nothing but business and clients, while needling one another nonstop.
Over time I realized the secret of Iscar's corporate culture: Almost all its managers have worked at the company for decades. They grew up together. They come, and they don't go.
Ostensibly Iscar has a clear hierarchy, but it's run practically like a family business. Twenty or 30 managers report directly to Harpaz.
On our third day of nonstop action, we were in South Korea, and I got it. Harpaz is a machine. He showed no signs of fatigue. In late afternoon, after a hideously hectic day of scurrying about with Buffett and the press, Harpaz held a working meeting with the management of Iscar Korea. Some 30 to 40 engineers, department managers, sales and marketing men, all Koreans, clustered in a lecture hall. Harpaz sat in the middle. The screen showed slides of product lines and sales, market size and most importantly, market share.
Night fell and the slides kept coming. Market share is what they dream of at night, at Iscar. That's the parameter by which Harpaz measures the company's performance. Don't think for a moment that Harpaz's crowning moment was the sale of the company to Buffett. No: It was when Iscar passed Kennametal, the biggest American player in cutting technology, and became second only to the Swedish company Sandvik Tooling.
All Harpaz really wants is to be No. 1. That may take a while, because Sandvik is enormous. But the Iscarites are patient.
Iscar has 140 subsidiaries in 65 countries. The management is generally local. The central Iscar management shows great respect to the local culture, and works with it, not against it. Iscar would never force an alien culture onto its units. The only value transmitted from headquarters is: grow. Then grow more. Increase market share.
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