- Posted January 22, 2014 by
Tel Aviv, Israel
Isaac Dabah, Delta Galil - Top 50 CEO’s In Israel – Calcalist
If you’re one who reads the financial newspapers in Israel, you probably know one of the biggest financial newspapers – ‘Calcalist’, has issued a list of the top 50 CEOs in Israel. In the honorable 3rd place, after moving up 11 places from last year’s ranking, is ‘Delta’ CEO – Isaac Dabah.
5 years after acquiring ‘Delta’, He tells us about the changes he has made in the company, what he plans for the future, and shares some of his experience and business philosophy.
In the midst of the stormy weather that hit Israel mid-December, Isaac Dabah watched the stormy sea from his office, located high above the rainy streets, in the 19th floor of the Textile House in Tel-Aviv; “yesterday was our best day in this quarter of the year. When it’s cold outside, people buy more pajamas, fleece clothing, it’s a different world”
Dabah (56) is the kind of man that would look at the sea and think about fleece. Even in today’s market everybody knows this man is all about making a profit, a quality which is greatly appreciated: it’s probably why this year he came in 3rd in the “Calcalist” newspaper rating of top 50 CEOs in Israel, after last year he was rated 14. He’s a merchant in his core, which is well noticed in a company that for years was run by Dov Lautman – an industry oriented business man. Back in 2008, when Dabah bought over the company and became CEO, a change has begun, one that resonates to this day: less manufacturing in Israel, more brands, more profit. These days 50% of overall company sales are of well-known brands (compared to 20% in 2008), and the company has grown from 623 Million dollars in sales with an operating profit (pre one-time clause) of 900 Thousand Dollars in 2008, to 818 Million Dollars in sales last year and an operating profit of 50.7 Million, which is 50 times as much. This year, the estimation in the company is that the operating profit will rise higher than 68 Million Dollars.
“We may have started a revolution, but we’re still not finished. We still have a lot of work ahead of us”, Dabah says. He entered the ‘Delta’ board back in 2005, when he bought 21% of the shares. “Why did I invest in ‘Delta’? Because I spoke to some clients and they told me they love the brand, but ‘Delta’ is hard to work with and the merchandise always arrives late”, he jokes. “So I thought it would be an easy fix. But I was wrong, it was very difficult”
One of the main challenges, he says, was changing the management culture in the company. “There was a culture of ‘you work hard, you did your share, everything is fine’. Now everybody has target numbers, the numbers are important and I don’t want to hear excuses if you didn’t make your target number. As a manager you have a responsibility, and you have to stand up to it. We track the numbers monthly, we have monthly meetings with every division, each division is fully responsible for its profit and operation, it does everything by itself. And if you want to get a bonus – you better make your target.”
How do you provide an incentive for managers in the long run?
“That I learned from the Chinese: you work by a three year program, in which a quarter of the bonus is set aside every year, and given only if a manager made his third year target – then we add an extra 50% to the sum he retained”
What if a manager doesn’t make his target due to circumstances beyond his control?
“If there was an event that is beyond our control we change the targets. We already did that in our factory in Egypt, when they started losing due to the demonstrations – we changed the target. It’s something I learned in high-school – I had a teacher who didn’t want to even hear excuses when you were late for class, he didn’t even care why you were late. He knew when something happened, and as long as you were only late once or twice it was OK. Here in Israel everybody is your friend so it’s hard to tell someone they don’t get a bonus, when I started this job I arrived as a stranger, so I had the advantage of not being friends with anyone, but now… it’s a bit harder” he jokes.
Dabah is happy to enumerate the changes that were made to the company; “when I arrived here there were nine different IT systems, which is unbelievable. Now we have one and every day we know exactly how much merchandise comes in, how much is sold, and how that compares to the targets”. One big change that was made is steering the emphasis away from the production: “With me, the focus shifted from manufacturing to ingenuity – we manufacture in Bangladesh or China, and we keep the focus on the product. We leave some of the production here, not enough to burden us, if there’s no work we won’t take jobs at a loss just to keep the machines running here. This gives us more flexibility”
Things learned from the family business’ failure
Dabah (56) was born in Jerusalem, lived there for 12 years and still speaks perfect Hebrew, ‘spiced’ with the occasional word in English. His father came from Haleb to Israel in 1925 at the tender age of a month, his mother – immigrated to Israel in 1948 at age 16, straight to a transit camp.
“My father worked at the Israeli IRS and my mother was a housewife, but all of our extended family lived abroad in the US and Panama. In 1969 my father’s brothers told him he should come to the US. Moving to America was very hard for me, as well as for my parents. We landed in Brooklyn, I went to public school and hand no friends at first. But then I started playing basketball, so I had a lot of friends”
Were you financially successful?
“At first it was very hard. My father worked as an accountant, then he tried making it with a partner and that failed, he worked for an import/export company. After a while he brought my brothers to work alongside him at the import/export business, trading clothes and other products. That was only half-successful, it had its’ ups and downs. In the end- it didn’t work.
“I left college in 1979, never graduated – that was a mistake. I worked for the family company for a short while and then left to work on my own. When I told my father I wanted to leave he didn’t like it, but the family company wasn’t working, everyone was losing and that taught me to be more cautious and conservative”
With those life lessons in mind, he bought ‘Gloria Vanderbilt’ in 1993, a clothing brand known mostly for its jeans, for 5 Million Dollars. “I was in my 30s back then, and my brother in-law, a great business man who specializes in real-estate in Argentina, helped me buy the firm for 5 million dollars. He gave me the initial sum but I learned how to work on a budget.”
“We were counting every penny back then. We bought a company that was in a big problem and brought it to a profit, after ten years we had 100-110 million dollars of sales each year and an operating profit of 19%. But at that point I was looking to have cash, financial security for my family, so I decided to sell the company. I came out of that sale with 154 million dollars”