Elements for Successful Organizational Shift, Spotlighted

On talking about the industrial sector, in the Kingdom of Saudi Arabia, it is necessary to pause for a long time, before the main potential of this sector, which has managed, over 5 decades, to be a basic building block in supporting the industrial sector, towards existence first, then excellence and uniqueness, in the output, Harvard Business Review spotlighted.

Here we are talking about a government institution that, at the outset, has get rid of the mantle of bureaucratic work, that is usually adopted by the government apparatus and its red tape saga.

It decided to move towards agility in performance and empowered itself, by providing financing programs and advisory services to its private sector clients.

Henceforth, it is not surprising that Harvard Business Review described the Saudi Industrial Fund as the godfather of industry, in the Kingdom.

Projects financed by the fund vary between major, medium-sized and other small-sized projects, giving the observer that the fund’s tasks and outlook are comprehensive.

Even though it is paying increasing attention to small and medium-sized projects, where the number of projects is more than 80% of the total number of approved loans.

The fund was established to support the private sector, in various industrial fields, whether by providing financial or advisory support to the sector.

It provides medium and long-term loans for new establishments, modernization and expansion of factories, in place, bringing the volume of loans since its establishment until September 2021 to 4,761 loans, with a total value of more than SR196 billion.

The Industrial Fund started with a capital of SR500 million, only 48 years ago, and it has been, since, raised several times, in line with national priorities, and in 2019, its capital rose to SR105billion.

Harvard Business Review confirms in its report, on the Saudi Industrial Fund, that the launch of the Kingdom’s Vision 2030, was the whistleblowing for a start of a new round of the fund, to enhance its role, in developing the national economy.

Within 5-year, the fund was able to experience the institutional shift, to keep pace with the vision’s goals.

The magazine adds that the fund’s adoption of a new strategy, that contributes to achieving the industrial shift, that the Kingdom aspires to, was a primary goal, especially after the main financial enabler for the National Industrial Development and Logistics Program became one of the most important programs of the Kingdom’s Vision 2030.

It pointed out that the most prominent change that the fund has undergone, in recent years, after setting the vision, is the amendment of its statute to extend its support to 4 different sectors: industry, mining, energy and logistics, instead of supporting industry only.

Harvard Business Review pointed to the digital transformation, indicating the fund’s efforts to redesign its all operations to become fully automated.

The result describes that it was impressive for this digital transformation, as the time for approving loans was reduced to a maximum 5-month, only, instead a process requiring 11-month, on average, before.

The fund crowned its success, in digital shift, by obtaining two awards, in the gold category within the Middle East and North Africa Stevie Awards, in addition to the IDC Award for Excellence, in Digital Creativity for the Year 2021.

Despite the Coronavirus pandemic, the fund has managed to achieve great success, and showed flexibility, in dealing with the pandemic, as the fund achieved exceptional numbers, in 2020, as it approved loans worth more than SR17 billion, the highest value, in its history.

In the case of the Saudi Industrial Fund, the famous magazine confirmed that the state of change, is no longer just a proposal submitted by an active manager and remains suspended, until the completion of the current agenda of the institution.

That is the organization’s strategy, if it wants to survive.

Harvard Business Review indicates that major institutions are facing difficulty, in smoothly traversing the path of institutional change and transformation, especially government institutions, as it cites some results of studies, indicating that 74% of transformation efforts, in the private sector are doomed to failure, and the percentage rises to 80%, in the government sector.

However, the magazine indicated that these disappointing results are offset, albeit, in lower proportions, by successful pioneering experiences, and cites the experience of the Industrial Fund, in its journey towards change, as it goes on to describe the journey, noting that the fund worked to establish new business sectors.

Subsequently, the business development and strategic planning sector, in question, appeared.

The fund has managed transformation and innovates products and services that fit with customers’ needs and serve the goals of the Kingdom’s Vision 2030.

It also has worked on creating initiatives, that serve transformation, such as the local and international partnerships initiative, to enable the industrial financing system.

In launching the fund, Harvard represented a distinct initiative, regarding partnerships with major companies such as Aramco, Sabic, STC and Saudi Electricity, to support them in the localization of supply chains, where if a company needs certain products, that are not manufactured, in Saudi Arabia and does not want to import them.

The fund finances national factories to manufacture these products, thus reducing the costs and helping localizing the manufacture of these products, which serves the Kingdom’s Vision 2030.

In addition to its financing services, the Industrial Fund provides advisory services to its clients and others to raise awareness of potential investment opportunities, in sectors such as energy efficiency and industrial digital transformation, especially as they are relatively new areas for the Saudi market.

While the investor and client may not be aware of the opportunities available, in this field.

Here we have provided a summary of a 12-page report, and for those who want to review it, they shall refer to the distinctive report of Harvard Business Review, on the Saudi Industrial Fund.