Operational Leadership: From Founder → Scaling → Professional Managers

My biggest takeaway from this round of classes is Start with Charisma, Scale with Process. Without process, there's no optimization. If you want to scale, you first have to build up your inner strength. Professionalizing management is a process of organizational change. A large company may need a 20-year handover. Case Summary

The 2024 decision: three brothers gather in a backyard in Dubai to celebrate CEO J. Joseph completing nine years in the role. He'll step down at the end of this year, and for the first time a non-family CEO will take over. The strategy for the next five years: double down on Saudi Arabia + double down on modular construction. But the organization is going through the biggest centralization and digitization overhaul in its history — is it safe to "raise the bet" now? Background: the market and the window. Saudi Vision 2030 has brought a wave of giga-projects (estimated at about $1.25T in total). In 2023, new contracts signed in the GCC hit $205B, a record high, mainly in Saudi Arabia and the UAE. Modular grew from $2.9B to $3.5B in 2020–2023, with demand strengthening. But by 2024 the Saudi sovereign fund's cash was only about a quarter of its 2020 level; fiscal shortfalls are visible, and the window is limited. Decentralized expansion (1993–2002): founder Chebel set up AMANA in the UAE in 1993. It entered a new country every year, with country managers given broad authority plus profit-sharing, like "little kingdoms." The result: low efficiency, high risk, and a loss-making headquarters. At this point Riad was brought in, on the condition that a corporate headquarters be built, operating manuals written, and key powers such as approval of large contracts pulled up to headquarters. In 2005 the group returned to profit. From then on it held for years to retaining ≥50% of net profit each year as a buffer, did only short-cycle industrial contracting, and kept an 80/20 client mix dominated by private and quasi-government clients to sustain cash flow (he compared the portfolio to "plywood" — if one layer cracks, the others hold it up). "Chase profit, not revenue" (2008–2013): after the financial crisis, to protect jobs, a majority of the leadership team voted to enter oil and gas EPC. Five projects quickly exposed underestimated complexity and labor costs, and by 2012 they had lost several million dollars. The lesson: chase profit, not revenue. In the end the company developed its "three risk questions": what have we done / where / for whom — if two of the three are "never done," be cautious; and it added a bidding gate scored on 25 indicators. At the same time it merged several entities into one legal entity, filled the CFO role, and spent five years gradually improving back-office accounting and processes. Disrupting itself, betting on modular (2010–2016): Chebel insisted on disrupting himself first. He judged that Middle Eastern clients prefer "solid walls," so he chose concrete boxes over light steel and light walls — technically harder, but in line with the local preference for a "sense of permanence." In 2010 the company built 150 prototype rooms at one of its own remote sites; in 2015 its first external client project was delivered two months early. In 2016 the modular team was branded DuBox and delivered 250+ Gardenia townhouses in Dubai in one go, validating the technology and the business case. The pain of independence and the merger back (2016–2017): DuBox's early projects were sparse; the factory and workers were often idle, and running independently made it hard to move people across projects, so it burned cash. In 2016 DuBox was merged back into the group: staff went into a shared pool, procurement gained economies of scale, and incentives were consolidated; the same year Riad became vice chairman and J. Joseph became CEO. In 2017 the industry turned down; AMANA went from 14 BUs → 4, centralized banking/cash/procurement at headquarters, gave departing managers "golden parachutes" and gave those who stayed raises/bonuses, completing the re-centralization quickly and quietly — and it moved into data centers as an adjacent track, opening a new pipeline. The big breakthrough in the Saudi window (2019–2021): the Saudi government was actively looking for innovation. In 2019 AMANA won Turtle Bay and delivered it on schedule in 22 months during the pandemic; it then won the Red Sea project. The advantages were very clear: less environmental disruption, material waste cut by about two-thirds, only a tenth of the on-site labor, and — more importantly — materials in an urban factory are significantly cheaper than at a remote site. The company realized from this that in remote settings, modular has structural cost and speed advantages. Productizing the "room" — DuPod (from 2020): DuPod was incubated in the Red Sea project: high-end "bathroom/kitchen" pods whose plumbing and electrics plug in like a "washing machine connection." A standard catalog was tried first and didn't work — clients preferred customization — so they switched to BIM (3D collaboration), letting clients settle the details in the digital model in one go, with physical mock-ups when needed. The goal is to productize: in the future you'd pick a "ready-made office" the way you browse IKEA, installed in six months; skipping the design phase can shorten the total schedule by 20–30%. But the price is a mandatory "design freeze" + Day-1 procurement; once a concrete box is the wrong size, it can only be torn down and redone. This forced the company to rewrite its processes: the project manager is fully accountable for schedule/budget, and even "who handles paint touch-ups on site" is written into the responsibility matrix. The 2024 picture and the "changing of the guard": by 2024, AMANA had nearly 6,000 people and 1,500+ projects in total (including Amazon and IKEA), 18 consecutive years of profit and zero debt; about 50% of revenue in Saudi Arabia and 40% in the UAE; industrial contracting is 85%, modular about 10% but growing fastest, with 186,000 square meters signed since 2020 and about 35% completed. Shared services continue to roll out; profit-sharing remains, but bonuses are concentrated on Top Performers. A non-family CEO (Abboud) takes the baton; the new CFO/CHRO, after coming on board, pointed out areas for improvement: not enough KPIs, headquarters costs on the high side, an ERP is needed, geographic concentration is too high, HR needs to be institutionalized, and so on. The open question: can you "raise the bet" in the middle of change and be both fast and steady? Opportunity: the Saudi window is big, client culture in the short term favors the "permanence" of concrete, and AMANA is both a general contractor and a modular supplier, delivering faster and more efficiently. Risks: rising concentration in Saudi Arabia; Vision 2030's funding pace is tied to oil prices; modular is still ramping up and depends heavily on front-end design freezes; organizational digitization/governance is still in progress. The core question: can it find a balance between "discipline (centralization, process, cash retention) + agility (BIM co-creation, productization)," and, once the founding family steps back to the board, "institutionalize" the culture and operating discipline? Class Notes 1. A case of a mature company. The company's business falls into three parts: the cash cow, the future cash cow, and possible opportunities (new regions, new technologies, new industries) 2. If we want to add on something, it has to be adding on to the core. When growing, choose things with strong synergies. 3. Is the Founder Replicable? Can the founder be replaced? IP - Knowledge —— Yes Standardized —— Yes Charisma —— No

4. What are the early decisions the founder has done? What special things did the founder do early on to succeed? Taking risk Sharing the profit not the losses No Rules

5. How to Scale without Breaking? Discipline × agility: centralize key decisions, standardize processes, make cash the North Star; at the same time let the front line keep its speed, and turn innovation into a closed loop of "controlled experiment → stage gate → merge and scale up." This combination is what has supported AMANA's 18 straight years of profit and zero debt, and lets it accelerate in the Saudi window without crashing

6. Think about small steps instead of big one unless you have a very clear direction

7. New Market : look at the balance sheet

8. Start with CHARISMA ➡️ Scale with PROCESS Charisma is never enough

9. No Process, No Progress 10. Structure is Strength There is structure everything is a little bit Everyone understand what is required What is the boundary What is the difference between structure and process? why structure is strength not process?

10. Process is the Bridge

11. Founder is replicable because the process is there.

Transition from Family run to Non family run: the transition from founder to professional managers

It is an art instead of a science. Tone Autonomy —— autonomy in setting the tone Silent Mode — step away, don't interfere, let things play out for a while Longrun Package Must Give Space — give them space CEO Coach and Board Coach —— both sides need to learn how to make it work Governance Model CEO is in charge Who is deciding what — what goes to the board Honey Moon 9 months Co Founders are like parents a corporate officer working with him A 20-year succession plan 10 years with him 5 years more space 5 years just watch totally 20 years of transition Internal team 4 people, earn their share need equity, minority

How do you work with your siblings? disagreement — sleep over night, make an agreement together inside the family 3 times a week, chatting over lunch —— management and assistant, deciding CLOSE TO each other : office close to each other

How does the second generation get involved, or not? How 2nd generation included? Or not included? No 2nd generational business from an early stage Train 2nd generation as a responsible shareholder More flexibility for them to join, able to adapt to the interest of the younger family members 8-10-44 years old 2nd generations now