Chairman and Managing Director, Larsen & Toubro, A.M. Naik’s passion and commitment enabled him to bring about the required changes to grow the company’s revenue from Rs. 109 billion to Rs. 46,108 billion. Practicing the philosophy of ‘change is a way of life’, he has driven growth at L&T through emphasis on ethical governance, customer centricity, people power and entrepreneurial innovation. In a conversation with the authors, he talks about the crucial need for entrepreneurial leaders to multiply value for the organization.
Excerpts from the book In Search of Change Maestros* by Dr. Pritam Singh and Dr. Asha Bhandarker

While A. M. Naik inherited a conglomerate organization with a great history, which had great talent, where people had a sense of belonging, it lacked adequate focus and direction. His keen observation of global trends was able to unfold in time, the roar of competition from across the globe that was going to hit India, and hence enabled him to prepare L&T for the expected tsunami of competition. His strong belief in ensuring excellence is a journey, and not a destination, and his focus on achieving better each time, enabled him to bring about the required transformation to take the company to sustenance.

Turnaround strategies at L&T
Quest for excellence: The approach of being constantly in the quest for excellence is introduced through the questioning approach. To see everything through a new lens that strives to improve all the levers of competitiveness. There is a continuous and unstoppable drive to seek excellence in everything.
Thinking tomorrow today: They restlessly scan the emerging trends in order to map the future. There is a constant focus on identifying issues and challenges, and thus, they prepare themselves in anticipation of the imminent changes.
Global thrust: There is an active thrust on thinking global – global scale, strategies, processes and managerial talent. This became the major mantra to de-risk the business, which soon became a part of the collective vision and mindset of people.
Focused growth strategy and value creation: There was an active thrust on value creation through divestment, portfolio restructuring, building cost and quality competitiveness, along with customization, innovation, speed of response, and people power. This was coupled with a continuous focus on re-aligning the business strategy to respond to the changing business context.
Speed: In a fast-paced world, where everyone is running, walking is equivalent to moving backward. L&T was transformed from being a ‘sleeping giant’ into a ‘sprinting giant’ with the introduction of speed, urgency and quick response to move ahead of competition.
Empowerment: The company reaped the fruits of nurturing a highly empowered work culture by enabling tremendous amount of togetherness, loyalty and sense of belongingness amongst its employees. This led to a greater identification with, and a sense of pride in being a L&T-ite.
Entrepreneurial innovation: Great organizations attempt to make continuous efforts to avoid the trap of inertia by striving to promote a culture of risk taking, innovation, empowerment and tolerance towards mistakes.
Ethical organization: L&T-ites take great pride in the ethical orientation of their company, and this is driven by their values of transparency, ethics and integrity. There is a zero-tolerance policy to any transgressions on ethics.
Customer focus: They believe that the organization exists because of its customers and so, follow a customer-centric approach for creating a winning organization. ‘In service lies success’ has been the guiding principle for L&T-ites since its inception.
Caring organization: Concern for employee well-being was reflected in L&T’s decision to make employees shareholders in the company. The culture demonstrates a high degree of concern towards employee welfare and spends adequate time to understand the needs and expectations of employees through continuous interactions.
Contribution-centric meritocracy: It is a professional company where performance is a key requirement. There is a strong connection between performance and reward which further enhances the thrust on contribution and merit in the organization.
Nurturing talent: The HR techniques like 360 degree appraisal, assessment centers, mentoring, and counseling aim to build a leadership bank at L&T. There is emphasis on younger people holding higher positions.

Who are the leaders that you have admired?
I admire my father who has been my number one role model for his selfless lifetime contribution to educate the poor and the downtrodden. Among political leaders, I admire Sardar Vallabhai Patel for his firmness, bravery and his quality of always leading from the front. Among corporate leaders, I do not find anyone selfless and I believe only those who are contributing to a larger cause are worth being inspired by.
I also admire our founders. While Mr. Larsen was an unassuming person, who was more a human being than a businessman, his partner Mr. Toubro was more of a businessman who created a reputation of L&T in the 60s as being the most honest company.

What is your philosophy and expectations in life?
My expectations have always been very modest. I feel that you should think and dream optimistically, and spend your resources realistically. Having grown up seeing the villages and the poor who my father worked with, my expectation when I graduated was to cross a 4 figure salary, and within 13 months of joining L&T, I got Rs 1000.

How did you bring about a transformation at L&T?
When I became the CEO in 1999, my first thought was to bring prosperity to shareholders. 60% of L&T today is what I have built from scratch in the areas of heavy industry ship building, railways, boilers, turbines, power hydrocarbon, upstream hydrocarbon downstream, defense nuclear aerospace, etc. The winning formula that made this possible was devotion with passion.
I was determined to take L&T to the next level and transform it into a global company. So my number one objective was to align our growth to the growth of the nation, and the number two objective was global competitiveness. I believed that the two must be aligned as the company’s growth depended on the growth of the nation. My third objective was to bring prosperity to all stakeholders. For this, I started L&T’s life stock option for employees, which was a concept that was much ahead of its time. I thought it was important to do something for the employees who have given their entire life to the organization and this was a way to provide them economical independence. However, I faced a lot of resistance from my colleagues on the board who feared that such an initiative would put the whole organization in turmoil. I spoke about this at least 10-20 times every month, all over India and to all sections of people, but nobody looked at L&T stock options until 2003.

What is your advice to today’s leaders who strive to ensure continuous organizational growth?
I believe there should be devotion with passion. Passion is beyond dedication, where you put priority for the cause beyond anything else. In my case, devotion was L&T. Unfortunately, when people talk about vision, they are only looking from 40,000 feet above and have no knowledge of what is happening at the ground level. People can convert the vision into reality only if they come down from 40,000 feet to the ground level. There are hundreds of micro steps where each micro step must be planned, strategized and executed to make vision a reality. The power and ability to come down from 40,000 feet to the ground level with speed comes from the ability to coordinate hundred different things.

Tell us more about your family’s involvement in educating the less priveleged?
We run two trusts – the Naik Family Trust and Miravali Trust (in my granddaughter’s name). So now three generations of the Naik family have contributed to education. After my father died, my mother and I decided to continue the thread and started in 2001. We have a new campus there and have created a brand new school for nursery, primary school, high school and junior college. I acquired land from the Gujarat government and started a school dropout training centre. There, we run 2 courses - wireman and tractor mechanics, which have helped these people become self-made businessmen. I am more satisfied if I am able to help these people become productive.

How would A. M. Naik best describe himself?
A self-made, entrepreneurial leader.

Dr. Pritam Singh is Professor and Director General at IMI, New Delhi and former Director MDI, Gurgaon and IIM, Lucknow. He has been awarded the Padma Shri for his outstanding contribution in the field of education.
Dr. Asha Bhandarker is Raman Munjal Chair Professor of Leadership Studies at Management Development Institute, Gurgaon.