PUT YOUR ASS ON THE LINE
Naik responded, ‘We have assessed risk, and we will mitigate it. I take the responsibility and we will make it work.’

Venkataramanan, who worked alongside Naik for five decades, and was the former CEO and MD of L&T said, ‘This was Naik’s vision—L&T was quite small at that time. He was thinking of achieving a scale in terms of size that world-class equipment would require, maybe five to ten times larger than what we were producing at Powai.’

‘We were the bad boys of the boardroom. We were overshooting the budget by ₹12 crore. We explained to the board that this happened due to land restoration, piling and girder rejoining.
Eventually, the board was satisfied when everyone saw and agreed that Hazira was a miracle built on marsh.’ It took 30 months to ready the Hazira complex.

The transformation of Hazira from a swamp into a manufacturing complex that builds equipment for nuclear-powered submarines, nuclear reactors, fast interceptor vessels, and offshore oil and gas platforms is one of the most extraordinary stories in Indian corporate history.

The realization of the Hazira dream brought out the leadership qualities in Naik.

With the completion of Hazira, the then chairman of L&T, N.M. Desai realized Naik’s enormous entrepreneurial ability. He said, ‘L&T would not have been where it is today if Naik was not there.’ He was inducted as a member of the board in 1989.

YOU SHOULD BE WILLING TO DO WHAT YOU ASK OTHERS TO DO
Naik was a hard taskmaster. But he would not tell others to do anything that he did not do himself.

As Venkataramanan recalled, ‘Naik would work with us. At times, it got tiring, but we could pull through as our leader would always be there to keep our spirits high.’

IF YOU REALLY BELIEVE IN YOUR VISION, OTHERS WILL BELIEVE IN YOU
What Naik did here was to energize his people to internalize the organizational mission and values.

He went to the villages and spoke persuasively with the protestors in their own language. They listened as he not only spoke to them in Gujarati, but also in the dialect of that region, Surti.

Naik sincerely explained to them that this complex would create new jobs, bring roads, power, sanitation and above all, prosperity to the region.

He assured them that the company was engaged in the very last phase of earth filling and not an inch more would be filled. He spoke to the people with great empathy as if they were his extended family.

It was Naik’s people skills at work that rescued the project from this imbroglio.

HAVE  A PROCESS TO ATTRACT AND RETAIN TALENT
Naik looked into the future to resolve the next big question: How to get skilled workers? He made a master plan to source and train people.

L&T established a training centre in Udhna, a town about 30 km away from Hazira. It recruited students from 500 schools in Gujarat by setting up a process that attracted the best students.

Naik also had an eye for finding the right people for the job and the persuasion skills to convince them to take it up. ‘Naik would carry people’s files with him. He would think of who would go where and find the right situations to fit the right person in the right position. He was a great identifier of talent, and he could see what that person would do five years from then. Identifying talent, developing and nurturing it was his passion.’

The in-house leadership training programme at L&T has been Naik’s pet project. This is the Seven-Step Leadership Development Process, a programme that is especially structured to bring out the best in an individual.

3 STEPS TO GO FROM VISION TO REALITY
Institutional leaders do three things consistently: first, they plan with vision and values; second, they organize with alignment and clarity; and third, they control with motivation and involvement.

AN EMOTIONAL BOND WITH A COMPANY IS A BIG COMPETITIVE ADVANTAGE
L&T is a company that has created a strong sense of emotional bonding for employees over several decades.

L&T had been successful because of its employees, who did not own the company’s equity, but behaved possessively as though they owned the company.

It was the employees, who were the real owners of the company; they held ‘emotional equity,’ thus creating a strong positive culture in the company.

This soft asset of emotional equity was not valued in the balance sheet, but it certainly made L&T what it was.

NAIK SAVED THE COMPANY FROM CORPORATE TAKEOVERS
Naik addressed several meetings where he said, ‘Why should we remain servants? Let us become the owners of this company.’

He suggested, ‘If we convert this risk into a security ring by becoming the shareholders of the company, no one can touch us.’

In 2003, after months of confidential negotiations with ABG, a deal was struck. It was spelled out in these words: ‘ABG should exit L&T by selling its stake to L&T Employees Welfare Trust, and in return, ABG would receive L&T’s cement business.’ It was a win–win deal for both.

ABG got what they wanted—the cement manufacturing business of L&T that would in turn consolidate ABG’s position in the cement industry, and L&T could avoid the takeover by ABG and remain a professionally managed company.

One, the Employees Trust with a 12.5 per cent stake would be able to ring-fence and vote out any takeover threat.

Two, the rise in the share price of L&T had created a second ring-fence ensuring that the company was not cheap anymore.

NAIK MADE L&T GROW 20X IN 5 YEARS
Within a short period of five years, the demerger of the cement business in 2003 pushed up the market capitalization and the shareholder’s value by nearly 20 times, from ₹4,592 crore in 2003 to ₹88,423 crore in 2008.

Naik was happy that his position of CEO worked as an acronym that also described him as Customer–Employee–Owner.

USE FILTERS TO CREATE THE RIGHT VALUE FOR YOUR BUSINESS
‘Is it creating value?’ became the new question to be asked, the standard by which every process would be measured.

Value creation turned into a tool for the transformation of the organization, from the corporate level to the task level. For the first time, executives thought before taking up a project. Thus, the leadership at L&T started thinking in terms of value creation, targeting turnover and profit.

We started putting filters—on geography, on values, and on contracts,’ he added. The filters changed the way projects were taken up, choosing big and more profitable projects while letting go of the smaller ones.

A better risk management system was also built around the filters.

‘What Naik did in his leadership role [is that] he transformed the company from a sedate, gentlemanly company to an agile and fighting fit, competitive company. His intervention led to course correction and brought in better focus in the organization.’

L&T CREATED INDEPENDENT COMPANIES TO EMPOWER LEADERS IN DIFFERENT BUSINESSES
Naik took several steps to shape and nurture the organization’s capabilities to sustain it.

He created ‘independent companies’ to streamline organizational structure by creating verticals and empowering leaders to function independently.

Naik led the process to streamline L&T’s portfolio in 2012, and created 10 verticals of independent companies and six subsidiaries which would together run over 100 businesses.

This was done to bring focus, accountability and autonomy. The idea was to reduce the complexity of the organization. These independent companies had separate leadership and supported an exclusive board.

By giving a leader complete autonomy over a vertical, Naik encouraged their entrepreneurial spirit. The decentralization of power and autonomy allowed Naik to create a set of new leaders with a sense of ownership to operate efficiently and grow the verticals.

He explained with the example of hiving off water as an independent company. He said, ‘When you looked only at water, you could realize what the water business could become. What are the other water companies in the world? What they do in terms of technology? How can we geographically expand? How do we protect ourselves from changes in the environment? A leader was able to evaluate and assess several questions when his focus of attention was only water.

The leader of each independent company developed by focusing only on his company and what he needed to do to grow, instead of bothering about other segments of this huge enterprise. Tremendous growth was registered from this concept.’

Although separate, the verticals converged under the broad umbrella of L&T that provided centralization of administration to this world of decentralized independent companies. The business heads would report to the CEO of L&T. Synergies would continue to be derived across businesses through key account management and shared revenues.

THINK BIG
He built Hazira in the face of internal doubt and opposition.

He conceived Project Lakshya to build new capacities in a planned and systematic manner.
The letter L stands for ‘Lean’, a structure that was changed from bulky and bureaucratic to lean; A stands for ‘Agile’, swiftly responding to threats and opportunities; K stands for ‘Knowledge’; S for ‘Speed and Scale’; H for ‘Humane’; Y for ‘Yielding Value’; and A for ‘Action Orientation’.

The primary aim of Project Lakshya has been to implement ‘Big Projects’ with a ‘Broad Vision’ that could transform L&T into a world class manufacturing company.

MAKE YOUR GOALS PUBLIC
Project Lakshya provides the vision for focusing the energy of the company towards the creation of mega projects with a time-frame of five years, that is broken into yearly targets and further into quarterly targets.

The target numbers and achievements are shared with SEBI and the stock exchange for complete transparency and accountability.

L&T undertook the creation of mega facilities through Project Lakshya-I (2005–10), Lakshya-II (2010–15) and Lakshya-III (2016–21).

Through Project Lakshya, L&T attained the status of an Indian MNC.

Technology lies at the heart of Lakshya 2021 with the company’s strategic five-year growth plan for 2016–21. Naik affirms: ‘We will be the technology leaders in our businesses and as a technology-led company we shall focus only on cutting-edge, high-tech and extremely complex projects that few other companies will attempt—space first, nuclear second, defence third and finally smart cities. Even the engineering and construction division will look at complex projects and not just at simple construction projects.’

PLAN MACRO, EXECUTE MICRO
Implementation of the project provides a succinct example of achieving ‘macro vision and micro planning.’

When Naik was asked, ‘How do you think about so many mega projects in so many locations?’ he provided a detailed answer, which in fact is the core of his strategy.

‘Many people can think, some can conceive, few can strategize, but very few can make it happen. It is important to liberate your own self and the organization from the constraints of convention. It is not sufficient to exploit the current rules of the game to stay ahead of the competition. It is important to re-set the game and speedily secure first-mover advantage, while leaving the competition far behind.’

Naik is a stickler for details and follows a six-layered path: starting with a broad vision, he conceives, strategizes and plans for the implementation, following it up with a detailed plan replete with commas and full stops.

What remains then is to implement the plan, get things done and see the results.

HOW TO IDENTIFY TALENT?
Naik often said that his management mantra for identifying talent was simple. ‘If the person has devotion, passion, conviction and commitment—half the job is done. For the rest of the capabilities, a person can be groomed.’

Naik made another strong point: ‘Not many have the devotion. Everybody does hard work, but that is to maintain the job. If you are dedicated, you might add some value, but if you are devoted, you will multiply value.’

Naik changed the strategy. He said, ‘Find the stars and bring them upwards straightaway. We must reward talent and promotions should be based on performance rather than seniority.

In the next three years, they have to become the backbone of L&T. Our internal processes, training and development, encouragement and empowerment must enable ordinary people to do extraordinary things.’

Characteristically, thinking ahead of time, he has engaged with over 25 top executives to ensure that L&T has a robust leadership pipeline as far as 2040.

With over 65 per cent of the workforce below the age of 35, L&T is a young engineering conglomerate.

IF YOU HAVE AN ARGUMENT WITH A CLIENT STAY COOL
SNS shared a story about how a deal was closed for Delhi airport, a $2 billion project with the client GMR, with a lot of caution.

SNS said, ‘GMR was a young group then and L&T was worried whether they would be able to finance it.’ SNS had done all the preliminary work and also taken care of the negotiations. When it came to closing the deal, Naik said, ‘Let me talk to the board.’ He bought some time and managed the event well. He went into another room and sat down as he felt that the magnitude of the decision was so big, you couldn’t rush into it. It was settled later that day.

As SNS said, ‘I learnt a lot from that meeting with GMR and the way in which Naik handled it. That was when we came closer.’ Naik took this opportunity to mentor him, ‘If there was an argument with the client, stay cool and clear.’

WHAT IS LEADERSHIP?

A simple definition of leadership is that it is the art of motivating a group of people to act towards achieving a common goal.

He often talked about the four qualities, ‘passion, conviction, commitment and devotion’ that he considers a prerequisite for being a good manager.

The art of leadership lies in implementing simple solutions to achieve great success.

EVERY LEADER IS A LIFELONG LEARNER
Describing Naik’s learnability, Mukhija said, ‘Naik had mastered diverse subjects by being a lifelong learner.

He knew more about finance than a CA or CFO, more about law than a lawyer, more about the construction of structures and buildings than an architect and engineer.

He had also mastered human resource management and entrepreneurship.’

‘Every evening I reflect and go through my day, what have I done, how could I have done it better. It works on my mind, and the next day I try to do it differently.’

LEAN ON THOSE WHO ARE BETTER THAN YOU
He called in top notch consultants such as McKinsey, BCG and Bain & Co. to achieve the goal of turning L&T into a world-class company.

He had the humility, discipline and openness to follow the suggestions made by the consultants.

KNOWING YOUR TEAMMATES NAME IS A HUGE ADVANTAGE
Naik also always communicated with people using their name. Anyone who came in touch with him felt close to him and shared a great rapport due to this personal touch.

Workers and union leaders felt privileged that the boss knew them personally.

GIVE BACK
Naik remains deeply committed to the community. He has pledged 75 per cent of his wealth to social causes in various sectors such as healthcare, education and skill development.

He shares his family dynamics, ‘If my son and daughter-in-law don’t come back to India, then after me, a good part of the balance will also go to charity.

Following the Nirali Memorial Medical Trust named after his grand-daughter, Naik has also set up hospitals in Powai, Surat, Kharel and Vadodara.

He uses his engineering and management skills to regularly monitor these projects and ensure that they achieve stated targets.

He is committed to complete two projects every year.