With mild thrusts, unobtrusive lunges, and the gentle art of persuasion, S.D. Kulkarni is quietly tearing its past uncompetitiveness off Larsen & Toubro.

By Roshni Jayakar

Sometimes, Sudhakar Dinakar Kulkarni just doesn't seem to be for real. If he wasn't really as low-key as his voice, the 64-year-old CEO of the Rs 5,768-crore Larsen & Toubro (L&T, No. 9 on The BT-500) may just have elicited the suspicion that he is a concocted composite, symbolising a syndicate of managers who actually run the construction giant.

After all, although he is bereft of the fire-and-brimstone that marks the manager-turned-messiah, Kulkarni (1997-98 gross earnings: Rs 46.90 lakh) has still succeeded in changing L&T enormously in the last 5 years that he has been at its helm. If it weren't for his very tangible 6-foot figure, which can be spotted entering the office of L&T's CEO and Managing Director in L&T House at Ballard Estate in Mumbai at 9 a.m. and leaving at 6 p.m., it may have been simpler to assume that Kulkarni is a figment of our imagination.

In a way, he is the exception that proves no rule. When he retires on April 27, 1999-he isn't involved in succession-planning, which is the responsibility of the board-he will leave behind him an unusual style of leadership indeed: one that achieved its objectives almost entirely by quietly inducing other people to act. Extraordinary as it is, this approach is made even more remarkable by the fact that it was applied to a theatre of 25,362 employees, not more than 100 of whom have, probably, been addressed directly by their CEO.

Of course, the daily routine of this grey-suited winner of a succession derby that followed the abortive attempt by Reliance Industries Chairman, Dhirubhai Ambani, to take over L&T in 1993 is unsullied by any hint of the unusual. Almost an ascetic in his lifestyle, Kulkarni starts his day with yoga at 5.30 a.m., following up the exercises with the newspapers and a light breakfast with his wife. In an uncharacteristic show of flamboyance, he settles down in the back-seat of his spotless white Mercedes-Benz at 8 a.m., for the hour-long drive from the company-owned apartment in Santa Cruz to L&T House, armed with reports and briefs.

Once at his spotless desk, kept that way by the prompt disposal of everything that comes his way, he spends most of his day in meetings-including the 4-hour Corporate Management Meeting every Monday-and catching up on his mail, both paper and e-mail. Also on his agenda, frequently, are meetings of the Bombay Chambers of Commerce & Industry, of which he is the president, and seminars and conferences.

His preferred post-6 p.m. pastime: spending evenings at home with his wife, Mrinalini, a retired professor of botany, and, occasionally, either or both of his sons, Manish, 26, who works with the $22.81-billion Canon in the US, and Kaustubh, 24, who works for SICOM. He also loves listening to Indian classical music- Bhimsen Joshi is a favourite-as well as K.L. Sehgal's and Pankaj Mullick's songs, following the news on television, and reading, culminating in bedtime at 11 p.m..

''I'm not a club-goer,'' he confesses. ''Occasionally, I attend formal dinners, but I don't enjoy the cocktail circuit.'' Characteristically, there is little in his routine that suggests spontaneity, innovation, or even a spark of restlessness. The son of a retired bureaucrat in the Revenue Department, and the first member of the Kulkarni clan of Pen in the Raigad district of Maharashtra, he maintains a low profile that is almost a badge.

And yet, Kulkarni-who began his career at Voltas in 1960 as a junior executive, armed with a chartered accountant's degree, and took only one turn, when he joined L&T in 1975 as General Manager (Finance)-has achieved that rare feat: transforming a megacorp using subtlety as his mainline strategy. He does have 2 flanking weapons, though.

The first is balance. Confirms Y.M. Deosthalee, 52, Senior Vice-President (Finance), L&T: ''Kulkarni has never taken a single decision on the basis of an outburst. There is nothing temperamental about him.'' And the second is resolve. Says K.K. Nohria, 65, the CEO of the Rs 1,583-crore Crompton Greaves: ''Although he is soft-spoken, Kulkarni has firm views, and does not deviate on matters of principle.'' Agrees N. Kumar, 48, the CEO of the Rs 398-crore Chemplast Sanmar: ''He has never hesitated to take a position.''

His own gestalt? Says Kulkarni, whose only management mantra is that one must keep one's eyes and ears open: ''Making the organisation see the new realities is not a one-man job. It is that of the entire organisation. As the CEO, I only have to take the initiative to make that happen.'' BT presents an exclusive report on leveraging the laid-back approach for change-leadership-a la Kulkarni.

All rise, the court is in session
''...I have tried to create a culture, using people as a resource, and getting them involved to improve quality and create a world-class company...''

He leads the federal corporation. Managing a confederation of 6 major businesses, each armed with a historical mandate to chart its own course of revenues and profits, is virtually akin to knitting different states into a single nation. As is effecting co-ordination between presidents who have long been used to strategic and operational independence, using the centre-like their political counterparts-as a resource-centre. The CEO's office at L&T, therefore, is neither the backroom of business strategy nor the hub of operations.

What, then, is Kulkarni's own charter? First, maximise the performance-levels of each of his lieutenants-and, through them, of the businesses they run-without encroaching on their autonomy in any way whatsoever. And second, harmonise their individual activities into a strategic symphony rather than a cacophonous discordance at the corporate-level. To achieve these objectives, Kulkarni leads like a judge in a jury-determined courtroom: he sets the agenda for interaction, gives everyone free run of expression, and allows the verdict to emerge from a collective consensus or unanimity-taking on himself the task of dispensing justice when necessary. Says Holck Larsen, 91, co-founder and Chairman-Emeritus, L&T: ''Kulkarni has a great ability to make people work as a team.''

Points out A. Ramakrishna, 58, President (Operations), L&T: ''All of us are specialists in our field. But it requires someone who is as fair and equitable as Dharamaraj to provide leadership.'' That, in fact, has been Kulkarni's consistent style of presiding over L&T. Comments Anil Sachdev, 44, CEO, Eicher Consultancy: ''Without becoming visible personally, Kulkarni makes heroes out of his colleagues instead of being the hero himself.''

Primarily, by setting the broad goals, explaining the philosophy behind them, supporting the attempts of the business heads to get there, and seeking out the synergies between different businesses that can not only help each individual division, but also make the sum of the parts greater than the whole. Says R.K. Pitambar, 67, the Director of the Rs 3,624-crore Mahindra & Mahindra: ''Kulkarni delegates wisely, giving his people sweeping powers, but monitoring their progress constantly.'' Adds K. Venkataramanan, 53, Senior Vice-President (Operations), L&T: ''Kulkarni is very much the elder statesman, always listening and adding value to others' ideas.''

For instance, a year ago, at a series of L&T's Central Management Committee meetings devoted to discussing a proposed alliance with the American farm-equipment major, the $1.30-billion John Deere, 7 top people debated for over 4 months the strategic wisdom of not entering a growth business on its own. Without interfering, Kulkarni sat through the points and counter-points made at every meeting, catalysing resolutions whenever there were differences of opinion. Crucially, it was he who methodically orchestrated the discussion into eliciting a decision to test the commitment of the American partner to the Indian market before the go-no go choice was made. Typically, he only directed-never influenced- the content of the conversation.

Likewise, Kulkarni has never made it mandatory for any of his managers to attend the quarterly reviews of managerial processes, where issues like relationship engineering and communication-processes are discussed. By the third year, however, everyone had joined in of their own volition. Concurs A.M. Naik, 56, President (Operations), L&T: ''Kulkarni allows discussions to continue, only listening and moderating mildly when necessary.''

If there is a downside to this gentle approach, it is evident in Kulkarni's relative lack of ruthlessness in treating failure and the inability to meet targets, and his refusal to intervene aggressively. Thus, the disparities in achievement-levels between L&T's different businesses are being perpetuated: engineering and construction, construction machinery, and switchgears account for 72 per cent of its sales. Sure, he's not always pliable. Warns Naik: ''That he is a gentleman and mild does not mean he gives in to anything.'' But since Kulkarni's culture abhors haste when it comes to correcting course, just how long he can afford to remain slow so as to be sure, rather than being fast and falling flat on his face, is debatable.

There are no stops on quality street
''...I introduced TQM specifically to make L&T a world-class company. My objective was to get the whole organisation to be customer-oriented...''

He isn't the first champ of TQM in corporate India. But Kulkarni's unique leadership proposition is the method he used to get his sprawling corporation to buy into the Japanese philosophy of creating products that satisfy the customer 10 times out of 10, and having the processes that make this possible. When Eicher Consultancy approached him to market TQM in his company, soon after he had entered his cabin-typically, it is not even the corner-room-Kulkarni said yes immediately. Recalls Sachdev: ''He told his people that TQM was a better way to do what they were doing. But he didn't force it on any of his divisions.''

On the contrary, what Kulkarni did was to tell his A-Team that they could access a new management tool if they considered it worthwhile. Not everyone thought it was a priority. For instance, Naik's Group 2 felt it more important to stress productivity and efficiency. Kulkarni's response? ''If you feel strongly about having a structured, in-depth programme, that's fine. But have a look at TQM, and what it asks you to do by way of treating your people and getting them involved, interacting with customers, and, ultimately, increasing shareholder value.''

Coaxing, rather than coercing, is Kulkarni's chosen style for introducing change in any form, especially when it comes to those that demand sweeping transformation. Acknowledges Naik: ''Ultimately, a realisation of our own needs made us go in for TQM along with the others. Had we not done it, we would not be what we are today.'' Analyses Mumbai-based chartered accountant Shailesh Haribhakti, 42: ''Kulkarni has been able to swiftly create links within his organisation to make things happen. He keeps in his mind a map of what needs to be done by whom, and has been able to bring about a fusion between his company and the outside world.''

But how does Kulkarni compensate for the lack of force? With quiet, unobtrusive personal example, beaming out the message that even if others aren't interested, he is. Confirms Sachdev: ''He personally invested plenty of time.'' Kulkarni attended training sessions, sitting with people down-and-across the organisation, continuously encouraging them to share their experiences, doubts, and triumphs with him. During plant visits, Kulkarni made it a point to speak to machine operators about their personal and group kaizens-steps taken towards continuous improvement-and Small Group Activities (SGAS). This touch was evident later too, when several of L&T's divisions went from TQM to TPM (Total Productive Maintenance) on their own.

Significantly, although L&T's TQM rollout was a massive, complicated exercise-involving the training of 25,000 workers through 800 in-house trainers, the creation of 500 SGAs, and thousands of individual actions-it wasn't Kulkarni who personally blueprinted any of this. True to his style, what he did was to talk to his key people about the need to change the direction of the company from internal operations to meeting customer needs. The details were left to them to work out. Says Ramakrishna: ''Earlier, the orientation was towards marketing rather than on quality goods, on-time delivery, and customer-relationships. TQM changed all that, and made L&T a learning organisation.'' Adds Kulkarni, with satisfaction: ''TQM has spread like wildfire across the company, with everyone talking of the internal and the external customer. This is transforming everything we do.''

What the CEO provided, however, was continuous support, accompanied by a standing offer to flatten any organisational or infrastructural obstacle that came in the way. Says Venkataramanan, who capitalised on the freedom that Kulkarni provides his people by substituting TQM with Real Time Strategic Change in his projects division: ''Kulkarni is a reassuringly good supporter.'' Although he deviated from the organisation-wide TQM drive, Kulkarni kept sending him notes on his personal stationery, backing his efforts to achieve results and always offering help.

When necessary, Kulkarni will do anything to break the ice-even singing Pankaj Mullick's classic songs at gatherings of senior managers to make everyone relate to each other better. In the process, Kulkarni has turned what could have become a cognitive organisation-where people participate only cerebrally-into a holistic organisation, where people join in as they would in the case of a family.

So, although change at L&T may have come slower than a revolution demands, under Kulkarni's tutelage, it has, probably, come more surely. ''TQM involved changing the mindset of people. That's what I focused on. The rest came on its own, and now we have started thinking in terms of other initiatives like Six Sigma,'' he says.

Don't just think, just do it too
''...Long-term vision is important, but you have to ensure that it isn't crowded by short-term problems. The objective today is to make our operations world-class and competitive...''

He doesn't just craft strategy, he also ensures its adoption across his rainbow corporation. Coming to head a company involved in many businesses, each of them operating with varying levels of success and competences, Kulkarni knew it wouldn't be enough to just work out which businesses to sell, which to keep, and which to lavish new investments on. He would also have to manage the entry, execution, and acceptance of many moves that wouldn't sit easy on a company unused to strategic choice.

That the current ability and future potential for leadership-No. 1 or No. 2, a la General Electric's Jack 'Neutron' Welch-would determine whether to stay in, or quit, a business was obvious to Kulkarni. So was the fact that there would have to be linkages between L&T's businesses in a way that would enable them to draw on each other's strengths. These 2 filters automatically narrowed the focus to the engineering and construction, cement, construction machinery, and electrical equipment and information technology-effectively morphing L&T from an engineering company to a construction and projects company.

That led to the third conclusion: to wit, the difficulty in convincing his people to exit certain businesses. To sugar-coat the bitter pill, knowing that he couldn't afford to be ruthless if he wanted to carry his A-Team with him, Kulkarni devised the strategy of spinning off L&T's relatively-weak performers into joint ventures, preferably with foreign partners. Thus, Kulkarni persuaded his people to agree to transfer the Bangalore-based construction equipment business into a joint venture with Komatsu of Japan, L&T Komatsu, and to turn the infotech business into a subsidiary, L&T Information Technology.

These moves helped Kulkarni convince his senior managers to be less benevolent in the next stage, and sever the apron-strings of unviable businesses like shipping, shoes, and merchant exports and discontinue the manufacture of computer peripherals like printers, floppy disk drives, and hard disk drives without feeling sentiment-tugs. Simultaneously, Kulkarni kept morale high to ward off corporate anorexia, catalysing a consensus on expanding L&T's cement capacity in order to stay on the growth path.

Within 6 months of becoming CEO, Kulkarni had his lieutenants' approval for a plan to increase L&T's cement-manufacturing capacity from 2.20 million tonnes per annum (tpa) to 12 million tpa by the turn of the century. Says Ramakrishna: ''Eventually, we realised how effectively he was strategising for a new L&T-one whose businesses would be linked by the common thread of projects.'' So, Kulkarni effected the transition with unobtrusive silken smoothness, providing the inexorable logic for every move, but eliciting the final decision from his colleagues rather than imposing it on them. This was all the more significant as it came from a man whose view about the future is clear. Points out Deosthalee: ''Because of his vast experience in the field of finance, he is able to strategise better on a long-term basis.''

Still, instead of calling the shots, Kulkarni prefers to wield the conductor's baton. Says S.S. Marathe, 77, Director, L&T: ''Although the financial institutions hold close to a 40 per cent stake in L&T, and have markedly different views on strategy from that of the management, Kulkarni has managed to convert them, and the mixed- bag of stakeholders, to the perspective of the management.'' Adds Venkataramanan: ''At the board-level, Kulkarni is the vital link between the managers and the governors.''

For instance, while it was Naik's entrepreneurial abilities that led to the plan for the big thrust to Group 2, it was Kulkarni who, ultimately, persuaded the board to go along with the idea. In the process, he earned respect from both for his strategic acumen and diplomatic skills-potent ammunition for his stint at the top of L&T. As Eicher Consultancy's Sachdev puts it: ''Kulkarni brought dignity to the office of the CEO, which was vital for a corporation comprising businesses which were run with complete independence.''

Perhaps the benefits of Kulkarni's cool approach to his sojourn in the corner-room are summed up best by Ram Tarneja, 66, the Chairperson of the Bombay Management Association Committee, which selected Kulkarni as the Management Man Of The Year in 1998: ''He is able to get the full support of the board for all his decisions, which is an enormous achievement for a professional manager without a financial stake.'' Whether it is in character with his personality or whether it is a tactical choice, Kulkarni's methods have also secured the co-operation of his senior managers. Applauds Ramakrishnan: ''Because Kulkarni is not a boss who controls by commanding people, he has brought about a lot more unity among the team-members, and ensured that we work together.''

Judging from the sheer dimensions of L&T's transition in the Kulkarni era, his effectiveness at inducing change can hardly be questioned. Confirms Ajit Gulabchand, 49, the CEO of the Rs 375-crore Hindustan Construction Co.: ''That he continues to steer the company successfully through such difficult times is testimony to his contribution.'' Tellingly, Kulkarni has achieved these results without any of the messianic zeal, the iconic charisma, the fervent energy, and the larger-than-life image of the transformational leader. Instead, he has done it subtly, touching the right nerves here, pulling the right strings there, setting the ball of change rolling everywhere.

Nor has Kulkarni been afraid to create layers of people between himself and the rest of his corporation. He has never worried about being out of touch with his people, partly because of the rarity of his visits to L&T's 35 offices and 26 plants in the world. The model of leadership Kulkarni has created, therefore, is that of the touch artist. It lacks overt dynamism, inspirational teaching, and a captivating personality. But, like L&T's best works, it may just turn out to be of enduring value.

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