Abdul Razak Dawood – A Story of Thought Leadership followed by Action Leadership

July 30, 2010

Humans are the greatest source of inspirations; at times ordinary, at times extra-ordinary. They are all around us, only if we can pick up or learn from them. Inspirations, ideally, are like chain reactions. You get inspired and you inspire others and the reaction goes on. But then again, inspirations start from somewhere. As noted by someone, “There never was a great soul that did not have some divine inspiration”. Surely, those are the few who actually kick start the chain reaction.

Observing people have remained a great way of learning that I have thoroughly enjoyed. One of those learning aid is the Founder and Chairman of Descon Engineering Group, Mr. Abdul Razak Dawood. In case you are one of those who never heard about Descon Group, it’s the largest construction and engineering company from Pakistan positioning itself rapidly in the global markets.

Abdul Razak Dawood

Descon Quick Recap: In less than 3 decades, Abdul Razak Dawood transformed DESCON from a 1977 startup with 4 engineers to more than 1600 engineers and professionals (employee strength reaching 40,000) globally competitive engineering company based out of Pakistan. Today, Descon has 15 businesses in engineering, chemicals and power under their portfolio with 0.9 million man hours/year of engineering capacity and 72 million man hours/year of construction capacity. Some call this a vision, but there is someone definitely more than a visionary over here.

Portfolio in brief: Abdul Razak Dawood served as the former Federal Minister for Commerce, Industries and Production, Government of Pakistan for four years. He is the Chairman Pakistan Business Council and Managing Director of Descon Engineering Limited and six other private companies. His former corporate positions included, CEO Dawood Hercules Chemicals and Managing Director Lawrencepur Woolen & Textile. He has been on the board of various corporate giants such as ICI Pakistan, KSB Pumps, United Refrigeration Ltd, PIA, & State Bank of Pakistan. He taught at Department of Business Administration, University of Punjab and is the Member Syndicate, the University of Punjab as well as member Senate, University of Punjab. Mr. Abdul Razak Dawood has been an active philanthropist and at present he is the Rector, Lahore University of Management Sciences to which his family has donated generously; Vice Chairman, Board of Governors National Management Foundation; Member, Board of Directors Shaukat Khanum Cancer Hospital and Research Centre, Trustee CARE Foundation and Member, Board of Directors NUML College. Mr. Dawood is a BSc. Mining Engineering from England and MBA from Columbia University, USA.

I heard about him for the first time when I applied to LUMS and met him for the first time at my convocation while he handed me over my degree. Little did I know that in the years to come I will be lucky enough to be directly mentored by him and have him on our board of advisors for Kualitatem. Though I have got a chance multiple times to hear random briefs from his valuable experiences but never got a chance to hear his life story, until recently at a TIE gathering. Abdul Razak Dawood has no doubt transformed his thought leadership into action leadership and has institutionalized it to a greater extent producing stream of future leaders. There is a lot one can learn from him and his experiences.  Here are some important notes I managed to jot down during his talk and thought to share and contribute in that chain reaction.

Abdul Razak Dawood [1]: “Ladies and gentle men, assalam-o-alykum. Today I have been asked to give my story about my experiences in business, of being involved in education and basically being an entrepreneur. But I must say that usually I feel a little uncomfortable talking about myself and what I have done. In today’s talk I will spend some time talking about my career, but a little bit more time on strategic decisions, visions, values and qualities required for being an entrepreneur.”

[2] “I graduated from Columbia University and landed back in Pakistan in October 1968 after 18 years. Got married within 3 weeks and then issue came within the family; where should they park this young lad who just came back from America. Lawrencepur, district Attock was decided for me and I gathered my dreams, passion and commitment and went to Lawrencepur where I simply fell in love with the place. I loved the community life, loved the people, I loved the opportunities. It was magnificent. Not because it was easy, but it was challenging and here I was ready to face them while being in the trenches. I was welcomed by a strike letter on my first day on my desk. As I struggled to set things straight over the months, I introduced a new brand for ladies called “Layla”. While it was rejected by big brands like HKB, Bombay Cloth House etc. we ran a TV commercial and bang; it was a hit. Next, we advertised Layla for PKR 80,000/- budget over 4 months despite the strong resistance from my father. The results changed the world and the next time around it was my father who urged to raise the budget for advertisement.

Take away from Lawrencepur experience: Marketing was not understood properly and there was no market segmentation or product differentiation done ever at Lawrencepur. In order to sell, one needs to understand the pulse of the market first. I used to walk down Anarkali with my father for hours and used to listen to the shopkeepers, the customers, their demands, likes and dislikes in order to set our strategy. And an entrepreneur’s job is exactly the same.

[3] “I loved the job and Lawrencepure and gelled in the environment quickly. But “Man Plans, God commands”. 1972. Time for change came out of the blue. Family had a massive problem putting up Dawood Hercules as a merger where Dawoods and Hercules were fighting and couldn’t solve the problem. Senior members of Dawood family forced me to attend the board meeting and there and then made me the resident director of Dawood Hercules. From rural I moved to the urban. From the large canvas that I was working on and loving every minute of it, I moved to the narrow canvas inside Dawood Hercules.

Here it was different; learning about corporate struggle, board structure, articles of association and lot of agreements. Dawood Hercules had no problems of marketing, no problems of production and no problems of cash flow. It was a problem of different mindsets. Dawood and Hercules could not match cultures of local company with an American multinational. This ugly problem took 1.5 years to be solved by winning the hearts of Americans (Hercules) and maintaining confidence of family members (Dawoods).

I became the CEO. There were no problems in Dawood Hercules unlike Lawrencepur, so I got opportunity to learn engineering. Being 29 years old among the old and experienced engineers working in the plant I started learning the machinery as well as plant operations. I had no idea what was in store for me but I kept learning. An important day came when a Siemens machine busted and we called an engineer from Germany. He said the machine cannot be fixed and we need to get a new one which may take upto six months to be delivered. That was hard, shutting the plant for 6 months. We called the local champions, who understood the machine, committed to make a fix without shutting the plant and they did it. For the next six months the plant ran beautifully.”

Take away from Dawood Hercules: “That was the day when I said, I have faith in my Pakistani engineers. It’s about the judgment call that few can take and few cant. Pakistani engineers did it clearly indicating their competency.”

[4] “Winds of change in the family started and the family could not stay as it was. I could see it coming and about to break. On 21st April 1981 I was finally asked to go, so I packed up my bags and moved out of Dawood Hercules.

[5] “1981: I joined Descon Engineering (whose foundations were laid in Dec 1977), with 4 engineers, 5000 sq feet of office space, high level of energy and commitment and the promise of tomorrow to fight it. The starting point for any entrepreneur is your own inner most desire to do something, desire to go unknown paths and desire to take risks. That’s what we did. At that time what we formed was Descon Engineering Services & CONstruction Limited abbreviated DESCON.

Take away from early days at DESCON: “Do entrepreneurs have a fair idea about their ideas, company or their future when they start? NO WAY. It’s way too vague. You don’t need a brilliant idea or a brilliant product to start it. Did Mr. Hewlett and Mr. Packard did it? They didn’t. Look at the founder of SONY, his first product was a rice cooker; GE, P &G, Motorola, read any of the stories and in their early days they hardly knew what they wanted. And neither did DESCON. We just had a vague idea. Whole thing we did had was a searching mind, a desire to be different, a heart full of hope, a passion to do something and commitment to rope the extra mile.”

[6] “We kept on fishing for the first few years. Some call it the garage stage, I call it fishing. Nothing is too small. Our first job came at Havellian for electrical wiring and we took it to open up our electrical department. Soon we realized, consultancy is not the way to go and we left. And the two senior most engineers left the company as we left the consultancy business; it was a setback. As we started to settle down, the issue came for how do you want to dream about the company. ‘What type of policies you want to adopt, short term or long term? You want to go local or global?’ We were very clear that we will follow the long term strategy and take Descon Engineering, Power and Chemicals all global. And this is one of my issues with the Pakistani entrepreneurs as well. They simply don’t seem to understand the real benefit of a long term strategy. In the long term you gain more. If you look at the 50’s and 60’s old business models of textile, ghee and rice; they stand nowhere now”

Take away: “1) Don’t go for short term strategies, go for long term. 2) Don’t think local go Pakistan Plus Plus. ”

[7]Dreams and Aspirations: How do you dream is how you want to play it. That’s another problem with Pakistanis. We don’t dream enough; we day dream a lot. We don’t dream greatness. If you can’t dream it you can’t do it. Nobody is ever poor because he doesn’t have the capital. He is very poor who doesn’t have the vision. Another thing, do you have to be a charismatic leader to be an entrepreneur? No. Research has shown that you don’t need to be charismatic, high profile and strong personality to be a successful entrepreneur. In fact when you reach the final stages of entrepreneurship, being strong personality becomes a liability, being charismatic becomes a liability. In the start of the business, charisma and personality plays a role. Things get done because of the persona. But organizations built to last needs systems (processes and procedures). They need not to be driven by entrepreneurs as they grow.

Take Away: “1) Dream and Dream A LOT. 2) Fast Forward 20 years into your business, if the entrepreneur is still on the driving seat there is something wrong. Very much wrong.”

[8] “In September 1981 we landed a fantastic job in National Refinery Karachi. Descon went after it and Alhamdulillah we won the job. People said, don’t do it, friends said don’t do it, mentors said don’t do it as it’s too big for a company of 8 engineers. We had the passion, we had the drive, we took it and Alhamdulillah we did it.

Take Away: “People later commented and said we were smart. But infact, I would say the hand of God was with us. I have a strong Faith in it.”

[9] We hunted a maintenance job in Saudi Arabia at SAFCO managed by a great Pakistan Ahmad Kidwai. I went on to take Descon International. Next we went to Abu Dhabi; we made a bid against a Spanish company. And we bid very vey low, infact 30 % below the next bidder. When I went to meet the Arab whose name was Hasan Salman …,

Hasan Salman: ‘I know why you are here. You made a bid that is very low and now you want to exit.’

Me: ‘I don’t know if I have bid that low, but I am here to ask you to give this job to us.’

Hasan Salamn: Surprised. ‘Will you be able to make money’

Me: ‘NO’

Hasan Salman: Further surprised, “You still want a job’

Me: ‘Yes, I want the job’

He gave it to us and we did a good job for 16 days. Went back to Hasan Salman …,

Hasan Salman: Appraised. ‘Now you are prequalified for every single job that comes up at ADNOC’

Me: ‘Thank you. That’s what I wanted.’

Hasan Salman: ‘Did you make money out of that job.’

Me: ‘Well in the start I told you we won’t, but actually we broke even.’

Hasan Salman: ‘But why did you want to lose money in the first place.’

Me: ‘Hassan Salman, we believe in long term. I was actually buying my entrance fee to get into ADNOC.’

Asan Salman: Smiled. ‘OK. You are In now.’

Take Away: “Believe in long term. One job after another and we kept rolling fast.  1987 into Oman, 1990 into Iraq.1999 into Qatar. 2000 into Japan. 2001 into Canada, 2008 into Kuawait”

[10] “When you think about it from the lowest stages of the family to the highest stages of the long term. There is no right answer; it’s your own individual wish, your desire how you feel at the bottom of your heart. It is YOUR answer that why you are on God’s good earth. There are many many wealthy families around the world. But there are very few who created institutions to built the last. You need to ask yourself a fundamental question, “Do you want to be the time teller or a clock builder”. A time teller announces his position frequently but a clock builder works silently and persistently repairing and improving his creations. At Descon, we were very clear. We wanted to be the clock builders. Our purpose is to give returns to our shareholders but also helping our society in shape of LUMS, NUML College and CARE Foundation. Our purpose is that the people outside should know that a Pakistani company can operate professionally. Our purpose is to uphold the name of corporate Pakistan. We want to build the institution built to last from generation to generation. We all have a date with destiny, and at DESCON our destiny is to build that institution. And I hope before I leave this world, inshAllah I will go on that date.”

Take Away: “I conclude by saying that entrepreneurship is not a trip, it’s a journey. But more important, make it a life time adventure, an adventure of greatness for the benefit of your family and this wonderful country of ours. When people tell you are successful, my reply is, ‘I don’t know’. I am right now in the middle of the battle, cannons firing, infantry moving and the heat of the battlefield still ON. Then there is a question about success. How do you define success? Is it the size of your balance sheet? Is it the quality of your heart or the goodness you brought to society?  Is success being a good husband or a good father? I would say it’s much more than all this. For me it includes 1) being a responsible member of society. 2) Living the way Almighty Allah Tala wanted us to live as defined in his code of conduct. Because ultimately we will all judged by HIS standards, not by our standards. 3) In 2075, if the organization is still flourishing and executives are still worried about challenges coming up in next 100 years. To me, the size of balance sheet is No criteria for determining success. It hardly matters when you talk about success. I thank you all for listening to my story so patiently. If as a result of this address, the spirit of entrepreneurship kindles in one heart or if the entrepreneur moves up the value chain to decide to create the institution built to last then all the time we have spent today, together, will all be well worth it.”

Some more interesting collection of facts about Abdul Razak Dawood

Childhood: He migrated from India to Pakistan with his family. He was six years old at that time with memories of tents and sea of people at where Quaid-e-Azam’s mazaar is right now. He just had a one year of schooling from Pakistan before he was sent to England with his brother and cousin. He enrolled in a public school called Eshton Hall in Yorkshire Dales in 1950. England was slowly coming out of the war. The life was tough and sports were a part of everyday life. Independence and strength is what he got out of the tough time spent in early childhood in England.

Life Changing Experience: First life changing experience was in an English Public School. He was not so good in academics due to his love for sports. But then there was a paradigm shift when he changed the way he used to think. It was when his O-Levels results were not so good. While traveling in a bus, he had a flash in his mind. That flash made him decide to take studies seriously and since then he had been meticulous about work and learning. Though sports still remained an essential part of his life. His second life changer was when he went to US for MBA. With a wealth of knowledge, people passionate about business, where ideas and concepts galore, it was a whole new and exciting world that shaped up his desire for business.

Personalities Who Inspired: Historic – Napolean, Salahuddin Ayubi, Taimur Lang.  Contemporary – Jack Welch, E.I. DuPont and Lou Gerstner.

Creating Lahore University of Management Sciences: In 1984, the idea of LUMS was conceived when Syed Babar Ali at a meeting discussed about the need for high quality business graduates required to support and grow Pakistani Economy. Razak Dawood had taught MBA for 8 years in IBA – Punjab University, was fully responsible for the curriculum and the course and aware of the need for a high quality platform producing business graduates. He matched PKR 2.5 million contributed by Syed Babar Ali and developed the charter in March 1985 for an institution built to last. First batch started in September 1985.


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