Historical Issue - November 2004
 An in-house publication of the Odebrecht Group – Odebrecht S.A, Construtora Norberto Odebrecht, Braskem and Fundação Odebrecht
Editorial
Essential History
German Immigrants
Emílio Odebrecht, the Pioneer
Norberto Odebrecht,
the Founder
Regional Development
and New Opportunities
A National Company
Diversification and
International Growth
International Organization
Leadership in Latin
American Petrochemicals
Social Action and
Cultural Action
Personal Statements
Timeline
Editorial team
 
  

Norberto Odebrecht, the Founder
As a young man, Norberto Odebrecht replaced his father,
Emílio Odebrecht, at the helm of the business, in
the early 1940s,and in 1944, Norberto started the
company that grew into the Odebrecht Group

In the early 1940s, Salvador, Bahia, still bore all the marks of its colonial past. Nearly everything was lacking – from sanitation to recreation facilities, and from housing to supplies. And it was in this city, which sorely needed a boost into the modern world, that Norberto Odebrecht’s career got its start. He was a young man with a very special upbringing. He had been instilled with solid principles that became the key to his future: “Moral wealth is the basis for material wealth. Wealth without ethics is not healthy wealth.” The values he learned from his parents were reinforced by Pastor Otto Arnold, from Germany, who arrived in Salvador when Norberto was six to tend to the city’s Lutheran flock.

Pastor Arnold became the Odebrecht family’s tutor. It was through him that Norberto understood the meaning of “ephemeral wealth.” What might that be? The cleric explained. They talked a great deal during long walks, the few moments when the young boy came into contact with the outside world. “Wealth cannot exist without health, ethics, work and productivity,” said the pastor. Unless it was bolstered by strictly ethical behavior, material wealth was unhealthy. Without ethics, it was “ephemeral wealth” that was sure to be frittered away.

Emílio Odebrecht and his son also liked to go hunting. During those expeditions, Norberto learned other lessons in life, by cultivating the art of patiently waiting for that one irretrievable moment when the hunter can catch his prey. These lessons included concepts such as making firm and confident decisions; exercising moderation in the number of animals killed; transporting, cleaning and sharing the catch with fellow hunters and the family; and finally, cleaning the weapons and storing them in a safe place.

When the Odebrechts moved to Ladeira dos Aflitos, 15-year-old Norberto gained entry to his father’s working world. The new house stood next to the company’s outbuildings. After school, Norberto was encouraged to learn from teachers of a different sort – the construction supervisors who taught him the basics of the building trade.

At first, he learned how to lay bricks, and started earning wages instead of getting pocket money. After that, he worked as a smith, steelfixer, storeroom boss, and transportation manager. The supervisors taught him to cut and bend steel and use it to make the reinforcing cores of columns, beams and slabs. He could coat walls with mortar, carve wood, and work a forge. Being raised in the Odebrecht household according to the family’s German traditions, he valued work highly and saw it as the only means to obtaining well-deserved wealth. As a result, Norberto had assimilated values since early childhood that converged into a basic attitude: always seeking to serve others, rather than being served.

While Norberto was learning the crafts of the construction trade, he also got his first practical lessons in administration and management. As he would say years later, “I learned that time is the only irretrievable resource and we have no right to waste our own or other people’s time.” He also learned much more: to successfully coordinate people in a project, it is essential to understand the technologies they are using; work requires advance planning and, when it is assessed, intentions, efforts, skills and methods bear little weight. The only decisive standard for judging people’s work is results achieved on the basis of ethical principles.

When he was 18, Norberto followed a family tradition dating back three generations and enrolled in Salvador’s Polytechnic. He seemed to have a quiet youth and an untroubled career ahead of him. However, when he was in his third year, his father’s company ran into difficulties and he was called up by the adult world.

When Norberto took charge of Emílio Odebrecht & Cia., he inherited all its liabilities, but he also had a major asset: the supervisors his father had trained in the school of the jobsites, and who had freely decided to put their trust in that young student. His aim was to finish the company’s contracts and keep the business going. The solution came through three pacts.

Norberto made a political pact with Banco da Bahia, his main creditor, which became his ally and helped him win and satisfy new clients. An economic pact ensured that his clients got their projects done in less time with lower costs. And a social pact sealed the union between the entrepreneurs and the workers. As Norberto recalls, “There was only one way to lead those men, who had character, professional discipline and vast expertise: by encouraging them and making them more productive together than they could be on their own, while creating the conditions for rewarding their efforts.”

Going from theory to practice, Norberto applied the concepts of decentralization, planned delegation and partnership. He realized that the business world is based on the three-way relationship between those who own the capital, the entrepreneur and his team, and the client. Therefore, he took on the job of maintaining good relations with his clients, suppliers and the bankers with a view to getting more work. Each of his company’s supervisors was responsible for a project (client) and had full autonomy to form a team and achieve previously agreed results, which would then be shared by the supervisor and his team, together with the entrepreneur. Finally, the entrepreneur contributed ideas and new equipment to each project, while the supervisors used their creativity to reduce construction time and costs and keep the client satisfied. And that is just what they did. As a result, by 1948, all of the company’s debts had been paid.

In 1944, Norberto started an individually owned firm. Banco da Bahia and the difficulties involved in restructuring Emílio Odebrecht & Cia. required him to do so to stay in business. As a result, the transition of leadership was complete, and Norberto Odebrecht became a full-fledged entrepreneur.

The solution to a difficult situation was making three pacts: political (with creditors), economic (with clients), and social (with the workers)

He began practicing what he preached – establishing a healthy, interdependent relationship – during the administration of Governor Otávio Mangabeira (1947-1951), which was marked by an unprecedented surge of development in the state of Bahia. The high points were the construction of the Rui Barbosa courthouse, Hotel da Bahia and many other works. Construtora Norberto Odebrecht took part in several of those projects.

Although the construction industry presented a vast and open market, the new company had plenty of challenges in store. It lacked the capital to purchase the modern equipment whose development was spurred by World War II, but even so the contractor had to establish a place for itself in a market largely occupied by foreign firms. Norberto remembers that he only saw one alternative: “Working much harder than those who were not in our situation.” And he had one main incentive: “tremendous creativity.”

He came up with an idea as simple as Columbus’s egg that remains the bedrock of the Odebrecht Group’s philosophy to this day: identifying, integrating and grooming talented young people with a calling for entrepreneurship. Students in the last two years of Polytechnic School who could work without giving up their studies began joining the company. These young men learned the trade from the contractor’s supervisors, who were each responsible for grooming a future leader. For Norberto Odebrecht, the only way to realize people’s potential was making their strengths productive. “A leader is responsible for motivating, encouraging, and challenging team members while creating the conditions for sharing the results they helped build.”

In addition to establishing an entrepreneurial philosophy, Norberto was consolidating the Odebrecht family’s tradition: the new company’s hallmark was revolutionizing the construction methods of its time. Its work system was completely different from the established norms. For example, the concrete structure of a building was typically constructed first, and the walls were only raised when the last roof slab was in place. Plastering and the installation of frames, plumbing, electrical and sewer systems came afterwards. Going against these rules, Norberto Odebrecht’s contracting firm started doing all these jobs almost at once. When the first slab was ready, the concreting team went to work on the second while the walls of the first floor were being raised. “After that, all we had to do was go from the top down and close all the doors,” remembers Supervisor Bonifácio, with a twinkle in his eye. He was one of the supervisors from Emílio’s team who had stayed on with Norberto.

Soon after he began his entrepreneurial career, Norberto discovered that all leaders need a substitute. When a severe illness kept him in bed for 47 days in complete isolation, he realized that ensuring his Clients’ peace of mind depended on factors that were out of the Entrepreneur’s control, including his own health. He therefore invited two young Bahia Polytechnic students, Francisco Valladares and Otto Schaeppi, to help him structure the new company and come on board as partners. That is how Norberto Odebrecht Construtora Ltda. came into being in 1945.

Constructing the Belo Horizonte Building for the Correa Ribeiro real-estate company was a milestone during that period. The company’s teams built it in just seven months, when a building of that size normally took three years to complete. There was a clause in the contract requiring that the building to be delivered in seven months, making no allowances for delays.

The results of sound planning and increased productivity were shorter construction times and lower costs. Soon, the company was building projects that bolstered its credibility, and by the end of the 1940s, it was one of the most important contractors in Bahia. Those projects included the Worker’s Circle (1946), a 5,000 square-meter structure housing shops, restaurants and a movie theater; the Ilha do Fogo shipyard (1947), between the towns of Juazeiro and Petrolina, on the São Francisco River, equipped to build ships weighing up to 1,200 tons; and quays and piers for Canavieiras (1948) and four other ports. One of them was situated in Ituberá (1949)

An area rich in natural resources, including Pancada Grande Falls, a 63-meter-high waterfall on the Serinhaém River, Ituberá was surrounded by dense tropical rainforest. It was an invitation to diversify the business by generating power and working with forest products. Norberto Odebrecht had little or no experience in these areas, but he realized that productive investments would have in that area could have a positive social impact, and managed to attract major business conglomerates there, such as Firestone (which was going to plant rubber trees to make tires) and Matarazzo (which was to plant palm trees to produce oil).

Norberto created a company to develop this complex venture - S.A. Ituberá Comércio e Indústria – Saici, which answered the prayers of the mayors and councilors of the area’s five municipalities, who had asked the state government to build 62 kilometers of roads to interconnect them. They trusted in the “area’s outstanding conditions,” as they wrote to Governor Luiz Régis Pacheco Pereira in 1952. With the backing of the local authorities, Norberto had soon built a hydroelectric plant, a sawmill and an autoclave to make plywood, because the timber extracted from the forest was of poor quality but was hard to burn and competitively priced.

Planned delegation and decentralized decisionmaking enabled the company to build many more projects at once and stand out from the competition

The company built a residential enclave and a small airport, and closed a deal with a local airline, TAS – Transportes Aéreos Salvador, to operate two daily flights there using single-engine planes. It also built a large plywood factory and imported huge trucks to bring in high-quality wood from as far as 250 kilometers away. Transportation proved to be uneconomical, so the company started another activity: a plywood factory using modern machinery imported from Germany. Vast sums of money circulated, the planes were always full, and the renovated Port of Ituberá handled tanker ships weighing up to 1,500 tons. Nevertheless, Saici was in poor health. It finally closed in 1954, and Norberto had learned another lesson. “The more Saici’s businesses multiplied with growing speed,” he would write later on, “the faster my lack of knowledge about them grew as well, preventing me from providing leadership for any of them.”

In his words, “According to logic, if the premise is faulty, the reasoning may be impeccable, but the conclusions will necessarily be wrong.” Instead of starting from the “only” and the “right” beginning of the entrepreneurial task, which was the fact that “the client must be served and satisfied,” he had started out with “processes” and “things.” He had confused growth with swelling, adding to the number of employees and managers who formed a mass of people without direction, because Norberto really had no clue how to run the company. Finally, he says that he was wrong to think that he could make a business profitable when it was economically unfeasible from the outset.

The closing of Saici spawned one of the biggest crisis in Odebrecht’s history, but it also sowed the seeds of diversification and provided a lesson for how to act in the future. Furthermore, contracts for all kinds of projects kept coming in. By the late 1940s, Salvador had become a huge construction site. A hilly city built on a peninsula, it was building broad streets in its valleys and roads along its extensive coastline. A hydroelectric plant for Companhia Valença Industrial, overpasses for Centenário Avenue, the Treasury Department building, and the passenger terminal for Salvador airport, which was completed in less than a year, are some of the major projects Odebrecht built during that period.

The huge innovations Construtora Norberto Odebrecht proposed to make required a radical change in the construction industry’s conventional work system. Norberto had no qualms in entrusting tasks like ordering, purchasing and hiring to his supervisors, when they were usually done by contracting companies’ head offices. It was one way to motivate people and stimulate their creativity. The company’s overall planning made projects go faster, and there was a healthy rivalry among its teams to see which could be most productive. Full delegation of responsibility and decentralized decisionmaking enabled the company to build more projects at once than the competition. Within the conditions of previous agreements, supervisors had full autonomy, and to this day, this is one of the principles that has been maintained and improved at all Odebrecht subsidiaries. It enables the company to establish a closer relationship with clients, gain a better understanding of their needs and give them better service.

The contractor’s first years of operations in the Bahia market saw substantial changes in working relations, and the company continued to implement them in the following decades. Sixty years ago, when the concept of profit sharing was almost unknown, Construtora Norberto Odebrecht members were partners with their company’s leader. Financial rewards stimulated their productivity, and they shared the results achieved through each project. Norberto Odebrecht systemized this and other practices in the 1970s in the form of the Odebrecht Entrepreneurial Technology.


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