01 Mar 2014

Generation Next

How Nisa Godrej is remaking her family's storied Indian business dynasty
Re: Mark Kahn (MBA 2006); Tanya Dubash (AMP 168); Farah Nathani (MBA 2006); Abhishek Modi (MBA 2003); Vivek Gambhir (MBA 1997); Nadir Godrej (MBA 1976); Tarun Khanna
by Mark Bergen


In the summer of 2007, Mark Kahn (MBA 2006) received an unusual call from Mumbai. A former HBS classmate had a problem. She wanted him to look over strategic and financial documents for a diversified agribusiness subsidiary of the Godrej Group, a major family-run Indian conglomerate. Kahn, who worked for agrichemical giant Syngenta AG and knew the industry well, agreed to have a look.

The subsidiary, Godrej Agrovet, had expanded beyond its core business of animal feed in recent years, entering poultry processing, rural retailing, and urban gourmet grocery. All of the new businesses were unprofitable, though, and the losses from rural retailing threatened to overwhelm the entire company. Even worse, the avian flu had dented the poultry feed business, hitting the pockets of its farmer clientele. In the fiscal year before Kahn was called, Agrovet generated an operational loss.

"My feedback was, 'You're in trouble,'" recalls Kahn.

By the spring, Kahn was in Mumbai, part of a team tasked with turning Agrovet around—the first foreigner the Godrej Group had ever hired in a leadership role, a momentous step. More resounding moves would follow: The group's majority stake in the rural retailer was sold, and the poultry business was placed in a joint venture with US-based Tyson Foods.

The most significant changes came at the top. In August 2007, the managing director—a longtime Godrej employee—was unexpectedly replaced, sending waves throughout the conglomerate and Mumbai business circles. Above all, family-run companies in India value loyalty and seniority.

But the maneuvers worked. Over the next few years, the business started to rebound, marking a turning point for Godrej, one of India's largest industrial houses. And the moves that prompted its resurgence were notable not just for their boldness or the returns they generated. It was also for their source: a 29-year-old in her first year on the job.

The friend who rang Kahn was Nisaba Godrej—who goes by Nisa—the daughter of Adi, the Godrej Group's chairman, and the great-granddaughter of cofounder Pirojsha, who started the Group with his brother in 1897.

The brothers began by forging locks, slapping "Made in India" on each one. The business evolved, like its peers, with the spirit of swadeshi (self-reliance)—proof that Indians could make their own products, without the British. Today, Godrej has a more than $4 billion global market for its products, which range from security appliances to furniture, soaps, and real estate.

A young Adi Godrej joined in 1963 and never departed. His three children followed his path: the eldest, Tanya Dubash (AMP 168, 2005), leads marketing for the Group, and son Pirojsha heads Godrej Properties, the business empire's real estate arm.

For Nisa, 36, the middle child, life in the family business started with a flop.

After graduating from the University of Pennsylvania's Wharton School in 2000, she spent a year in the company's home insecticides joint venture with US-based Sara Lee and another in human resources before shifting to the Group's inaugural attempt to market tea.

"It was a big failure," she notes during an interview in November at her office. "It was an expensive way to learn about the realities of business." Nisa says that her next move, entering business school, was an attempt to outpace critics. "When you're in a family business, you walk around with a big nepotism sign on your head—until you actually prove you can do something." An MBA, she notes, is one sure proof.

At HBS, Nisa remained fixated on India. She wrote a paper delving into Agrovet and pulled her class contributions eastward. "No matter what the case was about, she managed to bring it back to India," says classmate Farah Nathani-Menzies, who now works as a consultant for Godrej Consumer Products. "There was no doubt that she was going back to India, and that she was going back to Godrej."

Her first board placement upon returning was with Agrovet. She noticed gaping wounds in the balance sheet—spurring the call to Kahn—and her ultimate recommendations were a challenge to leadership. But she met considerable resistance from the parent company chiefs, including her father. "Godrej has been one of those lifetime employers, and you don't change management," Nisa explains. "Within that year, I probably said I was quitting two or three times."

She didn't. Eventually, Adi relented and gave his daughter free rein.

Friends and colleagues describe the Agrovet episode as the opening act in Nisa's journey at Godrej, her almost missionary zeal to bring a "performance-oriented culture" to the 117-year-old firm. "No one," she says, "wants to take on people who've worked [at the company] for 25 years."

Why Nisa could challenge entrenched employees and the historical norms at Godrej underscores the unique situation facing young Indian executives intent on reforming their families' dynastic businesses: She was able to act, she says, "because I was a family member and not worried about getting fired."

India is still dominated by family-run businesses, representing 85 percent of the country's companies, according to Deloitte. It is the product of a long-standing ethos of concentrated ownership—the business group over the individual stock owner.

After the "Licence Raj," the period of tight government control of the private sector that ended in 1991, corporate families could finally stretch outward. But they had to contend with overseas competition. Young scions, often with more advanced training and international experience, began to push families into untapped markets in India and abroad.

The expansion can serve as a diversification tactic. Abhishek Modi (MBA 2003), for instance, worked for his family conglomerate's sugar plants before attending HBS. Like many industrial giants, the Umesh Modi Group reaches far, producing pharmaceuticals, selling cosmetics, and building steel. Modi added liquor and now runs Modi Illva, the company's four-year-old joint venture with Italian spirits maker Illva Saronno. "I get the security of the family business," he says by phone in New Delhi, home to the venture's headquarters. "And I get the opportunity to be an entrepreneur."

Next-generation leaders, more so than their progenitors, must overcome a public perception of nepotism. When Rohan Murthy, the son of an Infosys founder, joined the firm in August 2013, analysts scoffed, saying the move reeked of an older, dynastic India. Infosys responded swiftly, assuring investors that the younger Murthy would not receive special treatment.

Nisa faced another challenge: upending business as usual. One of the first sections she sought to revamp at Godrej was its relationship with external advisers. While working on strategy for the group's consumer products division in 2008, her team hired Bain & Co. to help lay out a five-year road map. At the time, Bain was relatively new to India, and therefore, Nisa figured, more likely to question the way things were done at Godrej. (Earlier consultants, she notes, often operated as yes-men for her father.) They didn't disappoint: Vivek Gambhir (MBA 1997), the Bain partner who headed the project, notably challenged the status quo, and Nisa went on to hire him as head of strategy for the group—a role that did not exist previously—a year after the project ended. Today, he is CEO and managing director of Godrej Consumer Products, the group's largest and most profitable company. Godrej consultant Nathani-Menzies calls the hire "revolutionary for Godrej."

"Nisa has expertly leveraged great talent from her own circles at Harvard," says Tarun Khanna, the Jorge Paulo Lemann Professor at HBS and director of Harvard's South Asia Institute (SAI). The Godrej Group has relatively strong, lengthy ties to the United States: Adi is a MIT alum, and his brother, Nadir (MBA 1976), managing director of Godrej Industries, also studied in America. Nisa has accelerated the ties. "It helps expose the Group to a significant corpus of international thinking," says Khanna. And Nisa still counts Bharat Anand, Henry R. Byers Professor of Business Administration, as an important mentor, noting that he has advised the group and teaches a course on strategy to mid- and senior-level managers at Godrej.

Shortly after the Agrovet turnaround, rumors began circulating that Nisa was being groomed to replace Adi, 71, the eighth richest Indian with a fortune estimated at $8.3 billion, according to Forbes. In a 2012 Economic Times interview, Adi said of Nisa, "She could head the business.…She has also repositioned the company for the future rather than for just the next few quarters and selected top-notch people to lead various parts of the group." Nisa casts the Agrovet reshuffle as the event that allowed her to shape her current role: head of innovation, corporate strategy, and human capital.

Godrej headquarters are located in Vikhroli, a northeastern Mumbai suburb. When the family bought the property in 1940, Vikhroli was a rural stretch. Its 3,500 acres are now a throbbing part of the city. Like most parts of Mumbai, it is hugged by slums.

Inside the campus, asphalt walkways lead to rusting warehouses. Everything looks old and identical—until you enter the "Space office." The building, which houses design, strategy, and human resources, is marble white and ultramodern. There are no cubicles. Nisa's desk sits behind a panel of see-through glass.

Despite the transparent surroundings, Nisa is guarded in her public profile. In November 2012, Forbes India published a profile of Nisa for which she declined to comment, calling her "mercurial" and cataloging her "tough-as-nails culture." Nathani-Menzies says that Nisa is passionate about the business, but always to a constructive end. "Over the years, I've seen her develop into a very mature executive."

In July 2013, Nisa became executive director of Godrej Consumer Products, where she's been involved in strategy since 2008. In India, Godrej products are ubiquitous. They reach roughly 500 million consumers—a gargantuan market. "But it's still considered a bit old," Nisa remarks. "The product line is something my parents use."

Under her tenure, Godrej has been reinventing and relaunching products that millions of Indians use—inexpensive insect repellent—and aspire to buy—hair dyes and car aerosol. Nisa's aesthetic, what she calls "cheap and chic," comes in equal parts from her father, the practical manager, and her mother, Parmeshwar, a designer.

And Nisa plans to steer Godrej into newer territories—a process she believes starts with rethinking the working environment at Godrej. "We want an open culture," she says. "We want to be younger and free-thinking." To create that movement, though—a project whose spirit can spread throughout the company—Nisa had to build a rather unorthodox catalyst.

The "Space office" is the incubator for the future of Godrej, Parmesh Shahani says, swinging from a half-orb chair strung from the ceiling. Shahani runs the Godrej India Culture Lab, a three-year-old arts center. Its website states that the lab is "hard to categorize." Its events, free and open to the public, mix the academic and avant-garde. "We can put a feminist performer next to an anarchist architect," notes Shahani, the author of the book Gay Bombay.

The lab was his long-percolating idea. A mutual friend introduced him to Nisa, who approved of the idea after a single proposal. "It was broad and ambiguous," observes Shahani, "but she totally got it."

We Are Family

A few noteworthy cases from HBS faculty about companies that are balancing blood ties and balance sheets. hbsp.harvard.edu

CP Group
Balancing the Needs of a Family Business with the Needs of a Family of Businesses
How a second-generation leader kept his growing international business competitive while maintaining the family business feel.
Professor William C. Kirby and Tracy Yuen Manty

The Wen Group
Trying to find resolution in a Hong Kong–based family conglomerate that suffers from nepotism and governance issues.
Senior Lecturer John A. Davis and Matthew G. Pillar

Bush Brothers & Company
The famous baked-beans maker searches for a non-family president who can take the reins while staying faithful to the family's founding values.
Senior Lecturer Lena G. Goldberg and Chad Carr

One of the Lab's most public initiatives is Godrej LOUD (Live Out Ur Dream). For two summers, the project has scoured university campuses asking students, in Shahani's words, to "pitch their dream"—a tactic meant to identify a pool of potential Godrej employees who can help shake up the brand. It, too, has Nisa's full backing. "She's very much a Renaissance person," Shahani says. Mark Kahn adds that his friend's best corollary are the US industrialists of the 19th century, who built legacy charities and cultural institutions alongside their business empires.

Outside work, Nisa supports Dasra, an Indian social enterprise fund. Girls' education is a particular pet cause. She is an active board member of Teach For India, where she has advocated for the nonprofit to reevaluate its hiring and human resources.

She speaks often of her "ovarian lottery ticket," deploying the Warren Buffett term for those born into lives of opportunity. Her philanthropy, however, is hushed. "I am very good at saying no," she says. She prefers quiet time at her apartment over lavish social events. Her marriage in May to Kalpesh Mehta, a real-estate developer, was noted in the press for its secrecy.

Asked about her social life, Nisa quickly mentions treasured Sunday dates with her family. (That family is set to grow, too: Nisa was 8 months' pregnant at the time of the interview.) Family is clearly dear to her. Yet it is also driving her restlessness about efforts to refashion Godrej. "The most frustrating part, for someone like me, is probably the family," she says with a slight chuckle.

Ushering in a new culture still requires convincing the family and its institution, which remains conservative. She speaks of a "balance" in the company between the family and "professionalism"—a structure shed of family dynasty. Her hope is to push Godrej gradually toward the latter.

To do so, the young executive must rely on old business practices. "There is a boardroom conversation," she says, when asked about her internal lobbying efforts. "But, you know, I've learned that everything doesn't happen in the boardroom."

Featured Alumni

Featured Alumni

Class of MBA 2006, Section F

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