What does Sudhir Sitapati’s journey tell us about professional leadership

There is an interesting irony in Sudhir Sitapati’s professional journey. He spent more than two decades at Hindustan Lever, an organisation that has earned a reputation as a “factory of CEOs”. Over the years, HUL has produced some of the most respected business leaders in corporate India, many of whom have gone on to head large Indian and global companies.

Sitapati was one of them. After a long career at HUL, he moved to Godrej Consumer Products as Managing Director and CEO in October 2021. Nearly five years later, his decision to move on from the Godrej Group comes as something of a surprise, particularly because he has been steering the company through a challenging period for the FMCG industry.

But perhaps the more interesting story is not why he is leaving. Unless the reasons are publicly established, speculation about an individual CEO’s exit would be unfair. The larger question is what his five-year journey at Godrej tells us about the challenges faced by professional CEOs when they move from a highly structured multinational environment into a large, legacy family-owned business.

On paper, the move from Hindustan Lever to Godrej Consumer Products looked logical. Both are major FMCG organisations with strong brands, extensive distribution networks and a deep understanding of the Indian consumer. Sitapati brought considerable experience from one of the world’s most sophisticated consumer companies, where brand building, consumer insight, distribution, financial discipline and leadership development are deeply embedded in the organisation.

There is little doubt that this experience would have been valuable to Godrej. But experience cannot simply be transferred from one organisation to another. Management systems are shaped by the culture in which they evolve. What works naturally within a multinational can require considerable adaptation when introduced into a family-owned Indian business.

And this is where Sitapati’s Godrej journey becomes particularly interesting.

Godrej Consumer Products was not a company waiting for a new CEO to teach it how to run an FMCG business. It already had strong brands, experienced people, an established distribution network and the enormous legacy of the Godrej name. It had its own institutional memory, decision-making processes and understanding of its markets.

The challenge for a new CEO was therefore not to build a business from scratch. It was to determine what needed to change, what needed to be retained and, importantly, how quickly that change could realistically be implemented.

This is the fundamental challenge when professional managers enter family-owned businesses.

Family-owned businesses operate differently from professionally managed multinationals. Neither model is necessarily superior; they simply have different histories and organisational instincts.

A family-owned company carries a legacy that goes beyond financial performance. There is an emotional connection to the brand, its history, its people and the values built over generations. Promoters may think about the business in terms of decades rather than quarters. That long-term perspective can be a considerable advantage.

At the same time, as family businesses become larger, more complex and global, professional management becomes essential. Families need leaders who have handled scale, built brands, managed talent, understood consumers and navigated difficult business cycles.

This explains why professional CEOs are increasingly invited to lead family-owned companies.

But there is an inherent paradox. The professional CEO is brought in because the family wants professional expertise. Yet the family remains the ultimate custodian of the business.

The CEO therefore has authority, but that authority operates within an ecosystem that existed long before he or she arrived.

This does not necessarily mean that professional CEOs have limited freedom. Many are given considerable operating autonomy. But every large organisation has formal and informal structures — the board, promoters, senior management, long-serving executives and relationships built over decades. Some may never appear on an organisation chart, but they can influence how change is perceived and implemented.

A CEO may have the authority to make a decision. Understanding how that decision will be received across the organisation is another matter altogether.

This is where leadership becomes more important than management.

A senior executive coming from HUL cannot simply transplant the HUL culture into Godrej. Nor should he. The objective should be to bring the best of one’s experience while understanding what already works in the organisation.

Every legacy organisation has strengths that may not be immediately visible to an outsider. There are also practices that may have become outdated and need to be challenged. The incoming CEO has to distinguish between the two.

And that takes time.

Five years may appear to be a reasonably long tenure for a CEO. But in a large organisation with decades of history, it can also be relatively short if the ambition is to change systems, processes, people and mindsets.

Culture cannot be changed through a management presentation. It changes gradually through decisions, behaviour, appointments, incentives and the way employees see leadership responding to success and failure.

There is also the larger reality of the FMCG business. Consumer companies constantly operate under pressure to grow while protecting margins. Input costs fluctuate, consumers become more price conscious, competition intensifies and shareholders expect consistent returns.

The CEO is consequently balancing several competing demands: grow volumes, protect margins, invest behind brands, manage costs, strengthen distribution and deliver shareholder value.

This pressure is not unique to Godrej. It is visible across the FMCG industry, whether the company is Indian or multinational. The consumer landscape has changed dramatically. Digital commerce has altered routes to market, consumers have more choices, competition has intensified and affordability has become increasingly important.

Against this backdrop, a professional CEO has an unenviable task. The leader has to think about where the company should be five years from now while simultaneously delivering the performance expected today.

This makes the question of CEO freedom particularly relevant. How much freedom does an outside professional actually have in a family-owned company? Is the freedom as extensive in practice as it appears on paper? Are there invisible boundaries that a CEO discovers only after taking the job?

These are questions outsiders can rarely answer with certainty because much of what happens inside a boardroom remains private.

But perhaps the larger lesson is that bringing in a professional CEO is only the beginning of professionalising a family-owned business. The more difficult task is creating an environment in which professional expertise and family legacy can coexist.

The family has to give the CEO enough space to lead. At the same time, the CEO has to recognise that he or she is not entering a blank canvas. The organisation has a personality, and understanding that personality is part of the leadership responsibility.

The best outcome is not for one culture to defeat another. It is to create a third culture that combines the strengths of both.

The professional CEO brings new perspectives, management discipline and experience from other organisations. The legacy organisation brings institutional knowledge, relationships, values and an understanding of the business that cannot be acquired overnight.

The two have to learn from each other.

Perhaps that is the most interesting way to look at Sudhir Sitapati’s five years at Godrej. His move from Hindustan Lever represented the movement of a highly experienced professional into one of India’s best-known family-owned consumer businesses. His departure now provides an opportunity to look beyond one individual’s career and examine a much larger question facing corporate India.

As family-owned businesses grow and become more sophisticated, professional CEOs will increasingly become part of their leadership model. But professional management is not simply about appointing an outsider. It is about giving that outsider the opportunity to bring change while respecting the organisation’s history.

The difficult part is marrying the two.

The CEO has to adapt to the organisation. The organisation has to adapt to the CEO. Both have to find a way to create a culture stronger than either one brought into the relationship.

That process takes time, patience and, above all, trust.

Sitapati’s exit may therefore mark the end of one chapter at Godrej Consumer Products. But it also raises a larger question for India’s family businesses: when a professional CEO enters a legacy organisation, who ultimately changes — the CEO, the organisation, or both?

The answer may determine how successfully India’s family-owned companies make the transition to professional management without losing the DNA, values and institutional strengths that made them successful.