CEO and president, H.J. Heinz Company
Nationality: American.
Born: 1949.
Education: University of California–Los Angeles, BA, 1971; University of Texas–Austin, MBA, 1974.
Family: Son of Bill "Tiger" Johnson, a professional football player and coach, and mother's name unknown; married Susie (maiden name unknown), c. 1973; children: two.
Career: Drackett Company, 1974–1977, assistant brand manager; Ralston Purina, 1977; Frito-Lay, 1977–1979; Anderson-Clayton Foods, 1979–1982, group product manager, then vice president and director of marketing for consumer products; Heinz U.S.A., 1982–1988, general manager of new business, then general manager of marketing and vice president of marketing; 1988–1993, president and chief executive officer of Heinz Pet Products, then also supervisor of StarKist Foods; H.J. Heinz Company, 1993–1996, senior vice president and director; 1996–1998, president and COO; 1998–2000, CEO and president; 2000–, chairman, CEO, and president.
Address: H.J. Heinz Company, 600 Grant Street, Pittsburgh, Pennsylvania 15219; http://www.heinz.com.
William R. Johnson was recruited to Heinz U.S.A. in 1982 and made a name for himself turning around Heinz's poorly performing StarKist and Pet Products divisions, which some industry analysts had considered unsalvageable. Johnson was appointed president and chief executive officer of H.J. Heinz Company in 1998 and was made chairman in 2000. After taking over, Johnson focused on cost cutting and the performance of major brands to help turn Heinz around, as it had suffered from stiffer competition and pricing demands from wholesalers. Johnson was described by himself and coworkers alike as incredibly intense; industry analysts noted that Johnson was a fiscal conservative and dedicated cost cutter.
Life Is Like a Football Game
Johnson's father, Bill "Tiger" Johnson, was a center for the San Francisco Forty-Niners professional football team and later the head coach of the Cincinnati Bengals. According to Johnson, who grew up in Palo Alto, California, following his father's career helped instill him with a fiercely competitive spirit and a passionate distaste for losing. He credited his father as being a major influence on his life and continued to take advice from him throughout his career. Johnson said he also learned how to motivate people by examining the methods used by his father and other coaches. In an interview with Patricia Sabatini for the Pittsburgh Post-Gazette, Johnson noted, "Some people need to be handled gently. Other people you can kick in the rear end" (May 18, 1998).
After receiving his master's in business administration from the University of Texas–Austin in 1974, Johnson went to work briefly for Ralston Purina in St. Louis and then Frito-Lay in Dallas. In 1979 he joined Clayton Foods, also in Dallas, and quickly impressed the company's CEO. Before long, he was made vice president of marketing and of the consumer product group. As the then CEO Rick Avery later recalled, Johnson was results oriented, and every year he was with the company the bottom line went up.
"Establishing Price-Based Costing"
Johnson's success at Clayton Foods caught the attention of the Heinz Company, which began to recruit him. Avery said he fought off Heinz's advances but knew he had lost the war when Heinz sent a corporate jet to pick Johnson and his wife up for a meeting. Johnson joined Heinz U.S.A. in 1982 as general manager of new business and was later appointed general manager of marketing.
In 1988 Johnson was made president of Heinz's Pet Products division and four years later he took over one of the company's most visible divisions, StarKist Foods. As the head of these divisions Johnson reached new heights, successfully turning them around partly through a process he helped pioneer called "price-based costing." The traditional formula of 1980s business was the simple equation, cost plus margin equals the price of the product. In the new business era of the 1990s, with increased competition offering consumers more and more product choices, Johnson turned to the philosophy of determining what consumers were willing to spend and then doing whatever was necessary to be profitable at those prices. This goal was primarily met by slashing costs in every possible realm of the business. Johnson described the concept as simple but noted that its execution could be painful.
Johnson's strategy at Pet Products and StarKist was a success. As sales and profits soared, so did Johnson's renown within the company. In 1993 he was named to Heinz's board and became a senior vice president responsible for Heinz's burgeoning operations in Asia Pacific. The experience would prove invaluable with respect to his eventual leadership of H.J. Heinz. In an interview for an alumni profile on the University of Texas–Austin Web site, Johnson noted, "Working overseas, you have to learn to be flexible, to adjudicate issues in local terminology" (March 3, 1998). He pointed out that each over seas market required a unique approach and marketing technique and that establishing a brand was often more important than seeking profits in the early stages.
Named Ceo
In 1998 Johnson took over the position of CEO at Heinz from the longtime and popular CEO and chairman, Anthony J. F. O'Reilly. The first step Johnson took as CEO was to announce several top management appointments, as he installed his own senior administrative team. Unlike his predecessor, who was surrounded by older top executives, Johnson was intent on recruiting and promoting a new generation of younger talented executives, most in their 40s.
Johnson also established that he would continue to be dedicated to cost cutting and to restructuring the company, which he had begun the year before through Heinz's Project Millennia. He also announced that he would centralize decisionmaking at Heinz's Pittsburgh headquarters and increase headquarters' role in tracking the performance of Heinz's numerous international operations.
Some analysts feared that Johnson would be overeager in his cost-cutting wars with other large food companies. The Industry analyst Nomi Ghez also noted that Johnson was changing the centralized structure of the company and told Patty Tascarella, in an interview for the Pittsburgh Business Times, that "the risk is to hurt a culture of a company while you're achieving efficiencies" (December 12, 1997). Nevertheless, many analysts saw Johnson as the right person for the job at the right time, because his strength in operations would help the company better compete in a tougher industry environment.
Faced Many Challenges
When he took over the reins at Heinz, Johnson was dealing with a much-changed business environment in the processed-food industry. For example, Heinz and most other food-product companies were facing increased competition from retail giants who were able to squeeze suppliers to keep costs down. In addition, low inflation was leaving little opportunity to raise prices, and more and more consumers were eating out. In a BusinessWeek article, Johnson noted, "You can no longer price your way to prosperity" (December 20, 1999).
In 1998 Johnson announced that Heinz would consolidate its ketchup and condiment business into one advertising and brand-image account valued at $50 million. The move was made to establish a consistent worldwide image for Heinz ketchup that would be similar to images created by Coca-Cola and McDonald's. Johnson also set out to increase sales and cash flow while reducing company debt. He simplified the company's distribution chain by closing warehouses, outsourcing more work, trimming inventories, and disposing of slow-moving products. Johnson's strategy also included returning to basics by focusing on Heinz's core lines, including ketchup and condiments, frozen foods, and infant and nutritional products. In the process, Johnson oversaw the selling of Heinz's tuna and pet-food businesses in a $2.5 billion deal with Del Monte Foods.
Johnson further restructured the company through programs such as the Operation Excel and Streamline initiatives. Nevertheless, Johnson and Heinz continued to struggle with the "good news–bad news" dilemma faced by many corporate food giants. In March 2003, the good news was that Heinz's 15 core brands were doing well, as evidenced by its U.S. ketchup sales garnering a 60 percent share of the market and an overall sales increase of between 14 and 15 percent in its European and Asian markets. However, Heinz reported only modest performance overall, with a net income of $151.6 million (43 cents per share), down from the $201.7 million (57 cents per share) of a year earlier.
In 2003 Heinz's stock was trading at approximately $30, a 25 percent decline from the previous year. Furthermore, Heinz had a total of 24 charges against earnings over the previous 26 quarters. Some analysts noted that Johnson's seemingly endless restructuring programs had earned little profit for shareholders. Others, however, were more optimistic of John-son's moves within the company. The industry analyst William Leach told David Shock for a BusinessWeek Online article, "I think people don't realize that this company, over many years, had cobbled together a messy portfolio of businesses, and the recent restructurings and assets sales will make Heinz healthier" (April 29, 2003).
Management Style: Low-Key and Personal
In contrast to his predecessor, who was known as a raconteur who enjoyed the spotlight, coworkers and analysts described Johnson as decidedly low-key with an unpretentious and casual demeanor. On the other hand, his management style was described as hard charging and sometimes even brusque, but also refreshingly direct. In an interview with Tascarella for the Pittsburgh Business Times, the lawyer Art Schwab noted, "Bill is incredibly detail oriented and focused on the objective that's before him at that moment" (December 12, 1997).
Heinz employees described Johnson as a good-natured but demanding boss who set a clear agenda. He was noted for his approachable management style and his preference for conversing in person rather than via telephone or e-mails. Johnson himself commented that he didn't think exclusively about getting ahead because such an approach would get a manager in trouble. He told the Pittsburgh Post-Gazette staff-writer Sabatini, "You become risk-averse and focus on trying to do what everyone thinks you ought to do as opposed to what you really ought to do" (May 18, 1998).
Perhaps recalling his father's coaching days, Johnson described his approach to success in management and business as akin to a football game where heroic 99-yard kickoff returns are few and far between. However, as he noted in his alumni profile on the University of Texas–Austin Web site, "if you plan each play in your drive meticulously and execute it flawlessly, you can make one first down, then another, then another—until you've taken the ball across the finish line" (March 3, 1988).
Getting Heinz on Track
In a meeting with investors and analysts in 2003 Johnson said that the company intended to introduce something new to their ketchup business every 12 to 18 months, such as the company's recent additions of colored ketchup and the Easy Squeeze! Bottle. In addition to focusing on Heinz's giant frozen-foods and condiments businesses, Johnson's strategy emphasized increasing international sales in its European and Asian markets. Johnson told investors that he wanted to establish six markets with more than $100 million in sales. In a 2004 address to the Consumer Analyst Group of New York, Johnson said that Heinz was on track to meet its 2004 netsales, cash, and earnings goals. As reported by Business Wire, he added, "We have turned our U.S. food-service business around with 8 percent sales growth in the first half of fiscal 2004. We have exciting innovations planned for our U.S. and European brands, and we are on pace for record cash flow" (February 18, 2004). Johnson also held positions as a member of the board of directors of Grocery Manufacturers of America and a director of the Clorox Company.
Sources for Further Information "Alumni Profile: William Johnson," University of Texas–Austin, March 3, 1998, http://www.mccombs.utexas.edu/news/profiles/johnson.asp.
"Back at Heinz, the Stock Needs Stirring," BusinessWeek, December 20, 1999, p. 162.
"Heinz on Track for 8 to 9 Percent Earnings Growth," Business Wire, February 18, 2004, http://www.businesswire.com.
Sabatini, Patricia, "Heinz's CEO Is a Lot Like Tiger," Pittsburgh Post-Gazette, May 18, 1998, http://www.postgazette.com/businessnews/19980518bheinz1.asp.
Shook, David, "Heinz: In the Soup, or On a Roll?" BusinessWeek Online, April 28, 2003, http://www.businessweek.com/bwdaily/dnflash/apr2003/nf20030428_6278_db014.htm.
Tascarella, Patty, "Following a Heinz Legend: New CEO Is Much Like His Cost-Cutting Predecessor," Pittsburgh Business Times, December 12, 1997.
—David Petechuk
