Q&A: Heinz CEO William Johnson on Leadership

On paper, William Johnson had the perfect background to run H.J. Heinz, the $10 billion food company. He'd worked as a marketer in the company's flagship ketchup business, then orchestrated turnarounds at its pet-food and StarKist divisions. But there's really no preparation for what Johnson, CEO since 1998, has had to manage through recently: a high-profile proxy fight with activist shareholder Nelson Peltz, followed by a punishing global recession. In the latest in his series of interviews as part of NEWSWEEK's partnership with Kaplan University, NEWSWEEK chairman Richard M. Smith spoke with Johnson about how his view of leadership has evolved during a long stint in the corner office. Edited excerpts:

Smith: How many Heinz products do you taste during R&D?
Johnson: During a year I might taste 300 or 400 from around the globe. Some are more challenging than others—my least favorite being mung bean, which is a drink we sell in Indonesia. I'm usually the last person to taste a product we're introducing, and I have no vote—I've never believed in the rule of the "golden tongue."

After more than 10 years as a CEO, are you a better leader? There's no comparison. I started out under the assumption that what got me to the position of CEO would work when I became CEO, and that is running the business and execution. That's not my job as CEO. My job is to lead the people and manage the process. It took me a couple of years to learn that, and [when I did] I stepped back from the operations of the company and really began to focus on leadership, on having the right people in the right place, and on making sure people were properly motivated, incentivized, and directed.

Your dad was a longtime NFL coach. What did you learn from being a coach's son?
It's a very black-and-white upbringing: you win, everybody's happy; you lose, no one's happy. I learned to avoid the peaks and valleys—you're going to have days you win, days you lose, and you have to manage them the same.

How many people do you personally interview or hire in a year, and what do you look for?
I probably interview around 50 or 60 people, and I probably have direct influence on hiring maybe a third of those. No president in the company is hired without my approval, because it's that level—the business-unit managers, the country managers—who really make this company work. I look for energy and passion—that willingness to really step out. And I look for somebody who's prepared to take a risk and suffer the consequences of a failed risk—or the benefits of a successful risk. Once they're hired, I get very involved in helping transition and move people around.

Did you learn a particular lesson from a risk you took?
Yes. In the early 1980s we had a little cocoa plant sitting in the middle of Iowa, and it wasn't being used. My boss said we have to do something with this. So I went to Warner Brothers and got the license for Superman, and I planned to launch Superman hot cocoa. I thought this was a brilliant idea, and I told my boss I was going to launch it nationally. He sort of looked at me like I'd been out too late the night before. He said, "How about we do this in a test market?" We did; it failed miserably—and I got promoted. When he promoted me he made an interesting statement: he said you have to take a risk, and if you're not prepared to bet your career occasionally, you're not going to move the business forward.

In 2006 Heinz came under pressure from activist investor Nelson Peltz. How did you respond to that?
It created a sense of urgency that we need to change faster ... It also helped me understand leadership, because it was a situation where we had to [deal with both] the shareholder battle going on and keeping the company operating. It was a process that opened my eyes, and Nelson and I are very good friends now. I talk to Nelson frequently, more at my instigation than his.

Heinz has put up good numbers during the recession, but how has it shaped the way you do business?
Our consumers are changing, particularly in the developed part of the world. They're becoming far more value-conscious about how they buy products. They're more concerned with stretching their dollar, their pound, or their euro, and they're prepared to make trade-offs they haven't before, such as buying private-label brands. In the United States, they're looking for coupons. No one knows, but I think we're seeing a permanent change in the way consumers value brands and products in the developed world.