The Jack Welch Of The Meat Aisle

The first question Lawrence R. Johnston asked when a headhunter got in touch with him three years ago about running Albertsons Inc. (ABS ) was: "What's Albertsons?" But it didn't take long for Johnston, then the chief executive of GE Appliances (GE ) and often on the receiving end of such feelers, to realize that Albertsons, the nation's second-largest grocery chain, was the opportunity he had been waiting for. His assignments at General Electric Co. (GE ), especially resuscitating its ailing European medical services business in the late 1990s, had been so challenging that every other job he considered felt as if he would be taking early retirement. Not so at Albertsons. "This one intrigued me because it was very close to customers. It was big. It was complex. And it was broken," he says.

It certainly was. The folksy, family-owned grocery chain that Joe Albertson started in Boise, Idaho, in 1939 had become a $35 billion dysfunctional mess. The company had botched the integration of its 1999 merger with American Stores Co. "It was clear we didn't know who we were," recalls Paul I. Corddry, a board member since 1987. And while executives were preoccupied with union battles and lawsuits, Wal-Mart Stores (WMT ), Target (TGT ), and other discount retailers were eating Albertsons' lunch.