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Calculated Risk-Taking… Get Good at it

Irene Rosenfeld

In 2006, Irene Rosenfeld became Chief Executive Officer of Kraft Foods Group, one of the most popular cookie-and -cracker companies in United States.

She did have some challenges during her long career. She was overlooked for the CEO post at Kraft Foods, so she quit in protest and joined Frito-Lay for 3 years.

But soon Irene Rosenfeld was called back as CEO of Kraft Food and during this phase she restructured the company. At the time the company had huge losses. She turned it into two profitable companies.

Currently, she is the CEO of Mondelez International, the global company that was formed from her spin-off, and she is the highest paid woman executive globally.

At the core of Irene Rosenfeld’s business decision-making were her calculated risk-taking abilities.

As mentioned above, Kraft Foods Group was struggling to make profits despite popular products in their portfolio.

Irene Rosenfeld took some calculated risks:

One calculated-risk was acquiring Cadbury, a move that was opposed by many of Kraft Food Groups’ leading investors such as Warren Buffet. Buffet called the deal “dumb” and reduced his shares. His move was most likely regrettable because her hostile takeover saw Kraft Foods stocks increase by 19-percent and directly benefitted from adding popular brands that belonged to Cadbury to Kraft Foods portfolio.

A second calculated-risk was in spinning-off Kraft Foods itself. When she found that there were two distinct performance levels for Kraft Foods – as a grocery major within North American markets and as a successful snacks company globally, she set out to split Kraft Foods into two: The North American unit was called Kraft Foods Group, Inc. which continues to handle selling groceries, while the international snacks business became Mondelez.

Despite several doubts by industry analysts, Rosenfeld took bold and decisive business decisions. She was able to take such a strong position and was able to enact her decisions largely because of extensive research, asking the right questions and building the right decision-making process. These are certain lessons for each of us looking to achieve personal and business excellence.

Irene Rosenfeld

Take Action, Succeed Faster

A core requirement for decision-making is identifying and analysing the risks associated with the available choices.

To Calculate means to compute, work out, reckon, figure; add up/ together, count up, tally, total, tot up…

A calculated risk assesses resources such as business intelligence, analytics, subject matter experts, available resources, and personal experience to compute the “probability” of success and to finally make a choice.

Risk-taking is essential to personal and business growth. Calculated risks take time and can be a difficult process. The first step to becoming good at acquiring a skill is understanding:

1. Talk to people who you know are successful and whom you admire. Ask them how they take calculated risks. Some people seem to do it on auto-pilot. It has become a way of thinking for them.  Getting their formula will be difficult because they may have a hard time articulating it.  But if you ask enough people you will start to pick up patterns.

2. Read from reliable sources. Here are a few links where you can take a course.

  1. http://hbr.org/2007/01/courage-as-a-skill/ar/1
  2. http://www.mindtool s .com/pages/ar t icle/newTMC_07.htm
  3. http://www.mindtools.com/dectree.html

Best courses in my opinion are academic courses. Remember that calculated risk taking is complex.

3. Start small and steadily progress towards a larger goal.

4. Keep a journal where you can write down your decision making process and from time to time go back and see what insights you can draw.

How About You?

Have you taken ‘calculated risks’ that have made a difference to your growth?
What processes did you adopt to ensure that your calculated-risk prove to be a winner?
Your experience could inspire several others. Do share your insights.

Photo Credit: Fortune Live Media

 

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