Everything Has Its Price (2014 Spring Commencement Ceremony Friday Night)
- Date: 05/09/2014
- Author: Dr. Luis M. Proenza (President, The University of Akron)
- Location: E.J. Thomas Peforming Arts Hall
Today you complete an important chapter of your life. Next month, I shall do likewise and complete my presidency here. These circumstances provide an excellent opportunity for one final University of Akron lesson. This one is on me.
Since we will celebrate Mothers Day this weekend, I am turning to the sage advice of my own mother for this evening’s lesson. Many was the time she would sit me down and say, “Recordar: todo tiene su precio.” That translates into English as “Remember: everything has its price.”
Now we could spend an entire day plumbing the many interpretations of that expression, and its application to the different facets of our lives. But I think it would be most profitable for you if we focus on just one area: risk.
We take hundreds, perhaps thousands of risks every day. It’s impossible to avoid them. Most are quite small – a loose button on a shirt, a yellow stoplight, or leaving an umbrella at home on a cloudy day. And for each of these risks we do a brief, often subconscious cost analysis. What do I gain if I the risk pays off, what do I lose if it fails. Essentially, we are asking, “What is the price?”
Risk, however, raises the possibility of failure or loss, and that provokes anxiety. The problem is that we sometimes fail to appreciate that risk and anxiety are two quite different conditions.
A simple story will illustrate my point.
The Surgeon General tells us that cigarettes kill more than 440-thousand Americans each year,[i] and automobiles kill more than 30-thousand people per year.[ii] But, no one seems to be afraid of cigarettes or automobiles.
However, according to the Deputy Director of the National Institutes of Health, everyone is afraid of sharks.
It is estimated that there are about 70 shark attacks worldwide each year.[iii] The National Center for Health Statistics doesn't even keep a record of shark attacks because there are so few. (They know how many people are killed by bee stings, but not by shark bites.)[iv] The best guess is that sharks kill only two or three people each year in the United States.
But, the fact is that if you went to a crowded beach and shouted "shark" - everyone would race out of the water, jump into a car, light up a cigarette, and drive home!
Risk-taking is a necessary element for a balanced, healthy life. It introduces the possibility of loss or failure, but it also injects the potential for new opportunities and beneficial results. In fact, it is now understood that few things predict your potential for success more than your tolerance for risk.
The timid may think that avoiding risk ensures safety, but be assured: a world – or career – utterly devoid of risks ultimately is the most hazardous of all, because that makes us fragile.
The idea is well developed in a recent book titled, “Antifragile: Things That Gain from Disorder,” by Nassim Nicholas Taleb.[v] He says volatility, variability, stress and disorder are actually beneficial, and cites our own bodies as an example of what he means.[vi] Stresses on our muscles make them grow stronger and more resilient. Bacteria, germs and viruses may temporarily stress your immune system, but over time will make it more robust.[vii]
Taleb uses the restaurant industry as another example of antifragility at work.[viii] Imagine if the government bailed out every failing restaurant in your region. There would be no incentive to improve. Eventually the quality of the local cuisine would decline to a level on par with a cafeteria. But when failure is a stark possibility, as it is in any free market, restaurateurs do what they must to survive: they innovate, they experiment…they take risks. And the industry, not to mention society, benefits.
This same principle applies in your career. You must risk disappointments and some failures in order to find and capitalize on new opportunities.
Taleb also encourages readers to “embrace ‘optionality’ – like a traveler without an itinerary feeding off randomness by grabbing opportunities as they arise.”[ix] Planning may provide some sense of security, but it also adds layers of rigidity, complexity and vulnerability.
Research at the University of Virginia suggests that learning to accommodate feelings of uncertainty is not just the key to a more balanced life, but often leads to prosperity as well.[x]
The researchers interviewed 45 successful entrepreneurs, all of whom had taken a business public at least once. Almost none of these individuals embraced the idea of writing comprehensive business plans or conducting extensive market research. They did not choose a goal and made a plan to achieve it. Instead, they evaluated their resources and circumstances, and imagined realistic outcomes.[xi]
Significantly, they did not focus on the possibility of spectacular rewards from a venture, but determined how great their loss would be if they failed. They remembered that everything has a price. If the potential loss seemed tolerable and worth the anticipated gain, they took the next step.[xii]
We say of such people that they are prudent. It is interesting to note that one of the synonyms for “prudence” is “thrift,” which if you pursue the etymology a bit further, leads you to “economical management:” and that requires an understanding of . . . price.
The entrepreneurs in the study possessed the ability to accurately assess potential loss, and thereby thrive in the face of volatility and disorder. Taleb says “There is a crucial requirement to achieve antifragility: The potential cost of errors needs to remain small; the potential gain should be large. It is the asymmetry between upside and downside that allows antifragile tinkering to benefit from disorder and uncertainty.”[xiii]
It is my good wish that as you set off on your professional careers, or advance them to the next level, you utilize the critical thinking skills you have learned and refined here and become adept at calculating price of things.
[i] U.S. Department of Health and Human Services: How Tobacco Smoke Causes Disease. A Report of the Surgeon General. http://www.surgeongeneral.gov/library/tobaccosmoke/report/full_report.pdf
[ii] National Highway Traffic Safety Administration. http://www-fars.nhtsa.dot.gov/Main/index.aspx
[iii] Florida Museum of Natural History, University of Florida. International Shark Attack File 2007 Worldwide Shark Attack Summary.
[iv] Centers for Disease Control and Prevention, National Center for Health Statistics/NIOSH Workplace Safety and Health Topics: Insects and Scorpions http://www.cdc.gov/niosh/topics/insects/
[v] Taleb, Nassim Nicholas. “Learning to Love Volatility.” Nov. 16, 2012. The Wall Street Journal http://online.wsj.com/news/articles/SB10001424127887324735104578120953311383448
[vi] Ibid
[vii] Ridley, Matthew. “Economic Bricolage.” The Wall Street Journal. Nov. 26, 2012. http://online.wsj.com/news/articles/SB10001424127887323353204578128872051100906
[viii] Taleb, Ibid
[ix] Ridley, Ibid
[x] Burkeman, Oliver. “The Power of Negative Thinking.” The Wall Street Journal. December 7, 2012. http://online.wsj.com/news/articles/SB10001424127887324705104578147333270637790
[xi] Ibid
[xii] Ibid
[xiii] Taleb, Ibid
- Topic Category: Commencement Address
- Tags: [antifragile, anxiety, risk]
- Filed in: Speeches,