By Dr. Fred Ogolla
Strathmore Business School was honoured to host the 1997 Economics Nobel Laureate, Dr. Myron Scholes. The key theme highlighted in the invite was that Professor Scholes ideas would help Kenya prosper towards attaining middle-income status. Important questions lingered in my mind, What is in it for me? What is in it for Strathmore Business School? Perhaps this could be answered by knowing what it takes to be a Nobel laureate.
Few scientists experience the unique honor of receiving an unexpected phone call with a foreign voice on the other line. Once the message becomes clear that they’ve won the Nobel Prize, life ceases to be the same. The Nobel Prize is an award honoring the best work in physics, literature, chemistry, medicine, peace and economics;is viewed as the highest intellectual honor in the world. Alfred Nobel, Peace Advocate and Inventor of dynamite, left the money for the first five awards in his will. In 1901, the Nobel prizes were born. What does it take to win a Nobel Prize?
Though there’s no clear formula for success, there are certain traits common to many Nobel laureates. Above all, the prize favors people who seek to advance human knowledge or create solutions to the world’s problems, with accomplishments ranging from Robert Koch’s discovery of the bacterium responsible for tuberculosis to Martin Luther King Jr.’s leadership of the U.S. civil rights movement in the 1960s.
People, who create paradigm shifts, or major shifts in thinking for a field, are more likely to receive a Nobel Prize for their work. For instance, it would be tough to imagine where theoretical physics would be without Albert Einstein’s contributions that earned him the Nobel Prize in physics in 1921.
Dr. Scholes on his part created a paradigm shift in finance that had been dominated by Obligatory model of derivatives or valuation through inventing the option model and its method of valuation, widely known as Black Scholes model.
This, for a while, kept me thinking that the Chief Guests presentation would have been on how to boost ones chances of scoring a Nobel prize. Little did I know that there would be surprises coming my way and some tangible benefits for SBS, the entire Strathmore University and Kenya in the long-term.
Before his presentations, many people knew that Dr. Scholes was the inventor of the Black Scholes model, but most of them could not even dare try to explain what exactly it was. I did not know what it was either. One attendee complained of the sleepless nights he received regarding the model, to which the Nobel Laureate responded jokingly that dont just be thinking of how many sleepless nights the Black Scholes model has caused you, but how many sleepless nights it caused me and it continues to cause me in advancing it.”
This reminded me of the time I was studying philosophy when I enjoyed various theoretical schools of thought including Rene Descartes philosophy of clear and distinct ideas. But one Philosophy that made my life harder was Emmanuel Kants categorical imperatives. When it dawned on me that the author must have spent more time, energy and resources in coming up with their models, I shifted my attention from the author to the situation that worried them and made them work toward demystifying the reality. Even more worrying is our ignorance of models that ought to make the world, and Kenya for that matter, a better place. This was like a revelation to me.
I came to pity myself at the moments I have given up on theories or ideologies just because they were complex to understand, yet they have already been demystified by someone who took more time doing that than the time we need to understand these theories and models. This made me search for Dr. Scholes during the networking cocktail held after his talk and asked him to explain to me in a paragraph what Scholes model is. He made it so clear to me. Since then, I have been able to explain to more than ten people what the model is. I realized that even the most complex things in the world have their basics; therefore, to understand them, one needs to know its basic foundation. I discovered that there is a lot of simplicity in complexity that makes one sophisticated.
Black Scholes model is a complex and sophisticated framework built on basic real life issues. May be thats what makes Dr. Scholes simple and humble but sophisticated.
In that regard, the key message from Dr. Scholes visit is that we just need to observe the basic realities in all we do and come up with models and frameworks that can solve them and in this way, can end up as the ideas that if Kenyan businesses employ, would help our country in its prosperity as recognized in our vision 2030. From this, Kenya will be able to achieve its goal by responding to its realities, which are basic and lead to sophisticated models.
This is where Strathmore University has a role, to observe basic realities/ challenges that our path to prosperity faces and develop models to guide the country in this path. If this happens, we shall be sure that at least one Strathmore University Scientist will join the exclusive club of Nobel Laureate and imitate Dr. Scholes. This would be win for all, win-win-win-win…