Saturday, 7 September 2013

Real options come into being in real life

About two weeks ago, I came back from my holidays, where I, my brother and our friend spent time wandering in the mountains. We love hiking and we have many friends sharing our passion. Having such a hobby, it is almost obvious that there would be a constant, informal competition between all of us. When we meet with our friends, we often spend time discussing different tracks, unexplored routes and places, transition times between places etc.

We know that three of us create quite strong and reliable team, where everybody can count on each other in difficult situation. We have proven that plenty of times and we know, what we can expect from each other. That is why we decided to break out our friends' records. We were aspiring to establish three records in terms of: longest track, longest time spent in the mountains walking and the biggest total elevation crossed during entire trip.
We chose a track and prepared gear to go out, in the evening. We got up at midnight and went out. At 6 am, we were sitting at the highest peak on our route, delighting in the sunrise, at the crack of dawn. We took vast amount of photos, made a GoPro movie and went further chasing our records. Nothing was bidding fair our breakdown. 

We started to feel lack of physical power and motivation at about 16th hour of our wandering. All of us knew that feeling. We were trying not to talk about it, as it might have depressed others even more quickly. However, the truth was that we ate all our food, snacks, sweets, fruit and recovery gels. We also drunk entire water, isotonic drinks and tea we had with us. Each of us was motivating others to walk, being on a last legs same time. We were extremely suffering from lack of mental and physical power.

The interesting thing is that when you are fed up with everything and you hate your decision about breaking records, you miss your bed and glass of water, then you can transform that internal anger and find some more mental strength. It was helping us with keeping on pushing forward. 

Having one hour left to our stop, a shelter, we met very tall guy, standing on tracks cross and checking something in a map. He asked us how long would it take to go down following track he was pointing to.
We had just looked on each other, silently agreeing that the tall guy was completely lost in the mountains. However, he was talking so fast, and was so convinced that he is in a totally different location that we gave up. We did not have enough energy to argue with him. We waited, when he finished and told him: "You are in wrong valley, mate. You have about four hours to get to the place you would like to be and additional one and a half to come down". We were persuading him that the only choice he had was to follow the route we would be going down. The tall guy told us that he could have done that path in about three hours, as he is training ultra marathon running. We said okay, you might be right, however bear in mind that sunset would be in top thirty minutes, you have no food and water in a just one third of your camel bag and that is not all. The most dangerous thing was a bear, which was living in the neighborhood and approaching tracks from time to time. The tall guy admitted it was pointless to go to the location he wanted to be and bearing in mind sunset, lack of food and unwanted hand shake with bear, he decided to take our piece of advice. He decided to run down along route we pointed to him.

Before he left, we gave him an option of coming down with us through the forest, as we know that track very well and we had head lights. Also, we said that we had to stay for twenty minutes in hostel to buy some water and at least one Snickers per person.

Initially, he was reluctant and decided to run down himself. However, when we reached the hostel he was waiting for us with his mind changed.
He found our option useful and decided to exercise it. All of us went down chatting and laughing. At the end, he offered us a lift home, which we took as a miracle, as we were extremely exhausted.

It was the other day, when I realized that we had offered the tall guy a real option. It was having all option's properties like: 

  • value
  • expiry date
  • event transforming an option to a commitment

Option's value is not that easy to estimate. But, when you spare a while, thinking about it, you would probably come to the conclusion that you do not need to know its exact value. Humans are good in comparing and prioritizing, but they tend not to give correct absolute values. Thus, comparing is very good technique of evaluation options. It was obvious that the only other choice the tall guy had was to spend a night in the mountains, hugging with the bear (if lucky enough). So, basic comparison of two options gave him a fairly good understanding of his priorities. He had chosen to go down safely.

Expiry date was actually determined by the last point he knew for sure we would be heading to - the hostel.

Transformation moment was a moment, when option stopped being something, which may happen in the future and became a commitment of following three, exhausted guys. He knew perfectly well, why he would exercised that option. It was better for the tall guy to go with us, instead of spending a night in the mountains.

The conclusion is simple: real options are everywhere. They surround us. The only thing we need to do is to start thinking about them and seeing them. 
The most important lesson learnt for me is fact that even in very difficult situation, in unfavorable conditions and being on a last legs, one can still come up with a real option, which might be exercised.