Musings on "The Theory-Based View: Economic Actors as Theorists"

Key highlights

"Importantly, we also suggest that in their search for paths to value creation, economic actors are not constrained by their arsenal of existing resources (cf. Barney 1986). Rather, novel questions, novel problem frames, and novel economic theories reveal previously unseen paths to solutions and value in assets."

"Our physical reality and environment has a large if not infinite variety of features, characteristics, and possibilities that remain latent or dormant (Chater et al. 2017). However, theories provide a mechanism that allows for salience and unique observation. Novel theories, sparked by novel questions and novel problem frames, allow us to see, look for, and express that which may previously have escaped awareness. And importantly, the reinterpretation of even mundane objects, events, occurrences, or readily visible factors may take on completely new meaning and insight in light of the novel theories we possess."

"Organisms—humans included—attend to their surroundings not in a computational or camera-like sense (cf. Geisler 2011Tabachneck-Schijf et al. 1997) but rather through the questions, problems, hypotheses, and theories that they have in mind and impose on the world (Koenderink 2012). Thus salience and observation, in terms of what we are aware of, are driven by theories and questions and not by the inherent characteristics (called “natural assessments” in the literature), presence or even nature of objects (cf. Kahneman 2003). This intuition, intriguingly, was featured in some of Simon’s early work, when he argued that “a subject perceives what he is ‘ready’ to perceive in it; the more complex and ambiguous the stimulus, the more the perception is determined by what is already ‘in’ the subject and less by what is in the stimulus” (Dearborn and Simon 1958, p. 140, emphasis added)."

"What animates our vision are the questions that prompt observation and perception. Therefore, the environment a strategist perceives—the potential resources recognized and the value-tags affixed to assets and resources—is always a reflection of a question asked or a problem framed."

This is incredibly accurate and personally provoking. People with different perceptions of the world can drive down the exact same street and see and notice completely different things. None are wrong, and all are right to that person. Thus, greater value comes in our ability to see through a multiplex of perceptions and stitch together a multi-dimensional view of the world.

"Valuable theories—whether scientific ones or economic theories of value—perform several key sight-giving functions. By effectively framing a problem or a set of problems, a theory provides a coherent, abstract, causal representation of the world. It serves not as a (or the) representation of the world, per se, but rather as a map of what might be observed: a way of seeing things that may not be evident or obvious to others."

"Our approach, on the other hand, is fundamentally about identifying possible discrepancies with widely agreed current or future realities, or creating what we might casually reference as a “reality distortion.” That is, if realities—as discussed in the preceding section (also see Chater et al. 2017)—are multifarious and multistable, then the “distortion” of reality is simply a way of pointing out and making alternative realities, through questions and theories, more salient and possible (cf. Attneave 1954)."

I really enjoy this definition of reality distortion. Basically, reality is simply one perception of the world, and yet you can have multiple perceptions of the world that are all correct. Therefore distorting reality is simply changing the perception of the viewer.