Wharton Professor Offers Views of Economics of Strategy
According to Sidney Winter, an entrepreneur has a specific “viewshed” — what he or she can see from the current vantage point. Is the entrepreneur’s vision distinctive or does someone share the viewshed? If the view is distinctive, what is it worth?
A distinctive viewpoint can give an entrepreneur the ability to visualize the unimagined and move the unimagined from concept to reality. Winter says that products and services move from unimagined to imagined to existing.
The Deloitte and Touche Professor of Management at the Wharton School of the University of Pennsylvania, Winter believes that current pricing systems are incomplete because they don’t adequately account for business innovation. Winter presented the business administration strategy seminar on April 22 on “The Basic Economics of Strategy: Time for Rethinking?” He covered the basic economics of strategy, noted his “complaints” about the existing frameworks, and offers the principles and elements of a new framework.
Current economic costs concepts, he continued, are not helpful when trying to understand where wealth — your grandchildren’s inheritance — comes from. Winter highlighted the case of a company that pioneered a new technology, but failed after 10 years when new entrants came to dominate the segment. While current strategy analysis might treat this company as a failure, he proposed that we could understand the relative success of the firm by tracking the wealth it generated over that 10 years.
His new framework has three principles :
- consistent inter-temporal perspective
- realistic views of pricing, private costs, and cumulative scorekeeping
- a look at cumulative effect over time
Implementation depends on the recognition that entrepreneurs perceive opportunity from idiosyncratic viewpoints.
Co-Director of the Reginald Jones Center for Management Policy, Strategy, and Organization at the Wharton School, he is the author of the influential book, “An Evolutionary Theory of Economic Change,” as well as many articles on the economics of technology and strategy.