Chapter Two
WHAT IS IMAGINATION?
In order to harness imagination, we first need to understand what it is: to define it and what it can do for us, and to understand how it works.
The Power of Imagination
We can most clearly see what imagination is by comparing humans and other animals. An animal like a cow or a fish lives in the realm of what is. A goldfish works with just what is in front of it; it has no standpoint to reflect on its situation.1 It can’t create a mental model of a different, better kind of fish tank more aligned with its aspirations to flourish as a goldfish.
Humans, in contrast, can explore the realm of what is not. A hunter-gatherer could create a mental model of a better kind of basket or what the hunt might be like the following day. In business, we can consider what a company might be like if it were restructured or new products or services we could invent. This capacity to mentally explore the not-yet-existent allows us to deliberately create new things and shape the world around us.
We define imagination as “the ability to create a mental model of something that doesn’t exist yet.” This is also known as “counterfactual thinking”: the ability to create mental objects that are not merely representations of the outside world.*
In business, we spend much of our time in the realm of what is. We think factually, looking at data or a particular situation, trying to determine what is going on. This makes sense. Managing a business involves keeping a complicated effort going; many large businesses are bigger than most cities have been throughout human history. Walmart, for example, with its 2.2 million employees, is ten times the size of the great city of ancient Babylon. It makes sense that most of the time our minds are taken up with just keeping the machine running.
There are times, though, when we need to explore what is not, but could be. In crises like Covid-19, for example, we tend to be consumed with the question “What is happening to us?”—the factual question—to the exclusion of the imagination-provoking, counterfactual question “How can we create new options?”
When we think counterfactually, we put aside mental models we habitually rely on and create new ones. Haier, for example, now the largest appliance manufacturer in the world, transformed itself in the 1980s. At the time, the company was in crisis: the factory was run down and in debt. The new chairman, Zhang Ruimin, decided the company would have to move beyond making passable but lackluster refrigerators. He pulled seventy-six fridges off the production line—any that had even minor faults—and asked employees to smash them up.2 It was a symbolic act to shift thinking from the factual to the counterfactual: What could we do if we got rid of the existing system? Without imagination, all you would be doing is destroying the current reality. A cow, for instance, could not understand the point of bulldozing a moderately useful barn, whereas this might prompt an imaginative human to start making a mental model of something that doesn’t exist yet.
The Evolution of Imagination
How did imagination evolve? It appears to have developed as a tool to solve novel problems: How should we respond to this fire at the edge of our camp? How can we best cooperate in this terrain to hunt this animal? Or how might this person’s erratic friend react if I treat them in this way?
One evolutionary precursor to imagination seems to be the capacity to name or classify situations. Chimpanzees have this skill: they can learn abstract symbols for situations and point to them when they want an additional banana or the room heated up.a What chimpanzees are not particularly good at, however, is rearranging symbols to make novel combinations. A chimp will likely not rearrange symbols to ask if the banana can be heated up. In contrast, human children instinctively apply new concepts to everything. Once a child discovers the idea of cooking, they might ask if grapes can be cooked, if juice can be cooked, if books can be cooked, and so on. If they learn about sadness, they might ask if the dog is sad or if the clock is sad, or observe that the sun might be sad in the evening.
In the evolution of imagination, one crucial development was the ability to divide the world up more discretely and then manipulate how those parts relate. Humans can isolate the concept of heating up and apply it to many things, beyond one fixed idea of heating up the room. As evolutionary biologists Eva Jablonka and Marion Lamb note, this flexibility shows in our language, which “gives the unit, the word, great freedom to move from context to context … no longer constrained by referring to one particular situation.”b
This ability to analyze and isolate concepts has allowed humans to take ideas from one domain and apply them analogously to another, creating mental models of never-before-seen situations and perhaps from there, mental models of not-yet-existent things and situations.c This has led to new concepts, tools, modes of social organization, and territorial expansion.
How imagination evolved is still a much-discussed topic in science. But we might draw one tentative conclusion: that the analytical capacities underpinning and enhanced by language—the ability to observe, divide up the world conceptually, and create new relations between parts—enable imagination. Dissection and conceptual clarity might be prerequisites to, rather than the antithesis of, imaginative thinking. Analysis supports synthesis. Rearranging the parts to create new wholes is easier when we have a deep understanding of the parts.
NOTES
a. Eva Jablonka and Marion J. Lamb, Evolution in Four Dimensions: Genetic, Epigenetic, Behavioral, and Symbolic Variation in the History of Life (Life and Mind: Philosophical Issues in Biology and Psychology) (Cambridge, MA: MIT Press, 2005).
b. Jablonka and Lamb, Evolution in Four Dimensions.
c. Clive Gamble, Settling the Earth: The Archaeology of Deep Human History (New York: Cambridge University Press, 2013).
Grounded Imagination
Imagination is not just random thoughts unhinged from reality. Rather, it rests on a causal understanding of reality (see the sidebar “Humans versus AI”). To the extent we understand the dynamics of this world—why things are the way they are—we can play with recombining and changing things in ways that still make sense and are feasible.
We can compare imagination to other functions of the brain that are more or less tied to reality (see figure 2-1). As far away from imagination as it is possible to be is a state of mere being. This is the life of a plant. A plant has no self-awareness and is guided by its immediate environment. It has no brain to be able to release itself from the present.
Figure 2-1 Imagination versus dreaming and perception
With a human brain, functional possibilities open up beyond a plantlike state. There is conscious perception, a self-aware mode of operating that is tied to the outside world. Perception is constrained by what is out there—which is useful if we want to get an accurate picture of the world. Opposite perception is dreaming, an un–self-aware operation of the brain that is not constrained by the outside world; rather, we spend time in our inner world of scenarios, memories, and symbols while we sleep.
In between perception and dreaming is imagination, a self-aware mode of thought that is somewhat constrained. Imagination loosens the correlation to reality; we are playing with possibilities, rather than trying to get a precise picture of our environment. But it doesn’t cut the tie to reality. Effective imagination works with the laws of nature and other knowledge we have about the dynamics of the world—insights about human nature, practical wisdom gained from running a business, or lessons from history, for example. In imagining, we alter some parts of reality while remaining grounded in what we know about the rest of reality.
We might daydream of a flying giraffe or an interplanetary pipe to take the Earth’s oceans to Mars, but these are absurd, because they are outside the way the world works. Imagination, in contrast, draws on the depth of our factual models to inform and ground our counterfactual models. For example, in business, we could ask the counterfactual question: “What could an office supplies company be?” and imagine some radical and fascinating answers, drawing on our mental models of other industries, history, psychology, and technology.
What can imagination do for us? We can see this in figure 2-2. The two boxes on the left cover the factual realm, divided into what is inevitable and what is incidental. Inevitable things are features of the world like gravity, uncertainty, or permanent aspects of human nature. Incidental things are changeable, like laws, having cars in cities, patterns of customer demand, how profit is measured, the role of HR, and so on.
The two boxes on the right cover the counterfactual world, divided into impossible things, such as hyper-light-speed travel, a mind-reading machine, or pet dinosaurs (though some things that seem truly impossible turn out to be possible), and imaginable possibilities. This upper-right box of possibility is the one that is interesting for business.
Figure 2-2 Exploring and mining the space of what is possible
Imagination allows us to explore the space of what is possible—the counterfactual realm—like a mining expedition to uncharted territory. It allows us to explore, and it allows us to bring things back: early-stage counterfactual ideas that may eventually transform the business. Becoming skillful at harnessing imagination means becoming skillful at doing this collectively within a company: exploring and moving things from the unreal to the real.
Computers can’t do counterfactual thinking, at least for now. To see why, we can compare the cognition of humans versus AI. As described by computer scientist and philosopher Judea Pearl, almost all current AI relies on a basic form of cognition: noticing correlations.a A computer can notice that fire and smoke occur together, for example, or that Amazon customers who liked Rambo: Last Blood also liked Fast & Furious 7.
But humans can think at a level above merely noticing correlations. We can understand causes. We can say why phenomena are linked: why fire causes smoke; why customers who liked Rambo liked Fast & Furious. Understanding causes means that we don’t just notice that things in the world occur together; we grasp the underlying dynamics that produce the relationships. Drawing on psychology, we could guess that people liked Rambo and Fast & Furious because they are looking for heroic stories, perhaps because they feel they lack this in their lives. An AI could only tell you these two movies will likely occur together in online purchases.
Because the human mind is full of rich models of the world that capture causal relationships, we can think at one level higher again: imagination, or counterfactual thinking. When we think counterfactually, we draw on our causal understanding of the world, but we alter some parts and their relationships. As psychologists Caren Walker and Alison Gopnik describe it:
Conventional wisdom suggests that knowledge and imagination, science and fantasy, are deeply different from one another—even opposites. However, new ideas about children’s causal reasoning suggest that exactly the same abilities that allow children to learn so much about the world, reason so powerfully about it, and act to change it, also allow them to imagine alternative worlds that may never exist at all … It is because we know something about how events are causally related that we are able to imagine altering those relationships and creating new ones.b
To illustrate all three levels of cognition: an AI could identify a correlation (level one), for example, that people buying coffee are 60 percent likely to also buy a bagel. But this doesn’t tell you about causality (level two): Are most people coming for the coffee and buying bagels as an extra? Or is it the other way around? Once you know the causal relationship, you can then make an educated guess about a counterfactual question (level three): What would happen if you stopped selling bagels?
Levels of cognition from correlational to counterfactual thinking. Source: Adapted from Judea Pearl and Dana MacKenzie, The Book of Why: The New Science of Cause and Effect (New York: Basic Books, 2018).
Going further into counterfactual territory, you could use your casual understanding of the world to create a mental model of a new coffee loyalty program. Or you could imagine the future of food and drink. At the World’s Fair in 1893, American suffragette Mary Elizabeth Lease imagined that by 1993, humans would eat only synthetic food, freeing women from the kitchen.c Although this scenario wasn’t actually realized, it is an example of the scope of human imagination. Computers can’t create this kind of somewhat-plausible scenario because they lack causal models of the world. There is no data to crunch on things that do not yet exist. AI today has no causal models to mess around with to probe the realm of possibility.
NOTES
a. Judea Pearl and Dana Mackenzie, The Book of Why (New York: Basic Books, 2018).
b. Caren Walker and Alison Gopnik, “Causality and Imagination,” The Development of Imagination, ed. M. Taylor (New York: Oxford University Press, 2013).
c. Matt Novak, “Meal-in-a-Pill: A Staple of Science Fiction,” BBC, November 18, 2014, https://
How Does Imagination Work?
To harness imagination in business, we need to dissect this capacity to see how it works, not only at the level of the individual, but in the context of a company: how it works between as well as within minds and how imagination is intertwined with action. Let’s look at the life cycle of an idea, from an inspired thought to creation of a new reality.
The Seduction
One prominent theory about how the brain works, the Bayesian theory, holds that our brains update themselves based on surprising new inputs. A surprise is the beginning of imagination: an event that leads our minds away from familiar ways of thinking.
We can see surprise at the level of a neuron. The definition of surprise is, “a difference that makes a difference.”3 When a cell gets no surprising input, it has nothing to report. If it met up with other neurons for a chat, it would be the boring one, describing its day as “same old, same old.” Another neuron might have encountered something unusual and would say to the others, “Actually, I had something strange happen to me today; let me tell you.” It has encountered some difference, or anomaly, and this difference has made a difference by affecting the entity (a neuron) that encountered it—which goes on to make a difference in other entities (other neurons and through communication, other brains).
If your brain never encountered anything that was different from its existing mental models, it would never have cause to change its thinking. Contact with surprise—encountering something that doesn’t fit—is the starting point for imagination. We look at how to increase exposure and receptivity to surprise in business in chapter 3.
The Idea
After encountering a surprise, the brain has a number of possible actions available to it. Neuroscientist Karl Friston has distinguished five (see figure 2-3).4 The first of these is to rethink, that is, to change, recombine, and play with models in our mind to generate new ideas.† In chapter 4 we will dive into how to do this effectively.
Figure 2-3 Individual actions triggered by surprise
A great example of rethinking in business is the development of the LEGO Group. Early in the last century, the business was a carpentry firm that had expanded into making wooden toys such as yo-yos. Then an inspiring encounter—a surprise—kicked off a transformational rethink. As told to us by the executive chairman of LEGO Brand Group and former CEO, Jørgen Vig Knudstorp:
The founder, Ole Kirk Kristiansen, traveled to a trade fair in 1946, and encountered an injection molding machine—precision plastic injection molding was a new thing and had taken off during World War Two. Seeing this machine completely changed his thinking about what was possible. He thought, “Wow, this is fascinating. What could be done with this new plastic molding process? What could our business be like if we reoriented everything around this machine?”5
The Collision
Once an idea or mental model starts to develop in our mind, what can we do with it? The brain has a number of options to bring the mental model into contact with the world.
We can refocus, shifting our attentional filters based on our emerging idea, leading to further surprises and further rethinking. We can move in the world: colliding our evolving model with different geographical or social contexts. And we can probe the world, trying out something that provokes a response that feeds into our developing counterfactual model. During the reimagination of the LEGO Group:
The founder actually spent an entire year’s profit from the company to acquire a plastic injection molding machine, just so he could try it out—so he could play with it. Plastic toys were held in low regard, but he started producing teddy bears, airplanes, small trees, cars, small toys out of plastic. Inspired by the tractors that arrived with the aid from the US Marshall Plan, he created the Massey Ferguson tractor set with plastic parts. He really let his imagination lead him—into new kinds of products, but also, into a reconceptualization of what the company could be.6
By colliding our evolving idea with the world, we can use the collision to enrich our imagination. The mental model develops as the idea passes from mind to world, and back. We will explore how to support and enhance this process in chapter 5.
The Epidemic
The other action open to the human brain, following the disruption of a mental model by surprise, is to communicate. Unlike other animals, we can make ideas spread: an idea can jump from brain to brain, joining imaginations together across a business, accelerating both the development and adoption of an idea (see figure 2-4).
Figure 2-4 Imagination across multiple brains
This diagram shows the multiple-brain version of the diagram seen in figure 2-3: communication links minds as the idea spreads across multiple brains. When we communicate a still-evolving imaginative idea, we aim to become the surprise—the disruptive or inspirational input to other people’s minds—triggering others’ imaginations. When this happens, it creates collective imagination, amplifying the idea by making it socially significant, and accelerating its evolution by involving others in its testing, development, and adoption. We will look at how organizations can facilitate this in chapter 6.
Collective imagination played a crucial role in developing a mental model that was core to the LEGO business. As told by Knudstorp:
The founder’s son, Godtfred, became involved in the business. At one point on a boat trip he had a pivotal conversation with a toy buyer from Copenhagen. The buyer talked about the idea of a system of toys where each new toy built on previous ones. They discussed this and Godtfred took the idea back to his father and others. Over some weeks they developed the idea into a kind of mental framework for the company that they shared with every employee, called the LEGO System in Play.7
This is a great example of ideas evolving socially. The mental model was spread in one conversation, developed through further discussion, and eventually disseminated to all LEGO’s employees, sending the business in a new direction.
The New Ordinary
Developing and spreading new mental models would be pointless if it did not lead to a new reality. The goal is for an idea that began with a surprise to eventually become unsurprising: an ordinary and accepted part of reality.
Key to this is the art of codification, or writing a script so that the new thing can be realized and replicated by people far removed from its pioneers. We look at tools for doing this in chapter 7. In the case of the LEGO product, a key requirement was to bring customers into the world created by the toymakers. Indeed, the LEGO Group has become expert at writing scripts that induct people into the LEGO world. From our interview with Knudstorp:
It’s a universal, globally accessible language; because the product is designed so intuitively, everybody understands how to play with LEGO bricks. The other thing though, which is actually crucial, is creating the text-free building instructions. What’s really surprising is that the building instructions are super hard to copy. Of course you can make a photocopy, but it’s a big competitive advantage to be able to make great build instructions. We have a large team with very deep expertise of understanding of minds at the age of seven or at the age of fifty—what they need to know, to know how to take part in the LEGO world.
The Encore
In moving a model from the counterfactual to the factual, we create new policies, procedures, and specialized roles. Yet working within these dampens our capacity for surprise. As they grow, businesses face the challenge of being ambidextrous: on the one hand, having the corporate machinery to exploit developed ideas; on the other hand, being able to continually explore new ideas—to harness imagination repeatedly. A business that can do both well can be called an “imagination machine”: a company able to reliably harness imagination to discover new paths to growth, transforming itself and growing over time. This challenge will be explored in chapter 8.
Imagination itself is the ability to create mental models of things that don’t exist. Harnessing imagination in business, however, requires looking at all these areas, from the individual to the collective level. The following chapters will lay out actions, principles, policies, tools, and exercises for business leaders to shape themselves and their companies to draw on imagination consistently and successfully. In addition to this handbook, you can visit www
Misconceptions about Imagination
A number of popular misconceptions get in the way of understanding what imagination is and how it works. It’s worth noting these to avoid being misled by them.
Some of the most common myths around imagination are:
- That it is exclusively mental—overlooking the interactions with the world that prompt and ground useful imaginative thinking
- That it is exclusively individual—believing it’s all down to one heroic individual, forgetting collective imagination, and that ideas that don’t spread aren’t useful
- That it is unworldly—seeing imagination as dreaming, rather than as counterfactual thinking that depends on an analytic understanding of the world
- That it is momentary—believing or hoping that imagination happens in a flash, rather than via deliberate mental construction and repeated collisions with the world
- That it is mystical—believing it can’t be systematically managed, unlike other unpredictable aspects of human nature that business manages to harness
Most of these ideas can be traced to a cultural shift in Europe in the 1700s, the Romantic movement. Many intellectuals of that time were focused on rethinking what it meant to be an artist. The prevalent view was the Classical approach developed from Aristotle through scholasticism and the Renaissance: that being an artist was about learning a skill, clarifying a purpose or ideal, and building on and refining an inherited art—a systematic, collective practice—to pursue that end.a An example of this classical philosophy was the construction of cathedrals: extended, collective, creative efforts motivated by an ideal, for which no individual contributor took credit.b
In place of this, many influential thinkers, such as Johann Georg Hamann, Denis Diderot, and Jean-Jacques Rousseau advocated a new Romantic view: that chosen individuals—geniuses—have a mystical, mental link with a higher power, which leads them to great, iconoclastic ideas in some impossible-to-understand way. As historian Isaiah Berlin summarized: “[The Romantics] attributed freedom, self-determination, spontaneity, creative power to a transcendent self, outside the empirical universe with which men came into relationship only in comparatively rare moments in a mystical rising above their earthly selves.”c
In this book, we seek to dispel the Romantic myths of imagination, aiming instead, in the footsteps of Aristotle, to articulate the elements of a systematic, collective practice we can rely on to foster and harness imagination.
NOTES
a. Jack Fuller, “An Investigation of the Discussion of Civilization” (thesis, Oxford University, 2012).
b. Paul Spencer Wood, “The Opposition to Neo-Classicism in England between 1660 and 1700,” PMLA 43, no. 1 (1928): 182–197.
c. Isaiah Berlin, “Three Turning-Points in Political Thought,” Isaiah Berlin Virtual Library, n.d., http://
We begin, in the next chapter, by looking at how we can increase our exposure and receptivity to inspiring surprises.
* “Creativity” comes from “create.” It’s a general word meaning the ability to bring something into being. “Innovation” is likewise a general word, meaning creating something novel. “Imagination,” in contrast, refers to a specific mental process occurring in human brains: putting together mental models of things that don’t exist yet. Imagination—the mental activity within and between brains—is the essential human element of the programs of innovation and creativity in companies. But imagination also extends beyond programs of innovation: it is not just used for inventing new products and services, but for fundamentally rethinking the mental model on which a company is based, even rethinking an entire industry or envisaging new industries.
† The terms “idea” and “concept” can be used interchangeably with “mental model,” as in, “our idea for a new business is …,” or “our concept of a media company is …” We will use them interchangeably throughout this book. The term “mental model” is useful because it emphasizes that the mental entity is made up of components that can be removed, altered, and recombined.