- Every business must now be able to reinvent itself repeatedly if it is to prosper in the long term.
- While much has been written about innovation and business models, we don’t have a manual for what lies upstream of innovation: the imagination.
- In our new book, The imagining machine, we identify six steps to foster and harness the imagination, each with different requirements and pitfalls.
Companies have a remarkable propensity to turn ideas into valuable and ubiquitous new realities. They can turn the unreal into the mundane: the car, the computer, and the Internet all started with improbable acts of the imagination.
While most startups focus on finding the next big thing, those lucky enough to find it before they run out of money often spend the following decades scaling up and exploiting the basic idea. . This leads to a split in the corporate economy between smaller, younger, high-growth companies, and larger, more stable and profitable companies with lower growth potential. This division of roles makes perfect sense in a world where competitive advantage is maintained. But the half-life of competitive advantage has plummeted in recent years. All the company must now be able to reinvent itself repeatedly if it is to prosper in the long term.
Recruit Holdings, owner of Indeed and Glassdoor, is a real-life imaginative company with $ 21 billion in revenue in HR, education and marketing. If you are a Recruit employee, you are expected to help reinvent the business; you can easily build a team and get funding for a new idea; and employees aspire to start new businesses as much as they aspire to move up the chain of command. New businesses invented by employees now generate hundreds of millions of revenue for the business.
While much has been written on innovation, the creation of new value offers and new business models, we do not have a manual for what lies upstream of innovation: imagination.
Imagination is the ability to create a mental model of something that is not there. It is a capacity that exists within and between human brains, and the organizational context can support or undermine it. Most of the time, big companies inadvertently undermine it. When we surveyed CEOs, 90% saw imagination as a lifeblood, but 80% did not have a well-defined approach to managing it. We argue that the imagination can be systematically managed by companies to continually discover new avenues for growth.
The six steps to stimulate and harness the imagination
In our new book, The imagining machine (Harvard Business Press, 2021), we draw on the science behind the imagination and the empirical study of imaginative companies, to propose such a systematic approach.
We identify six steps to foster and harness the imagination, each with different requirements and pitfalls:
Step 1. Create surprising encounters, which encourage us to revise our mental model of how a business operates.
2nd step. Develop provisional ideas into detailed, coherent and verifiable mental models. Charles Merrill, founder of Merrill Lynch, had the idea of creating a bank similar to a supermarket: aimed at the middle class, with transparent prices and standardized products, unheard of at the time. It started as a hunch, but he developed it into a transformative model that marked a dividing line between two eras on Wall Street. The challenge here is to make room for reflection, cultivate counter-factual thinking skills, and create a culture that does not immediately reject embryonic ideas.
Step 3. Make new models collide with reality, and do so long before we normally use a well-structured pilot.
Step 4. Make sure that ideas spread to other minds, to encourage their continued development and adoption. Recruit hosts inspirational company-wide events to share imaginative ideas at all stages of development – effective events for spreading new ideas.
Step 5. Scale and codify mental models to shape a new reality, turning unprecedented and counterintuitive ideas into something successful i.e. normal and mundane.
Step 6. Maintain the tension between imagination and execution in a business and over time, harnessing old ideas while creating new ones that end up disrupting and replacing them.
Each of these steps involves specific techniques and abilities that must be mastered – techniques that are not common in large organizations today.
Leaders play a huge role in setting the right context for the imagination. They can focus the organization on the outside world where the most surprises come from, countering the tendency of organizations to become more and more introverted as they grow. For example, Nitin Paranjpe, when he became CEO of Hindustan Unilever in 2008, sent the entire company into the field for a day. “Everyone, from me to the receptionist at the front desk – everyone – had to go out and talk to the customers… Everyone was obligated to come back and share: What did you hear? What surprised you? What new ideas have emerged? And what should we do about it? ”
Leaders can also create a sense of urgency by focusing their attention on signals that yesterday’s success may not last forever, countering the false sense of security and complacency that retrospective financial measures can create. Business leaders can create cultures that allow time for reflection and where simulation issues are legitimate, not dismissed as impractical, distracting or fanciful. They can ensure that non-conformist personalities who create new ways of seeing the business are recognized and rewarded alongside those who are dedicated to exploiting the current business model.
The Global Innovators community is an invitation-only group of the world’s most promising start-ups and scale-ups who are at the forefront of technological innovation and business model.
Companies that are invited to become Global Innovators will engage with one or more of the Forum’s platforms, as appropriate, to help set the global agenda on key issues.
Do you think your business would be a perfect fit? Please contact us and tell us a little more about your organization using this form.
Technology also has a role to play. While we don’t believe that general artificial imagination will replace human imagination anytime soon, technology is already starting to play a role in complementing it. There are already tools that can help every step of the imagination cycle, including those for detecting anomalies, generating analogues for a given set of ideas, visualizing networks of ideas and people. , and the identification of critical factors underlying the successful application of new ideas. These tools will play a central role in creating new types of “bionic” organizations that can synergistically harness human and machine cognition.
The re-imagining has effectively become the new execution. It should be seen not only as a competitive necessity, but also as an opportunity to rehumanize organizations so that they can attract and motivate the talent they will need to continually discover new ways to succeed.