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How to harness the competitive advantage of new ideas for business leaders

24 September 2021 • by Knut Haanaes , Martin Reeves in I by IMD Book Club

In this interactive webinar, Martin Reeves, Chairman of Boston Consulting Group's Henderson Institute, discusses his book The Imagination Machine with Knut Haanaes....

The Imagination Machine, published in June, explains how business leaders can keep the power of imagination alive in their organizations and harness it systematically to ensure future success. Drawing on the experience and insights of CEOs across several industries, as well as lessons from neuroscience, computer science, psychology and philosophy, Reeves and co-author Jack Fuller, an expert in neuroscience, explore the mechanics of imagination and lay out a process to enable organizations to become more imaginative.

In the webinar, Reeves says that imagination is essential to enable societies to tackle the big collective challenges that the world faces. “Climate change is such a hard problem that we need to be extremely imaginative – and collectively imaginative – in order to solve it,” he notes.

But imagination is also more important than ever for businesses, because the competitive advantage of new ideas now fades much more quickly than in the past. A company with a performance edge over its competitors in the 1980s could expect this to last 10 years, whereas now it could only hope to enjoy this advantage for one year, he says.

And while AI can take over many routine tasks, it cannot replace the human capacity for empathy and imagination. Machines are already better than humans in many areas of correlative thinking and will eventually be better at causal thinking, but only humans are capable of counterfactual thinking, he notes.

And yet Reeves says 80% of CEOs are not confident that their companies have the ability to systematically harness the power of imagination. This is often because they are locked into ways of doing things that have made them successful in the past, and complacency sets in: “The paradox is that if you succeed in finding something which is new to the world and which the world needs, and you become successful, you become a prisoner of the mental models that underpin your past success and can become unable to see the need for the new or the specifics of the new.”

The book therefore sets out a six-step process on how businesses can systematically harness imagination:

  • opening themselves up to surprises, which are the inspiration for imagination
  • the mental elaboration of new ideas
  • the collision of these ideas with reality – how to rethink your ideas based on real-world feedback
  • spreading an evolving idea to others
  • codifying ideas to turn them into an accepted reality
  • repeating the formula over and over again, so that you don’t get trapped by your past success

Professor Haanaes, the Lundin Chair Professor of Sustainability at IMD and a Professor of Strategy, describes The Imagination Machine as a very visual book about a very visual topic, and it is accompanied by a gallery of images showing what imagination looks like in practice. This so-called Napkin Gallery features a series of sketches and prototypes that illustrate the messy nature of new ideas when they are still at the imagination stage. A selection of the images is included in the webinar.

Reeves says the CEOs of imaginative companies tend to be extrovert, curious and ready to seek out surprises. And imaginative companies allow time for reflection and counterfactual thinking rather than being a hive of activity based around trying to become more efficient at delivering on current goals. “Busy is the new stupid,” he says.

They also have a culture of setting unrealistic goals, which force them to rethink their business model, rather than incremental goals, which can be met by doing more of the same. And they also make a point of celebrating and recognising mavericks who come up with new ideas, even if these may appear impractical or disruptive, he says.

Authors

Knut Hanaaes - IMD Professor

Knut Haanaes

Lundin Chair Professor of Sustainability at IMD

He was until recently the Dean of the Global Leadership Institute at the World Economic Forum. At IMD he teaches in many of the key programs, including the MBA, EMBA and other executive programs. He is Program Co-Director of the Leading Sustainable Business Transformation program. His research interests are related to strategy, digital transformation and sustainability.

Martin Reeves

chairman of the BCG Henderson Institute

Martin Reeves is chairman of the BCG Henderson Institute, BCG’s think tank dedicated to exploring and developing valuable new insights from business, technology, economics, and science by embracing the powerful technology of ideas. Martin is also a member of the BCG Henderson Institute’s Innovation Sounding Board, which is dedicated to supporting, inspiring, and guiding upstream innovation at BCG.

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