Counterfactual Thinking

Counterfactual thinking is: 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.

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.

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