The ability to sense valuable strategic options and then to organize effectively and efficiently to embrace them is at the core of a company's dynamic capabilities. This article identifies and discusses a specific type of sensing that we call “generative sensing.” Companies and executives that display generative sensing capabilities proactively generate hypotheses about observed events and then test these hypotheses to generate new data in a recursive process. Borrowing from design cognition research, we discuss the two microfoundations of these capabilities—framing and abduction – and provide examples of how they are embedded in companies to enhance option generation.
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