This book examines conceptualizing capability (kÅsÅ-ryoku), the most important ability for thriving in the era of innovation. A new approach, "formative conceptualizing capability," is proposed as the core knowledge methodology for innovation and management, which is  is a fundamental human ability that goes beyond the boundaries between cognitive and tangible realities to shape concepts and drive innovation. Traditional studies on imagination in Western philosophy are combined with knowledge creation theory based on Eastern way of thinking. The book argues the capability should be at the core of innovation management, offering insights and principles for navigating the challenges of the present age.Japan has experienced the world's earliest capitalist setback and is stuck in a prolonged stagnation. The author maintains, however, that what is needed in this coming chaotic era is not only "imagination", as it would be called in English, but also the power of creating kÅsÅ, the Japanese term for "formative concept". The author has a proven track record in research and practice on knowledge creation theory, innovation management, design thinking, and scenario planning. He has reorganized and set forth in this book the perspectives he has proposed under the theme of kÅsÅ-ryoku to present a new methodology of knowledge for living in the twenty-first century.