The article confronts Cornelius Castoriadis' philosophy of  'the imaginary institution of society' with issues of innovation in a knowledge society and outlines a new notion of innovation as creative organization. It will take a critical approach to innovation from a historical perspective of postwar systems theory and introduce Castoriadis' philosophy as an interesting option in this regard. It proceeds in four parts: (a) First, it debates the limits of the commonplace metaphor of diffusion and adoption in today's debate on innovation. (b) Second, it will present aspects of Castoriadis's thought as an alternative, in particular his debate on imagination and the proto-institution of legein/teukhein — ordered action. (c) On this background it will treat a case from the Danish innovation industry, the firm Zentropa WorkZ's programme of 'Dramatic Innovation' as an interesting example of an innovation format addressing creativity. (d) In conclusion, it will briefly debate creative knowledge formation in a knowledge society by pondering relations between innovation and current science.