The power of point of view: truly innovative ideas consist of thinking about familiar things in unfamiliar ways, but how can one distinguish really good ideas from those that are mere gimmicks?

Want instant success? Just browse the business section of an airport bookstore, where you can learn how to reengineer the firm, how to be a one-minute manager, the 10 ways to capitalize on Internet marketing, the five key ways to think like a chief executive officer, or the latest fads from the Harvard Business School publishing juggernaut. It's enough to make one a permanent skeptic, much like a CEO I knew at a very successful insurance firm: "I'll try something new," I once heard him say, "if someone can show me a half-dozen other firms that have tried it and made more money by doing it. "

I can understand this attitude perfectly. I once worked for a firm whose CEO became enamored of reengineering, then a recent fad. His enthusiasm resulted in several top-to-bottom reorganizations that induced his firm's best employees to flee in droves and ultimately destroyed this once-prominent firm. Indeed, embracing an inappropriate point of view can be dangerous-or even fatal.

But despite the overwhelming prevalence of gimmicks, there are truly innovative ideas that consist of thinking about familiar things in unfamiliar ways, and so obtaining insights that would otherwise be unlikely or impossible. Unlike gimmicks, they are not formulaic lists of things to do, cannot be mastered in one minute (or even during a long plane ride), and make no guarantee of success. What they offer is new insights and methods for applying them. What if we thought about the Earth as orbiting the sun rather than as the center of the universe? What if we thought of an electrical circuit as something that could be put on a silicon chip? What if we thought of a giant room-sized mainframe computer as something that could be put in a box that fits on a desk? What if we thought of a communication network as something that could be global and free? What if we thought about a music delivery system as something that could be carried around in one's pocket? What's common to these examples is that changing one's point of view can change one's opinion of what is possible and what matters. Alan Kay, a pioneer in computer science, put it very bluntly: "Point of view is worth 80 IQ points. " Want to be really, really smart? Find a point of view that gives you the equivalent intellectual leverage.

A compelling example of the power of point of view is the budding movement in financial services to embrace Enterprise Risk Management, which focuses on thinking about, measuring and managing a firm's overall combination of risks and returns. The innovative idea at the core of ERM is thinking about one's firm as an overall portfolio of activities that generates both risks and returns, like a portfolio of stocks and bonds. In managing an actual investment portfolio, one would typically strive to maximize diversification of risk, specify the maximum risk that the portfolio should take, and invest in those securities that maximize the portfolio's return relative to its risk limits.

ERM invites one to take the same point of view toward the various activities of the firm as a whole by thinking about the firm's various lines of business and various functions, such as investment and underwriting, as different activities that generate returns and risks. Thinking about these various activities as analogous to securities in an overall portfolio invites a number of interesting and valuable questions. Should we take more underwriting risk during hard markets and more investment risk when markets are soft? Can we distinguish different pricing cycles among different lines of business and vary our portfolio of business accordingly? Should we think about changing the structure of our reinsurance program over the course of the underwriting cycle? Is our capital structure best suited to maximize our expected return on equity? What is common to all of these questions is that they are likely to be posed at all only if one views the firm as managing a portfolio of activities that, like securities, generates both risk and return. And although many executives would typically disregard these questions as being too difficult to answer, an ERM framework suggests that they are in fact answerable, although not without effort, by adapting methods originally developed for managing investment portfolios.

Gimmicks can indeed be dangerous, but truly innovative ideas can generate enormous benefit for a firm and its clients.

William H. Panning, a Best's Review columnist, is executive vice president at Willis Re Inc. He can be reached at [e-mail].