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We often limit ourselves to the areas with which we are most familiar, our comfort zones.

We view personal risk as minimized in this zone, and yet taking risk, even personal risk, is essential to innovation.

The balance between personal risk-taking and rewards is crucial to driving us out of our comfort zones. Many are pressed into taking more personal risk than they prefer, as a matter of job security. In the midst of this recession, job security is a key but insufficient motivator. Yes, we all want to stay employed, and our daily behaviors are usually oriented around this goal. But true innovation only comes from rewards that more closely match the risk taken.

Many have argued since this financial crisis ensued that excessive risk-taking is exactly what led to the irresponsible behavior of the collateral default swaps crowd at AIG and elsewhere. The near failure of AIG and the failures of many iconic financial institutions are, they argue, all the evidence you need to know that excessive reward leads to excessive behaviors and their consequences.

What wasn't and may still not be well understood is the global flow-through impact of some of these failures. It raises new questions about how to control and limit these behaviors to avoid such outsized consequences.

Yet, the aggressive compliance mentality that is emerging from the new administration has the very real risk of stifling the innovation needed to compete successfully in the global economy. A conundrum for sure.

Doctors John Blessant, Kathrin Moslein and Bettina von Stamm recently wrote in the Wall Street Journal (see "In Search of Innovation" WSJ, June 22, 2009) that successful companies "may just recognize the next great opportunity, or looming threat, before their competitors do." These same authors articulate the concept of seeking "eureka moments," which have the potential to "change a companies' fortunes forever." These moments are tough enough to come by without new government-driven impediments to their discovery. Whether it is government-influenced strategies or government-controlled compensation, these are just two examples of the rising barriers to uncovering innovation.

Government motivations aside, what can you do to get out of your box and discover your eureka moments? Start by broadening your network of contacts, in and out of your regular environment. Develop relationships with other functionaries whose focus and views are radically different from your own. This runs contrary to human tendencies but will open new vistas.

Next, explore concepts with colleagues and acquaintances outside your workplace, especially where their daily focus is different from your own. Think in terms of remote possibilities rather than likely or expected outcomes. Explore the possibilities in areas of performance and outcomes that are not part of your routine. Ask "what if" more often than lamenting "if only."

Hire people whose intellectual level and curiosity exceeds your own and put aside the personal risk that may represent, to your own job security.

Pursue your own eureka moments. If nothing else, it will make your life more interesting.

CHRIS MANDEL is the enterprise risk manager for a leading financial institution and a former president of the Risk and Insurance Management Society.

August 1, 2009

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