[Deutsche Fassung]

By Olaf Neumann

How do corporate decision-makers in a high-wage country (such as Germany) screen the pile of ideas, proposals and suggestions to select those which may be profitable in the long run? First, they need to identify valuable innovative ideas, and then they have to decide which innovative ideas the company will pursue. As a rule, this situation is complex and uncertain. In practice, companies have a range of tools and methods at their disposal and rely in addition on the personal experience and expertise of internal and external experts to assess ideas. Nevertheless, all efforts to base decisions on an objective and facts-based evaluation of new ideas are subject to certain limitations (see also “Die Bewertung von Innovationsideen. Eine empirische Analyse von Bewertungsdimensionen und sozialen Einflussfaktoren”/“The evaluation of innovation ideas: an empirical analysis of evaluation criteria and social influencing factors”, doctoral thesis at RWTH Aachen, 2012).

15 necessary competences

Ultimately, the decision-makers and their competences are key to keep the right balance between flop risks and growth opportunities. This is supported by the doctoral thesis “Selektion von Innovationsideen – Eine empirische Untersuchung zu erforderlichen Kompetenzen und Möglichkeiten der Aktivierung” (“Selection of innovation ideas – An empirical study of necessary competences and activation possibilities”) published in 2011 at the University of Kassel. The study analyses corporate decision-making procedures and the necessary portfolio of competences on the basis of a qualitative empirical case study in the R&D department of a German carmaker. Even though the conclusions are based on a single case study with a limited number of cases, they and the resultant recommendations appear useful for innovation and HR practices.

The study details a competence portfolio for those who decide on innovative ideas, and this competence portfolio is probably relevant for other sectors and R&D departments as well. The 15 necessary competences are: willingness to take risks, entrepreneurial thinking and behaviour, competence in the area of business administration, evaluation competence, systematic understanding, technical competence, creativity, visionary competence, market competence, process competence, communication and marketing competence, networking competence, determination and tenacity, integrative competence and the ability to resolve conflicts. This list shows that demands on decision-makers and the corporate organization as such are high – even though some competences will certainly be well-established or being built in companies.

Even if one person leads: Innovation is teamwork and requires the networking of many competences  (By Cactus26 (Own work) [CC-BY-SA-3.0], via Wikimedia Commons)

Willingness to take risks and decisions are key

Of course, the ideal decision-maker is a rare bird. We would like to stress that “universal geniuses” are not required in this context. Rather, the ability to lead interdisciplinary teams is a key strength which helps to leverage this competence portfolio in the corporate context. The personality of the CEO certainly plays an important role in this respect. This is described in detail in the article “CEO Narcissism, Audience Engagement and Organizational Adoption of Technological Discontinuities” published in the Administrative Science Quarterly (ASQ) in June 2013. The authors of this longitudinal study examine an insufficiently analysed influencing factor for adjustment procedures of well-established companies to discontinuous change: the character of the CEO and, in particular, CEO narcissism. They examine the response of traditional pharmacy companies to biotechnology between 1980 and 2008 and come to the conclusion that the probability of companies’ investing in completely new technologies increases parallel to the narcissism of the CEO.

We would not want to go so far as to claim that the recruitment of narcissistic managers and decision-makers is a sure-fire way to benefit from ground-breaking innovation. However, what is clear is that, besides systematic evaluation methods and a comprehensive portfolio of competences, the willingness to take risks and decisions is key.

The author: Olaf Neumann

Olaf Neumann (born 1964) is Senior Manager „New Technologies/Projects“ at RWE Deutschland AG. Following his graduation as industrial engineer at the University of Karlsruhe he worked as a production controller with Unternehmensgruppe Freudenberg und later on as a managerial sales accountant with Toshiba Europe GmbH. After six years Neumann changed from a line function into the consulting business. Among others he worked with PricewaterhouseCoopers, Deloitte Consulting and the inhouse consulting unit of RWE as project manager. After 14 years in consulting, he took over R&D and innovation functions at RWE Deutschland AG.