Narcissists are better leaders

Why do some businesses successfully adapt to new technologies and others don’t? We have the answer now: the business leader’s personality determines how a company adapts to innovation. The more narcissistic the leader, the more open the business to new technologies. Additionally, if the media is interested in the CEO as a person, the higher his or her willingness to experiment with risky innovations.

These findings come from a study by Pennsylvania State University, the International Leading Business School IMD in Lausanne, and the Friedrich-Alexander-Universität Erlangen Nürnberg. 

Based on examples of organisations in the pharmaceutical and biotech sectors, scientists have analysed which factors determine whether firms put their money on innovative technologies which aren’t widely accepted, or even contradict their business model. The project observed firms for 28 years, between 1980 and 2008. The “controversial” technologies in this period of time were, for example, the computer, online messaging, e-books, and various biotech innovations.

They found that those businesses open to risky innovations all had a CEO with particular characteristics in common. These were an exceptionally strong level of confidence and the higher-than-average need for constant attention. Also, the leaders were particularly dominant: they made their decisions with little or no ability to accept criticism, a great lack of empathy, and no willingness to pay attention to their their team’s emotions in the decision making process. They were impatient and showed a tendency to carry out projects at fast pace. From this profile, the scientists concluded a high level of narcissism.

But how do you measure narcissism? The study’s authors looked at how business leaders present themselves to the outside world – how often and how prominently their name shows up in press releases and company reports, for example. There is a significant connection between a tendency to present yourself prominently and the willingness to embrace risky innovations. According to the study, narcissistic CEOs took a risky leap into an innovative project more than twice as often as self-critical leaders.

An appetite for risk was further increased by a strong belief in their own ability to be proficient in the respective technologies, wrote the study’s authors. That’s why self-critical leaders shied away from risk. They would rather take a step back and observe the market, to learn from the mistakes of others, rather than be the first ones jump the ship. This tactic rarely puts them in the media spotlight which, for narcissists, is a most welcome bonus.

Of course there are also disadvantages to the narcissistic leaders’s approach. The risk of failure is high and they might easily gamble the business away. However, they have the potential to disrupt old structures and risk-averse cultures. “If a new technology is superior to the conventional approach, a narcissistic CEO might just be responsible for the business’s success, or even survival,” say the study’s authors.

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