So, what do I mean by the term transformational leadership? It might sound like a business buzzword, but it means using leaders whose style inspire others. Transformational leadership lets people reach new heights in ownership and good working principles. It means leaders who do more than just supervise the company’s change-over to digital systems, they motivate the workers too.
This type of leadership builds up your company's culture through coaching and mentoring of the staff. It’s a known fact that transformational leadership styles will allow your team to grow and improve. Starting from having an interest only in their own benefit, they can develop to be more focused on the common good.
Transformational leadership works because it results in good, strong growth and develops followers into future leaders. Most management teams will spend money to transform a company digitally only if they are certain it will succeed. Research shows there is a strong link between transformational leadership and company success, and there are examples that transformational leadership goes beyond just supervising, to motivate employees to adopt company values and goals as their own.
In a TED talk, Al Gore's former speechwriter Dan Pink says motivation encourages creativity, which is important to digital transformation. Trying to make the move to digital without transformational leadership, in that case, would probably not work.
There are four main elements at the root of transformational leadership theory, which are:
A transformational leader is a role model who influences others through values, convictions, and principles followed in their actions. These factors help them to build trust with their followers and confidence in their leadership.
Motivating staff depends on a leader’s ability to inspire confidence and purpose in employees. A good leader needs to have a clear vision for the future, be able to explain what he expects and be committed to company objectives. Strong leaders sound like they know what they are talking about and inspire staff to reach higher levels of morality.
Everyone is motivated by different things, so blanket consideration of your staff isn’t going to work. True transformational leaders find out what works for each person, and make it happen it in a way that gives each employee a sense of personal ownership.
To get the best from workers, a strong leader encourages them to see the big picture. This changes how they think about company problems and involves them in important decisions. It also challenges them to try and be more innovative and creative in their work.
Transformational leaders need to remember large-scale changes like this are about people, not processes. Going digital begins by changing the mindset of workers away from the fear of being replaced by robots, artificial intelligence, or computer processes.
People need to have common goals, be excited by the new technology, and understand the possibilities it offers. That means having to change company culture if you want your digital agenda to succeed, empower your workers, and get them to support the transformation.
Employees have to accept how their way of working will change and the new training they might need to do their jobs. Communications will change because of new technology such as social media, instant chat, and video conferencing options. The Internet of Things will affect the way equipment is serviced and maintained, and how customers buy goods.
Workers who don’t feel positive about the digital changes are likely to cause delays and to be less successful in learning the new methods.
Digital transformation is happening everywhere. Research by Gartner shows over 125,000 companies started going digital in 2016 and believe they will increase revenue by more than 80% by 2020. The problem is, only 27% of businesses actually have a strategy for doing so.
To escape the status quo and make digital change work for your organisation, it’s important to put a strong culture change in place using transformational leadership styles.
Developing a workable strategy means:
By becoming a transformational leader and a role model for digital change you can make sure your company avoids “Digital Darwinism”, which happens when technology and society change faster than companies can keep up. This caused the loss of almost half a billion jobs when companies like Blockbuster, ToysRUs closed down because they were unable to adapt.
Inspiring leaders keep staff more often and for longer than other types of leaders. They are usually also able to keep customers, too, because of the appeal this kind of leader has. A transformational leader tries to satisfy both the company’s needs and his/her own at the same time. This means all workers feel like they have a specific role to play in the team, which keeps them engaged and lowers the cost of staff turnover.
Getting your staff engaged and motivated is vital for reaching the highest possible productivity levels. A transformational leader is good at recognizing the needs of their followers, which enables them to find ways to inspire people to do their best work.
For companies to improve they must be willing to change. Transformational leaders get staff on board and excited about new happenings. They can sell the idea of changes better if they believe in the process themselves, which results in everyone reaching their full potential.
One of the most important aspects of the advantages and disadvantages of transformational leadership is the ability to spot gaps and problems in a vision and come up with changes to solve them quickly. Leaders can also “sell” the new solution to their followers, which means it gets adopted right away.
Excitement is catchy, and when people see others happy and having a good time they want to share in the experience. If workers see their leader excited about a new vision or goal they get interested as well, which leads to better team spirit, a higher level of productivity, and less turnover of both staff and clients.
A transformational leader does more than just work towards a final goal or vision. He or she also encourages staff to learn new skills. This helps to build a healthy culture in the company and ends in better detail orientation and good overall work from the staff.
When we compare this type of leadership to transactional leadership that loads making all decisions and solving all problems on the leader, it’s easy to see why transformational leadership promotes collaboration between workers. This leads to them being more creative and coming up with new ideas more often.
One of the biggest problems in companies relates to the way they communicate with workers. When staff don’t have the right information about their jobs, what managers expect or the needs of a project, they can’t do their work properly. An advantage of using a transformational leadership style is that managers must provide regular feedback to their followers to keep them headed in the right direction. This forces better communication, which delivers better results.
Companies that have struggled with low staff morale or indifference, whether over the short term or long term, can boost morale and change the working environment by bringing in transformational leaders to break workers out of the routine. This type of leadership understands that strong, healthy relationships are at the heart of all business operations, and boosting morale helps employees to want to improve their relationships with each other and with customers.
Ethical behaviour plays a large role in a transformational leadership style, which aims to change a company’s corporate values to include higher levels of fairness and justice. This type of leadership gives a wider view of leadership than other methods, while emphasising the followers’ needs, values and morals. An authentic approach to work means team members are always focused on doing the right thing in the right way.
Of course, few things in life have no disadvantages, and transformational leadership is not an exception. The secret is to assess whether the pros outweigh the cons in your particular situation and to make the decision that’s best for your company. Here are some of the issues to watch out for:
Research shows that in some instances, employers thought they were providing transformational leadership when in fact they weren’t. From the worker’s viewpoint, the way they were managed was actually a transactional focus, which is the opposite. Instead of treating workers as real members of the decision-making process, leaders were treating employees as subordinates and trying to exchange rewards for performance.
This happens when employees feel everything needs to be decided by a large group of people, which leads to some withdrawing and refusing to take part, while others get involved in constant conflict. In a small business, transformational leadership can work well because of the limited number of people, but in a large corporation, it works better when selected employees represent the others—rather than trying to have everyone involved equally.
Transformational leadership is a complex idea arising from several different leadership theories. This makes it difficult to learn or to teach, and true transformational leadership is more of a personality trait. It also carries a risk of being abused, because the leader’s position in this model is mostly unchallenged. When that happens, leaders may be able to abuse their power, for example in the way Adolf Hitler did.
Overall, transformational leadership advantages and disadvantages both need to be taken into account if your company is considering making the shift to a digital environment, but the effort is more worthwhile than you can imagine.
Being chosen to lead and carry out a digital transformation programme is both exciting and scary, and business leaders who want to succeed often find it hard to overcome the barriers they experience.
With a clear understanding of the differences between transactional vs transformational leadership models, however, you’ll be able to meet your company’s expectations.
There are several different styles of leadership recognised in business these days, but two of the most common are based on transformational and transactional leadership theories developed by James Macgregor Burns and Bernard Bass.
As previously mentioned, these models are almost complete opposites because while transactional leaders focus on maintaining the status quo, usually through careful organisation, staff supervision and group results, transformational leaders challenge the status quo and emphasise creating change inside an organisation.
Transactional leaders use disciplinary power and a range of incentives to encourage good employee performance. The “transaction” that takes place is the act of exchanging reward for performance.
Companies under this kind of leader usually operate smoothly, enjoy high productivity, and can deal with small operational changes easily. This makes it an effective management style for many traditional companies.
Transformational leaders, however, go beyond the day-to-day operational management and work hard towards taking their organisation to higher levels of success. Methods used to do this include promoting teamwork, inspiration and co-operation between employees at different levels, to make sure they carry out corrective actions to improve performance.
This style of leadership is great for developing and growing small to medium-sized businesses, which need creative thinking to expand.
Both of these leadership styles have a place in successful companies. However, many organisations are now facing an urgent need for digital transformation, which often depends on making cultural changes. So for large businesses, a transformational leadership style is needed too.
The concept of transformational leadership can apply to almost every industry, including healthcare, education and government agencies, but it’s especially important in IT as companies set goals and start their journeys towards digital transformation.
Adapting to quickly-changing technology takes innovation and strong leadership to stay ahead of the pack and continue to be competitive. And since digital transformation is basically about people, achieving a successful digital agenda begins by changing the mindset of a company to increase the emphasis on its people.
Research by the Harvard Business Review shows that any changes made that don’t empower employees typically don’t succeed and that empowering people through change is the only way to have the lasting digital transformation needed for companies to grow.
Transformational leadership style is based on four pillars, which can all be applied to achieving digital change in an organisation:
Transformational leaders don’t always have to be managers. Anyone can be (or become) a transformational leader in the field of digital disruption. The actions needed to make the shift to a digital universe effective depend to a large degree on the needs of the business and the organisational culture. In some instances, it might be necessary to use some transactional leadership methods, too.
For example, all processes across an organisation going through digital disruption will have to find new digital solutions, which could mean restructuring departments, starting to use new tools, and making changes to tasks such as:
Many of these activities are done well as a result of the structured methods of organisation and the supervision of staff by the transactional leader, which helps them to achieve their goals.
Both styles of leadership have their pros and cons, particularly when it comes to digital transformation. And we have covered the main advantages and disadvantages of transformational leadership styles above.
Transformational leadership is recognised for its ability to quickly assess a company’s situation, set goals for improvement and growth, and to create a positive work environment for the team. By using the four pillars listed above, this leadership style results in motivated and inspired workers, who typically deliver better efficiencies and results.
It can also face difficulties, though, such as a challenge with detail orientation that is obvious in transactional leadership methods. Also, transformational leaders occasionally get so passionate and excited that they overlook reality and truth, resulting in less-than-ideal use of logic and research. And not every transformational leader is good. For example, Osama bin Laden was a an example of this type of leader because he was able to motivate his followers to put aside their individual interests and work together towards a common goal.
The benefits offered by transactional leadership methods, on the other hand, include:
Disadvantages of this leadership style include the fact that it is usually viewed as “stiff” by employees, and has negative factors like job suspension and termination. It limits creativity and makes it hard for workers to present ideas that aren’t in line with existing goals, and also it discourages employees from aiming for higher positions in the company.
Employees often don’t take enough accountability and ownership, because they are given their tasks and expected to complete them within the framework provided. And since the rules usually exist for a reason and can’t easily be changed, employees have less concern for the company’s welfare than they would if they felt personally accountable for success.
Since digital transformation is fundamentally about people, getting it right mostly requires transformational leadership.
However, leaders might need to adapt their style to account for instances when transactional leadership is needed as part of the transformation process.
Examples of this include the healthcare environment, where strict guidelines and transactional management styles apply even during a larger transformational process. This is because healthcare employees still have to operate according to fixed programs and tasks, making the environment more suitable to the transactional style.
Therefore. leaders could well find themselves using a combination of transactional and transformational leadership styles in different circumstances.
There are lots of ways to skin a cat, or so the saying goes. While we aren’t in favour of skinning any creatures, we understand leadership has many faces. These transformational leadership examples show several different styles and characteristics that have been used successfully over time.
Companies wanting to go digital might know they need high quality, thoughtful managers, but it’s hard to know where to start. Here are some of the best-known transformational leadership examples to help guide you.
It’s not difficult to choose the late Steve Jobs of Apple Inc. as one of the most transformational leaders we’ve seen.
After starting Apple in 1976 with partner Steve Wozniak, the pair worked out of Jobs’ garage building computer systems for sale to non-corporate customers. Long before anyone else fully got to grips with the possibilities of a personal computer, Jobs had the foresight and vision to follow his dreams, make difficult decisions, and influence people across the world.
Steve Jobs used inspirational motivation to challenge his team to think outside the box and stimulated them intellectually to develop products we didn’t even know we needed.
Characteristics of Jobs’ leadership were his decision-making ability and adaptability, and in later years he was willing to take risks appropriate to his achievements.
Transformational leadership doesn’t only happen in digital circumstances. Nelson Mandela will go down in history as one of the most inspirational role models of all time. After years spent leading the struggle for democracy in South Africa and being imprisoned in difficult conditions for 27 years, he was freed when the country reached a tipping point in its struggle against oppression.
In spite of everything Mandela had experienced, he came out of prison to lead the country as its next President, promoting forgiveness and unity. By doing so, he transformed South Africa into a democratic nation without the predicted bloodbath of racial revenge that the public feared and expected.
Mandela demonstrated an idealised influence leadership style and was respected by his followers and society in general because of his ethics and morals. His complete lack of personal ego and his excellent self-management showed that his values went beyond personal gains, and his actions were all seen to be for good of the country.
Dr William Edwards Deming is widely considered the founder of the Total Quality Management (TQM) revolution. He was a doctor of maths and physics who worked for the U.S. government for most of his life. After World War II, he went to Japan for the U.S. Army and helped the Japanese apply statistical methods and processes to manufacturing. He planned to make Japan an industrial world leader in 5 years but achieved it in 4.
Deming went back to the U.S. to apply transformational leadership examples in manufacturing, where his style of inspirational motivation produced results by 1980. Accounts of his achievements clearly show characteristics of collective consciousness, combined with effective self-management and an ability to keep his ego in check.
H. Ross Perot was another transformational leader in the digital environment. After a career in sales with IBM, he started Electric Data Systems, a company that built and serviced computer systems for customers. He used the element of individual consideration to great effect, having a popular “personal touch” style of leadership, with strong decision-making and risk-taking characteristics.
Perot’s approach to customer service began the shift to the service-oriented way of working that so many companies now use.
Transformational leadership theory states that team members support each other and the company out of trust, loyalty, and respect for their leader. This means it takes an exceptional person to become a transformational leader, but there is no shortage of these leaders in the history of Great Britain or the world. Some of the best known, past and present, are:
If you’re thinking about making the shift to digital technology in your company you might find it useful to study these transformational leadership examples. It’s one thing to succeed in making the change over to digital, but it’s quite another to do it as successfully as the best role models in the business.
On a daily basis, organisations across the U.K. deal with challenges and obstacles, which are the nature of doing business.
Far too often, however, the setbacks resulting from these are caused by what the Chartered Management Institute (CMI) calls the national “accidental manager” complex. This occurs when a person is promoted internally based on their performance in a job, but they remain inadequately trained in managing others.
The research shows a total of 2.4m of these accidental managers currently functioning throughout the U.K., which, combined with other poor management practices, could be costing the economy up to £84 billion per year.
You've just read all about transformational and transactional leadership and you might have an idea about what kind of leadership style you've been using or what seems to come naturally to you.
It's important that you figure this out because, as we've learned here, you'll need transformational leaders in place for digital transformation to succeed. There will also be occasions where a transactional leadership style will be useful.
To help you uncover your own leadership style, I've devised a short quiz for you to take. Simple answer the questions honestly to find out your natural transformational vs transactional leadership style.
Armed with this knowledge, you'll be able to identify what you need to work on to improve your leadership style, or if you need to recruit suitable people for leadership roles.
Hello, I'm Chris and I lead the team at Cavendish Wood. We specialise in helping ambitious CIOs, CTOs and CEOs to transform their businesses to meet their constantly evolving customers’ behaviours, expectations, preferences, and needs through successful digital transformation programmes.
I'm immensely passionate about changing the fortunes of businesses – helping them to go beyond survival and thrive in the digital age. If you feel the same or are interested to learn more about Cavendish Wood, let's connect!
Twitter: @chrisfutcher
LinkedIn: /chrisfutcher
Email: chris.futcher@cavendishwood.com
Phone: +44 7971 826661