DOWNLOAD THE FUTURE OF ASSOCIATIONS WHITEPAPER   Download

The pressure for businesses to transform and sustain a culture of change has never been greater. Traditional companies are giving ground to upstarts at an increasing rate. In fact, only 64 companies have endured on the S&P 500 for the past 50 years, and its estimated by some researchers that 50 percent of companies currently on that index will fall off the list within the next 10 years.

The acceleration of “creative destruction” (a concept introduced in 1942 by economist Joseph Schumpeter) is serving as a wake-up call to executives. Large and small enterprises today recognize they must constantly respond to the disruptive market forces challenging traditional business models.

The transformation imperative has become clear, but still many companies continue to struggle with change. Transformation initiatives are resisted, stalled or never get off the ground. A common reason for this can often be traced to style of leadership.

Because leadership is so important to effect transformation, it’s worth contrasting a few of the key attributes of two often-compared styles: transactional leaders versus transformational leaders.

Transactional leaders:

  • are most effective in structured environments and, thus, good at enforcing policy and the status quo
  • prefer clear lines of organization structure, formal authority and positions
  • manage against established performance criteria through positive and negative reinforcement
  • being task- and results-oriented, they focus on short-term goals and thrive on efficiency

Transactional leaders have a traditional approach to management hierarchies, value the status quo, measure success on their ability to deliver results on assigned tasks or objectives and are more resistant to change.

James Macgregor Burns introduced the concept of transformational leadership in his 1978 book Leadership. His work has been often quoted and is perhaps more relevant in today’s highly disruptive business environment than ever before.

Transformational leaders:

  • possess a strong curiosity to inquire into what needs to change, and then work to change the status quo
  • develop new methods to solve challenges, as opposed to forcing solutions into old models
  • inspire team members and encourage strengths and capabilities, “ideation” and problem-solving across functions
  • embrace the paradox of simultaneously running today’s business while discovering tomorrow’s new businesses and growth opportunities

In essence, transformational leaders don’t fear change. They see it as necessary process of reinventing their business to remain competitive, they inspire new thinking and they are willing to take chances.

What is your leadership style? What type of executive leader holds the keys to your organization’s transformation future? Are you having trouble initiating and sustaining change? Is your organization developing transformational leaders? These are fair questions to ask and critical ones to answer for any company seeking to move their business transformation initiatives into high gear.

Related posts