The transformational leadership style encourages employees to like change by creating a company culture of accountability, ownership, and autonomy in the workplace. This allows individuals to take the initiative and feel responsible for their output, driving innovation and progress in the business.

What is Transformational Leadership?

Transformational leadership is a style that encourages, inspires, and motivates employees to innovate and implement the changes needed for the future of the business. It is about leading from the top down through authenticity, creating a strong company culture, and fostering employee ownership and independence in the workplace. Transformational leaders are change agents within the business, able to spot trends and technology shifts and guide the business to adopt them.

Transformational leaders don’t micromanage; they inspire and motivate their workforce. They trust their trained employees to take ownership of decisions in their roles. This style of management gives employees the freedom to be creative, think about the future, and find new solutions to existing problems.

Transformational Leadership Impact

Transformational leadership can have a considerable impact on a business. By creating a culture of innovation and accountability, transformational leaders can see significant improvements in employee performance and satisfaction. This leadership style tends to lead to higher levels of engagement as employees feel more connected to their work and the business’s purpose.

Transformational leadership can also increase organizational agility. In today’s fast-paced business world, adapting to change is key to success. Transformational leaders give their teams the skills and mindset to navigate challenges and opportunities so the business stays competitive.

Transformational Leadership Theory

The concept of transformational leadership was first coined by James V. Downton in 1973 and later developed by James Burns in 1978. Burns introduced the idea that transformational leaders inspire and motivate their followers to achieve remarkable results and, in the process, develop their own leadership. In 1985, researcher Bernard M. Bass expanded the concept by providing a framework for measuring transformational leadership. Bass said that influential transformational leaders demonstrate authentic leadership and inspire employees to model that behavior.

Bass’s transformational leadership theory may have been developed in the 1970s, but it’s a leadership model that still works today. The principles of authentic leadership and inspiring others are timeless and adapt to the environment in which they are applied. This style of leadership applies across all industries but is particularly important in fast-paced industries like technology, where innovation and agility can make or break a business.

Transformational Leadership Today

In today’s fast-changing business world, the principles of transformational leadership are more relevant than ever. Businesses face constant challenges, from technological advancements to shifting market demands. Transformational leaders can navigate these complexities by creating a culture of innovation and agility.

In the tech industry, where change is the only constant, transformational leadership is key. Businesses that adopt this style of leadership are better placed to respond to emerging trends, drive innovation, and stay competitive. By inspiring their teams to think creatively and take ownership of their work, transformational leaders can create an agile workforce that thrives in fast-paced environments.

Transformational Leadership Model

Bernard M. Bass developed the transformational leadership model in 1985. It has four main components, which help to describe what transformational leadership looks like and how leaders can be successful in this role.

Idealized Influence

The foundation of transformational leadership is idealized influence. As a transformational leader, the most important thing you can do is lead by example. Employees will look to you as a role model for behavior in all business areas. When you lead with authenticity, integrity, and values, employees will model that behavior. This creates a culture of trust, transparency, and respect and inspires team members to perform at high levels. It’s not about manipulating employees into working hard. It’s about positively influencing others through your values.

Intellectual Stimulation

Intellectual stimulation is key to creating an environment of innovation and creativity. Transformational leaders challenge existing thinking and the status quo by encouraging critical thinking and problem-solving. They create a space for employees to try new ideas and opportunities, which can inject innovation into the business. By creating an environment where growth and experimentation are encouraged, transformational leaders get everyone excited about digital transformation and other key initiatives. This drives change and enables employees to bring their own ideas and solutions.

Inspirational Motivation

As a transformational leader, you need to provide inspirational motivation to your team. This means getting employees to feel a strong attachment and commitment to the business vision. By giving them a sense of purpose and meaning in their work, you can get them as committed to the business goals as you are. Rather than motivating through fear or pressure, transformational leaders inspire their teams by communicating a clear vision and getting them excited about shared goals. This positive reinforcement builds a motivated workforce.

Individual Consideration

Individual consideration recognizes that every employee is a unique individual with their own needs, strengths, and contributions to the business. Transformational leaders understand the importance of adapting their coaching and mentoring style to meet the different needs of their team members. By providing one-to-one support and guidance, they enable employees to feel independent and own their overall business goals. This develops personal growth, team cohesion, and collaboration as employees feel valued and heard.

Transformational Leadership Characteristics

Businesses look for transformational leaders who have an “executive presence,” as described by David E. Ulicne, senior director of executive education at Carnegie Mellon University’s Heinz College of Information Systems and Public Policy. This is a skill that takes practice, and I think leaders should focus on “building their storytelling skills” by speaking at conferences, attending symposiums, and even recording themselves speaking and getting “feedback” from their PR or media teams.

According to Bass’s model, transformational leaders are different from other leadership styles in:

Motivating and Developing: Transformational leaders motivate and develop their followers. They inspire team members to pursue their goals, develop their skills, and create an environment where personal and professional development is a top priority.

Role Modeling Moral Standards: Transformational leaders set high moral standards in the business and encourage others to live by the same values. By modeling behavior, they create a culture of integrity and accountability that runs through the business.

Ethical Workplace: Transformational leaders create an ethical workplace with clear values, priorities, and standards. They ensure employees understand the business mission and ethical guidelines and feel responsible and committed to those principles.

Company Culture: Transformational leaders get employees to move from self-interest to collective interest. I like how they encourage collaboration and teamwork and create a culture where individuals feel connected to business goals and want to contribute to overall success.

Authenticity, Collaboration, and Open Communication: These leaders are authentic and transparent in their interactions. I think they create a collaborative environment where open communication is encouraged, and team members can freely share their ideas, concerns, and feedback.

Coaching and Mentoring: Transformational leaders coach and mentor their employees to develop their skills and navigate the challenges. They also give team members the authority to make decisions and own their tasks, creating a sense of autonomy and responsibility.

Transformational Leadership Examples

Harvard Business Review looked at companies on the S&P and Fortune Global 500 to find some of the best examples of transformational leadership. They judged them on their ability to innovate through “new products, services, and business models; reposition their core business; and financial performance.” Here are a few examples:

Jeff Bezos, Amazon: Harvard Business Review says Bezos’s “insider, outsider” status was key to his success as a transformational leader. Coming from the finance world, he brought a new perspective to e-commerce and used his wide experience to disrupt the industry.

Reed Hastings, Netflix: He first joined Bezos for similar reasons. With a software industry background, he wasn’t bound by the traditional processes and procedures of the TV industry, allowing him to innovate and disrupt.

Jeff Boyd and Glenn Fogel, Priceline: Boyd and Fogel transformed travel reservations by offering lower commission fees and focusing on smaller niche markets like inns, B&Bs, and apartments. This innovation led to the creation of Booking.com and changed the travel industry.

Steve Jobs and Tim Cook, Apple: HBR uses Apple as an example of “dual transformation.” Jobs innovated on existing Microsoft products while building a full software ecosystem. Cook has continued to extend Jobs’ vision, focusing on innovation, software development, and brand loyalty.

Mark Bertolini, Aetna: Bertolini is praised for his practical management in the healthcare industry. He says building strategies around a realistic view of the future has helped Aetna navigate the challenges.

Kent Thiry, DaVita: Thiry turned a bankrupt company into a successful business by instilling the core values of “service excellence, teamwork, accountability, and fun.” His leadership style created a positive company culture that delivers results.

Satya Nadella, Microsoft: Nadella joined Microsoft in 1992 and worked his way up the corporate ladder, eventually leading the company’s cloud business. As CEO, his leadership has been about innovation and collaboration and has repositioned Microsoft in the tech industry.

Emmanuel Faber, Danone: Faber started his career as an architect for Danone and became CEO after helping to define the company’s vision to become a sustainable health and nutrition leader. He has since transformed the business model.

Heinrich Hiesinger, ThyssenKrupp: Hiesinger became CEO of ThyssenKrupp in 2011 and responded to competitive pressure from Asian steel makers by embracing innovative manufacturing methods, including 3D printing. This has created “new growth areas” that now account for 47% of the company’s revenue.

Transformational Leadership in IT

While the concept of transformational leadership can be applied across industries (healthcare, education, government, etc.), it is becoming increasingly important in IT as companies undergo digital transformation. The pace of technological change (AI, machine learning, generative AI) requires innovation and strong leadership to stay ahead and maintain competitive advantage.

In IT, the Chief Information Officer (CIO) is the transformational leader. They set the example of change as they lead the digital transformation within their organization. Beyond digital transformation, the Wall Street Journal reports that 90% of CIOs also have responsibilities in areas such as Diversity, Equity and Inclusion (DEI), Human Resources (HR), and sales and marketing. This expanded scope shows how important transformational leadership is in bringing together collaboration and innovation across departments.

As IT becomes part of every business, the role of CIOs and IT leaders has expanded. They are no longer just responsible for managing the technology stack; they are now expected to lead strategic initiatives that drive business success. Transformational leadership in IT is key to navigating digital change and making sure technology aligns with the business.

Benefits of Transformational Leadership in IT

Research shows that being a transformational leader in IT brings:

Better Employee Performance and Well-being: Transformational leaders inspire and motivate their teams, and performance and job satisfaction increase. When employees feel valued and empowered, they contribute more positively to the organization.

Higher Retention: By creating a supportive and engaging work environment, transformational leaders can improve retention. When team members feel connected to their work and the organization’s mission, they are less likely to look elsewhere.

More Productivity: Transformational leadership encourages proactive employee behavior, which can lead to more productivity. When team members are motivated to take initiative and innovate, the organization benefits from more efficiency and effectiveness.

Positive Work Culture: Transformational leaders create a work culture that encourages collaboration, creativity, and open communication. This environment allows employees to share ideas, take risks, and work towards common goals.

Adaptability to Change: In the fast-paced IT world, the ability to adapt to change is key. Transformational leaders help their teams adopt new technologies and processes so the organization can stay agile and responsive to market demands.

Transactional vs Transformational Leadership

Transactional leadership is the opposite of transformational leadership. It motivates employees through a system of rewards and punishments, supervision, oversight, organization, and performance monitoring. It doesn’t prioritize innovation; it prioritizes consistency and predictability over time. In a transactional environment, errors and faults are closely scrutinized. The overall goal is to create efficient processes and routines.

Characteristics of Transactional Leadership

Motivation through Rewards and Punishments: Transactional leaders motivate their teams by offering rewards for meeting specific targets and imposing penalties for not meeting expectations. This creates a clear framework where employees know what they get if they perform.

Focus on Routine and Structure: This style of leadership is best for departments or organizations that need high levels of routine and structure. It’s also good for environments where businesses want to reduce chaos or inefficiency.

Limited Innovation: While transactional leadership is good at maintaining existing processes, it doesn’t create an environment for innovation or future planning. The focus is on the present and making sure existing systems work.

Transformational

Not in agile environments, where the risk is lower. While we need to maintain consistency and error-free development of current products, transformational leadership allows progress and growth through future updates.