Transformational leadership: a model for motivating innovation

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23 February 2018

Transformational leadership is a leadership style in which leaders encourage, inspire and motivate employees to innovate and create change that will help grow and shape the future success of the company. This is accomplished by setting an example at the executive level through a strong sense of corporate culture, employee ownership and independence in the workplace.

Transformational leaders inspire and motivate their workforce without micromanaging — they trust trained employees to take authority over decisions in their assigned jobs. It is a management style that is designed to give employees more room to be creative, look to the future and find new solutions to old problems. Employees on the leadership track will also be prepared to become transformational leaders themselves through mentorship and training.

Transformational leadership model
The concept of transformational leadership started with James V Downton in 1973 and was expanded by James Burns in 1978. In 1985, researcher Bernard M. Bass further expanded the concept to include ways for measuring the success of transformational leadership. This model encourages leaders to demonstrate authentic, strong leadership with the idea that employees will be inspired to follow suit.

While Bass’ model dates to the ’70s, it’s still an effective leadership style practiced today — this style of authentic leadership never changes, just the environments it’s used in. It is applicable across every industry, but it is especially vital to the fast-paced tech industry where innovation and agility can make or break a company.

Transformational leadership characteristics
According to Bass, these are the hallmarks of a transformational leader that sets them apart from other leadership styles. A transformational leader is someone who:

Encourages the motivation and positive development of followers
Exemplifies moral standards within the organisation and encourages the same of others
Fosters an ethical work environment with clear values, priorities and standards.
Builds company culture by encouraging employees to move from an attitude of self-interest to a mindset where they are working for the common good
Holds an emphasis on authenticity, cooperation and open communication
Provides coaching and mentoring but allowing employees to make decisions and take ownership of tasks

Transformational leadership in IT
Although the concept of transformational leadership can apply to every industry — including healthcare, education and government agencies — it is increasingly important in IT as companies embrace digital transformation. Adapting to rapidly changing technology requires innovation and strong leadership to stay ahead of the curve and to remain competitive.

As leaders in IT, CIOs are responsible for setting the example as transformative leaders — especially considering they are largely responsible for digital transformation in the business. Gartner reports that 40% of CIOs are leaders of digital transformation in their organisation, while 34% say they are responsible for innovation. Inspiring and motivating employees is an important puzzle piece when planning out digital transformation, as success depends on everyone buying into and embracing growth and change.

While there is certainly a growing need to keep an eye on the future — whether it is security, new technology or shifting platforms — not every part of IT will benefit from transformational leadership. Some processes, procedures and development projects require more structure, consistency and reliability; this is called transactional leadership.

Transactional vs. transformational leadership
Transactional leadership is the exact opposite of transformational leadership — it relies on motivating employees through rewards and punishments. It requires supervision, oversight, organisation and performance-monitoring. This leadership model does not try to innovate. Instead, it is rooted in keeping things consistent and predictable over time. Errors and faults are closely investigated, and the overall goal is to create efficient, routine procedures.

This style is best suited to departments or organisations that require routine and structure — areas where businesses want to reduce chaos or inefficiency. But it does not allow for innovation or future planning the same way transformational leadership will.

Transformational leadership, on the other hand, supports agile environments, especially where failure carries less risk. You want the development and maintenance of a current product to remain consistent and error free, but you do not want that to hinder the progress and growth of future updates and improvements.

Transactional leadership takes care of creating a consistent development process, while transformational leadership leaves people free to come up with new ideas and look at the future of products, services and ideas.

Examples of transformational leaders
Harvard Business Review analysed companies on the S&P and Fortune Global 500 list to uncover the best examples of transformational leadership. These businesses were judged on “new products, services and business models; repositioning its core business; and financial performance.”

Jeff Bezos, Amazon: Harvard Business Review attribute’s Bezos’ “insider, outsider” status as part of what makes him a great transformational leader. As someone who jumped from the finance world, he brought a fresh perspective to e-commerce through years of experience in a different industry.
Reed Hastings, Netflix: Hastings tied for first alongside Bezos, and for similar reasons. Hailing from the software industry, he wasn’t rooted in pre-established process and procedure in the television industry.
Jeff Boyd and Glenn Fogel, Priceline: Boyd and Fogel reinvented travel reservations by charging lower commission fees on reservations, but focused on smaller niche markets (inns, B&Bs and apartments), eventually spawning Booking.com.
Steve Jobs and Tim Cook, Apple: HBR points to Apple as an example of “dual transformation”: Jobs innovated on original Microsoft products while also building a software ecosystem. Cook has extended on Jobs’ vision, maintaining a focus on innovation, software and brand loyalty.
Mark Bertolini, Aetna: Bertolini is known for his realistic management approach in the healthcare industry. He says his goal is to build strategies around a realistic vision of the future.
Kent Thiry, DaVita: Thiry managed to take a bankrupt company and turn it into a thriving business through firm core values that included “service excellence, teamwork, accountability and fun,” according to Harvard Business Review.
Satya Nadella, Microsoft: Nadella started at Microsoft in 1992 and worked his way up the corporate ladder, eventually running the business’ cloud computing efforts, which landed him the executive position.
Emmanuel Faber, Danone: Faber started out as an architect for Danone and earned the CEO job after he helped develop the company’s vision to turn the company into a sustainable health and nutrition company.
Heinrich Hiesinger, ThyssenKrupp: Hiesinger become CEO of ThyssenKrupp in 2011 and helped alleviate pressure from Asian competitors in the steel market by embracing newer forms of manufacturing, including 3D printing – “new growth areas” that now make up 47% of the business’ sales.