There are two ways to talk about transformational leadership.
We can dive deep into the academic theory created by Bruce Avolio and Bernard Bass in 1991 and understand how it fits into the broader Full Range Leadership Model.
Or, we can look at some real-world examples of organizations displaying transformational leadership and let their stories illustrate the principles of the theory.
The internet is saturated with theories. So, for a change, let’s go with the second approach.
But first, let’s define transformational leadership.
What is Transformational Leadership?
Transformational leadership is a leadership theory where a leader uses a vision or a goal to energize, inspire, and develop their team. Such leaders don’t treat vision as a tool to pacify stakeholders but as an essential value to power their routine.
Transformational leadership puts change at the center of business strategy. After all, a vision or goal can only energize teams that are comfortable with change. Otherwise, they’ll advocate for the status quo.
For us, this might not seem to be a radical concept. But it’s important to note that the continuous need to grow and embrace change is a relatively recent phenomenon in management. For decades, most leadership styles alternated between the other two examples of the Full Range Leadership Model:
- Transactional leadership – The leader encourages or discourages behaviors through rewards and punishments.
- Laissez-faire leadership – The leader allows their team to make decisions on their own and avoids any responsibility.
Transformational leadership can only work if the employees have an aversion to stagnation. Traditionally, employees (just like most managers) carried an aversion to change. Leaving the comfort zone was the hallmark of exceptional outliers, not a basic expectation. In the age of Agile and digital transformation, employees understand that stagnation can jeopardize their careers.
We now have a situation where both the organizations and the employees crave continuous growth, providing an ideal breeding ground for transformational leadership.
NEW RESEARCH: LEARN HOW DECISION-MAKERS ARE PRIORITIZING DIGITAL INITIATIVES IN 2024.
Examples of Transformational Leadership
It can be tempting to categorize leaders based on their personalities or reputation. However, the truth is always more nuanced. No one is a perfect transformational or laissez-faire leader. All leaders show traces of different leadership styles in different scenarios.
So, instead of focusing on people, let’s focus on specific instances that capture the essence of transformational leadership.
1. Hasbro’s Adoption of Data and Nostalgia (Brian Goldner)
Hasbro’s stock prices tell a fantastic story. After a steady ride into the 21st century, the toymaker started facing stiff competition from digital media. Around 2012, Hasbro’s CEO Brian Goldner realized that it was time for a change.
This was also the time when cloud-based B2B SaaS and MarTech tools had started emerging. Businesses now had unprecedented access to their customers’ buying behaviors. Hasbro decided to act upon the insights. It shifted its focus away from children to their parents, i.e., banking on nostalgia to drive sales.
By using data and omnichannel marketing, Hasbro scaled its digital marketing and made its campaigns more targeted. The results were incredible. Despite the setback due to Covid, it has continued its growth sparked by digital transformation.
2. Microsoft’s Embrace of Open Source (Satya Nadella)
“What I realize more than ever now is that my job is the curation of our culture. If you don’t focus on creating a culture that allows people to do their best work, then you’ve created nothing.”
– Satya Nadella
The story of Satya Nadella’s revamp of Microsoft’s culture is perhaps the most discussed example of transformational leadership in recent years. Nadella’s calm personality differed vastly from his aggressive predecessor Steve Ballmer, which made the transformation even more visible.
In the early 2010s, Microsoft had acquired the reputation of a company that was past its prime. The record high of its stock prices was way back in 1999. Its foray into the smartphone market turned out to be uninspiring. Its Surface tablets failed to create a mark in the market.
Nadella joined in 2014 and changed Microsoft’s mission to “empower every person and every organization on the planet to achieve more.” He orchestrated a transformation of Microsoft’s culture from a closely guarded traditional IT organization to an empathic and collaborative company.
Nowhere is this shift more visible than in Microsoft’s approach to cloud technology and open source. Steve Ballmer had initially referred to the open source OS Linux as “communism” and “cancer that attaches itself in an intellectual property sense to everything it touches.” On the other hand, Nadella is an advocate for open source collaboration, and under his leadership, Microsoft joined the Linux Foundation as a Platinum Member.
Microsoft ❤️ Linux
Today, Microsoft’s stock prices are almost 5X their record high of 1999, and it is reasonable to expect that their best is yet to come.
3. Google’s Push for Diversity and Innovation (Susan Wojcicki)
CEO of YouTube, Susan Wojcicki, is often quoted as the most powerful woman in tech. She is famously known for advocating the $1.65 billion acquisition of YouTube, which is now valued at over $90 billion.
Susan Wojcicki, CEO of Youtube
However, her equally vital contribution has been to the culture of Google. When she increased paid maternity leave at Google from 12 to 18 weeks, the rate at which new moms left the company fell by 50 percent. She has also been one of the driving forces behind encouraging the wider participation of women in tech.
“Tech is an incredible force that will change our world in ways we can’t anticipate. If that force is only 20 to 30% women, that is a problem.”
– Susan Wojcicki
Wojcicki created a culture of knowledge sharing within the company to encourage innovation. She encouraged active collaboration across smaller teams to develop new solutions. For example, the concept of language translation in Google Talk emerged from conversations between Google Translate and Google Talk teams. Such cross-functional interactions also led to the creation of AdSense, which is now a multibillion-dollar business in itself.
4. Slack’s Redefinition of Collaboration
Slack has achieved one of the fabled goals of all product companies – create a brand synonymous with their business. You don’t message people at work. You slack them.
Stuart Butterfield, CEO and Founder of Slack
Slack’s founder Stewart Butterfield’s story has its share of ups and downs, but it does have one unifying thread – adaptability. Both Slack and Butterfield’s earlier successful product Flickr emerged from failed MMORPG games. He developed Slack as an internal collaboration tool while working on the game – Glitch. While Glitch didn’t succeed, Slack became one of the greatest B2B SaaS success stories.
You can’t create such a successful collaboration solution unless your team has mastered the art itself.
“Collaborative is the opposite of meek, deferential, submissive — it’s leadership from everywhere.”
– Stewart Butterfield
A collaborative culture energizes the organization and helps it adapt to changing business requirements. What’s most striking about Butterfield’s approach to collaboration is that it isn’t limited to his own company. He realized that a successful collaboration software needs to offer options to people. He noticed that a lot of Slack users were using integrations with Atlassian solutions like Trello and Jira. Therefore, Butterfield worked closely with Atlassian even though they were directly competing with Atlassian’s HipChat. Soon, Atlassian realized that they are better off focusing on their core competencies and sold HipChat to Slack. Both companies benefited from their foresight and synergy.
The Four Elements of Transformational Leadership
Now that we have explored four real-world examples let’s look at how they reflect the four essential elements of transformational leadership.
Transformational leaders walk the talk. They embody the change that they want to drive in the organization. When Satya Nadella pushed for humility in Microsoft’s culture, it resonated with the team because they could witness it in Nadella’s personality.
Transformational leaders create a culture that encourages knowledge sharing and creative problem-solving. Slack started out as a side project to solve an internal problem, which couldn’t have been possible without the support of its leadership.
Transformational leaders understand that their team consists of individuals with unique challenges and aspirations. They listen to grievances and take an active interest in furthering their team members’ careers. Susan Wojcicki’s push for maternity leave at Google was a response to reduce the problems new mothers were facing in the company.
Transformation can be exhausting. Thus, transformational leaders are experts at motivating their teams to drive incremental changes and accomplish their vision. Hasbro’s revival didn’t happen overnight. Their leadership had to continuously motivate their employees, run experiments, and learn from data to hit their goals.
The Key to Successful Digital Transformation
We often think of digital transformation as the adoption of new technologies. But simply deploying tools doesn’t lead to success in the digital age.
Digital transformation is a transformation of culture and mindset. At its helm are leaders who are motivated and not intimidated by change. Transformational leadership prepares leaders for the new reality of business, one where every company is a technology company susceptible to disruption.
To learn about the digital transformation initiatives that will define 2024, check out our latest research report that surveys over 300 executive and product decision-makers.