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The ‘Why’ and ‘How’ of Transformational Leadership Strategy, According to Scholars

Mostafa Sayyadi June 10, 2019

Today’s globalized markets place more pressure on organizations to employ effective leaders who are capable of developing innovation and building knowledge-based models. Many academic studies focus on the organizational and managerial factors that drive competitiveness. Leadership is one such area that plays a critical role and is a strategic prerequisite for business success in today’s knowledge-based economy.

The core of criticism in existing leadership literature is that organizations of all sorts — corporations, government agencies, and nonprofits — tend to be over-managed (and, in some cases, over-administrated) and under-led.

One scholar by the name of Quinn Mills highlights the vital importance of leadership. In his 2005 book Leadership: How to Lead, How to Live, he argues that in the absence of effective leadership, organizations are not capable of implementing changes at the competitive level. This conclusion makes leadership strategy all the more important for managers at all levels. Leadership strategies enable organizations to build knowledge-based models that can deliver the timely innovations today’s global markets require.

Defining leadership

In a landmark 1978 study on leadership, scholar James MacGregor Burns concluded that “leadership is one of the most observed and least understood phenomena on earth.” Warren Bennis and Burt Nanus agreed with Burns in that there is “no clear and unequivocal understanding that exists as to what distinguishes leaders from non-leaders.”

Let us now define this thing called leadership as influenced interactions with groups of followers to implement changes and achieve the determined goals. That definition sounds a lot like management — and it should be because, as mentioned earlier, leadership is a function of management.

The true basis of leadership was built upon a model that generated two sides of an X and Y axis. On one side is the concept of leadership that creates change through a process-oriented approach, while the other represents more of a relationship-oriented approach. When thinking of leadership and politics, for example, a leader has to be a politician, but a politician does not always have to be a leader. Similarly, based upon the management versus leadership idea, a manager always has to be a leader, but a leader does not always have to be a manager. Let us look at both types of leaders and determine their similarities.

The importance of leadership

Investors recognize the importance of business leadership. A good leader can turn a weak business plan into a success, but a poor leader can ruin even the best plan. Furthermore, pundits decide upon the valuation of publicly-traded stocks based on current and future leadership. One example of this comes from CEO Rich Teerlink, who dramatically changed Harley-Davidson in the 1980s and fundamentally built a different organization that still prospers today. The success of leadership at Harley-Davidson has stood the test of time.

For example, the company’s leadership created a more effective organization built upon three primary principles: focusing on people, challenging norms, and continuing to fundamentally change. At Harley-Davidson, every employee can participate in leadership decision-making.

Apple co-founder Steve Jobs presents another example. He built a highly effective organization through a change-oriented leadership approach, which highly manifested itself in talent, product development, organizational structure, and intense marketing.

The evidence from these examples suggests that leadership is highly demanding at both the political and corporate level. For organizations to achieve a sustained change and eventually a higher degree of efficiency and effectiveness, selecting a great leader is the key to success. Therefore, in the absence of effective leadership, organizations lose their required direction to achieve a high degree of hyper-competitiveness, and cannot implement successful change in order to adapt with today’s global business environment.

Implementing a transformational leadership strategy

A scholar by the name of Chien presented executives with a correlation between the effectiveness of different leadership strategies. Although the study was primarily designed to investigate global leaders, and in this case Taiwan, there are kernels for all executives to learn from. For example, there was a strong positive correlation between leadership effectiveness and adopting a transformational leadership strategy at the highest organizational levels.

Scholars, such as Bruce Avolio, David Waldman, and Francis Yammarino, illustrate that transformational leadership strategy plays a crucial role in developing a learning climate that empowers followers to come together around a common goal. Furthermore, transformational leadership strategy enables companies to respond to changes in the external environment.

Executives began to listen and respond to the plethora of information in the form of articles, books, and models that connected transformational leadership strategy to productivity, profitability, and competitive advantage. Another example is the concept of intellectual stimulation, which is another important aspect of transformational leadership strategy. Intellectual stimulation positively impacts the effectiveness of leadership in building learning through facilitating knowledge-sharing and collaboration.

Transformational leadership strategy also suggests that executives inspire their teams. By adopting transformational leadership strategy, executives are able to answer the questions necessary to apply leadership without having to delve through all the leadership strategies to find what works well for them and what does not. To prove the correlations between transformational leadership strategy and the effectiveness of leadership in global environments today, let’s take a further look at transformational leadership strategy so that executives can see the correlation and application.

Transformational leadership strategy in the global era

Commitment, flexibility, and innovation are necessary attributes to evaluate the success of organizations in the global era. The global era represents cross-cultural settings and requires executives who can adapt to various environments successfully. The major tasks of leaders in the global era include empowering employees, generating a shared vision, and creating fundamental changes at the organizational level.

Furthermore, sustained performance in the global era is dependent on continuous learning. Transformational leaders may be able to build a learning workplace through empowering employees. Transformational leaders improve knowledge-sharing and enhance performance through empowering human resources and enabling organizational change.

One way that transformational leadership strategy may be valuable in the global era is because these leaders shed light on the critical role of employees’ attitudes and values in implementing change. If  embraced at the senior level of organizations, transformational leadership strategy enables performance through implementing organizational change and developing a shared vision for future expansion into the global business environment.

Transformational leaders have been posited to be visionary leaders that attempt to develop a shared and inspiring vision for the future. Transformational leaders play a critical role in shifting organizations toward the creation of new services and products. These leaders contribute to new products and services to meet dynamic market needs, through higher expectations and stimulation for new and strategic opportunities to meet the needs of customers in the emerging marketplaces in 2019.

Unfortunately, while the characteristics of transformational leaders are positively associated with organizational innovation, this model is somewhat underutilized in organizations worldwide. This is suspect and alarming, because numerous empirical studies have found that there is a direct correlation between transformational leadership strategy and organizational innovation. Many scholars highlighted transformational leadership strategy as an enabler of innovation. Their work provides a compelling case for leaders to look toward this strategy to improve organizational performance.

In conclusion

Transformational leaders help their teams accomplish feats they never thought possible. Shared visions open the door for innovation. They change attitudes and assumptions at the individual level and create collective interests for cultural adaptation. When transformational leaders can generate a shared and inspiring vision for future expansion, they will secure a foothold in the ever-expansive global marketplace.

Social Entrepreneurship / Stakeholder Capitalism
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