What is transformational leadership? A model for motivating innovation

What is transformational leadership?

The transformational leadership approach encourages, inspires, and motivates employees to innovate and create the change necessary to shape the future success of the company. This is accomplished by setting an example at the executive level through authenticity, a strong sense of corporate culture, employee ownership, and independence in the workplace. Transformational leaders are change agents in the business, who can identify innovative and shifting trends in technology, and then help the organization embrace that change.

Transformational leaders inspire and motivate their workforce without micromanaging — they trust trained employees to take authority over decisions in their assigned jobs. It’s a management style that’s 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.

[ Find out how to apply transformational leadership at your organization and what it means to be a transformational leader today. | For the latest insights on leadership, sign up for our newsletters. ]

Transformational leadership theory

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

For a deeper look at the transformational leadership model, see “How to apply transformational leadership at your company.”

Transformational leadership model

Four main elements define the transformational leadership model and style. These factors were developed by Bass in 1985 to help define what transformational leadership looks like and how to be successful as this type of leader:

• Idealized influence: The most important thing you can do as a transformational leader is to lead by example. Employees will look to you as a role model for behavior in all areas of the workplace. If you lead with authenticity, employees will pick up on that behavior and feel inspired to maintain that high standard for performance. It’s not about manipulating employees into working hard, it’s about leading by example and positively influencing others through a commitment to trust, transparency, and respect.
• Intellectual stimulation: To help create change, it’s important to challenge long-standing beliefs in the company and push the status quo by encouraging innovation, creativity, critical thinking, and problem-solving. Transformative leaders should help employees feel comfortable exploring new ideas and opportunities that can inject innovation into the organization. You want to establish an environment that welcomes growth and gets everyone excited about digital transformation and other important initiatives in the organization.
• Inspirational motivation: As a transformational leader, you will need to encourage your team to feel attached and committed to the vision of the organization. You want to ensure employees feel as committed to these goals as you do as a leader by giving employees a strong sense purpose, rather than attempting to motivate them through fear.
• Individual consideration: Employees need to feel a sense of independence and ownership in the overall business goals. As a transformational leader, it’s important to understand every employee is a unique person within the company and will have specific needs, mentorship styles, and their own contributions to the company. These leaders will tailor their coaching and mentorship styles to the employee and help them reach goals both inside and outside of the organization.

Transformational leadership characteristics

Businesses want transformational leaders who display an “executive presence,” according to David E. Ulicne, senior director of executive education at Carnegie Mellon University’s Heinz College of Information Systems and Public Policy.

“The most important attribute for the success of the CIO would be their ability to articulate their vision and gain support of key stakeholders.” It’s a skill that takes practice, and you’ll need to “build your storytelling skills” by presenting at conferences and symposiums, and even recording yourself delivering speeches and asking your PR or media team for “constructive feedback.”

For a deeper look at leadership traits, see “7 leadership traits major enterprises look for in a CIO.”

According to Bass’ model, transformational leaders set themselves apart from other types of leaders by doing the following:

• Encouraging the motivation and positive development of followers
• Exemplifying moral standards within the organization and encouraging the same of others
• Fostering an ethical work environment with clear values, priorities, and standards
• Building company culture by encouraging employees to move from an attitude of self-interest to a mindset where they are working for the common good
• Holding an emphasis on authenticity, cooperation, and open communication
• Providing coaching and mentoring but allowing employees to make decisions and take ownership of tasks

For a look at how to draw attention to your transformational leadership qualities in your resume, see “IT resume makeover: Highlighting transformational leadership.”

Transformational leadership examples

Harvard Business Review analyzed 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.

Transformational leadership in IT

Although the concept of transformational leadership can apply to every industry — including healthcare, education, and government agencies — it’s 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’re largely responsible for the digital transformation of the organization. Gartner reports that 40% of CIOs are leaders of digital transformation in their organization, while 34% say they’re responsible for innovation. Inspiring and motivating employees is an important aspect of digital transformation success, as everyone must buy into and embrace growth and change.

Digital transformation has become an even bigger priority since the COVID-19 pandemic changed the way companies operate across every industry. According to the Digital Leadership Report 2021 from Harvey Nash Group, the pandemic sparked a “time of unprecedented change and transformation of digital at the majority of organizations.” While this digital shift began years ago, the pandemic only accelerated it through an increased demand for remote work and significant changes in supply chains and customer behavior. 

In 2021, 50% of digital leaders said they expect major or radical changes to products and services, 47% planned to unlock new value through digital, 43% were tasked with supporting innovation, and 48% had expectations to transform and digitize the enterprise, according to data from Harvey Nash Group.

While there is certainly a growing need to keep an eye on the future — whether it’s 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.

To read how CIOs are making good on transformational leadership, see “Transformational CIOs juggle innovation and operations.”

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, organization, and performance-monitoring. This leadership model doesn’t try to innovate. Instead, it’s 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 organizations that require routine and structure — areas where businesses want to reduce chaos or inefficiency. But it doesn’t 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 don’t 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.

Training and certification

Although transformational leadership skills are considered soft skills, there are still plenty of resources, certificates, and training programs aimed at developing transformational leaders. Here’s a short list of online resources to earn training and certifications in transformational leadership. However, it’s likely you can find an in-person training course at a local college or university in your home state.

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