Change has never been as pronounced as it is now and more so in the coming years. The 4th Industrial Revolution, which is bringing forth technological developments in artificial intelligence, big data, cloud computing and others are disrupting all facets of work and life. A new cohort of consumers and workers, the Generation Z, those born after 1995, are coming into the fore as the true digital native, veraciously purchasing online which further spurs ecommerce.
In this digital age, organizations need a new breed of leaders, transformational leaders, those who can champion all stakeholders through the tidal wave of transformation that’s happening all over.
The term transformational leadership was coined by James V. Downton. It was further developed by leadership expert James MacGregor Burns in 2004. According to Burns, transformational leadership is visible when “leaders and followers make each other advance to a higher level of morality and motivation”.
Later, researcher Bernard M. Bass expanded Burns’ original ideas to develop what is today referred to as Bass’ Transformational Leadership Theory. According to Bass, transformational leadership can be defined based on the impact it has on followers, with facets such as moral standards, authenticity, harmony and persuasive appeals.
While these are still necessary traits and actions of a transformational leader, they are not enough today when many are struggling with what to do in the midst of digital chaos. This is evidenced by the increasing mortality rate of companies, heralded by the demise of corporate giants Nokia, Toys R’ Us, Sears among others. Leaders in these organizations, who are contemporaries of the original concept of transformational leadership, proclaimed they didn’t do anything wrong, but admitted they lost.
The ‘soft’ side of transformational leadership–vision, inspiration and motivation–are patently deficient. Making sense of what’s happening in the environment, putting together digital transformation strategies for sustainability and growth, innovating the business model, bias for relentless and well-integrated execution and drive for organization culture change are the new facets of transformational leadership in the digital age.
• Sense-making. This is a key transformational leadership capability for today’s complex and dynamic world. According to Professor Deborah Ancona of the MIT Sloan School of Management, ‘it refers to how we structure the unknown so as to be able to act in it. Sense-making involves coming up with a plausible understanding—a map—of a shifting world; testing this map with others through data collection, action and conversation; and then refining, or abandoning the map depending on how credible it is. Sense-making enables leaders to have a better grasp of what is going on in their environments, thus facilitating other leadership activities such as visioning, relating and inventing.”
• Digital transformation strategy. To respond to the fast-changing environment, transformational leaders need to understand and employ digital transformation strategies. This involves the acceleration of business activities, processes and competencies to fully leverage the changes and opportunities of digital technologies and their impact in a strategic and prioritized fashion. These leaders not only understand digital transformation. They also know where and how to do it.
• Business model innovation. A transformational leader spearheads the development of new, unique concepts on how a company delivers value to its customers, whether that’s through the development of new revenue streams, distribution channels or taking advantage of digital technologies in bringing those concepts to fruition.
• Well-integrated execution. What separates transformational leaders from the rest is their ability to execute in a well-integrated manner. In a holistic and systematic way, they implement strategies across operations, product and service platforms, customer engagement and employees. These leaders optimize business operations, innovates and transforms product offerings, enhances customer experience and enables and empowers employees. They identify and put the right people to appropriate roles. For example, implementing an ecommerce platform should include considering its impact to operational processes, employee skills and product offerings.
• Drive for culture change. Transformational leaders not only inspire change, they also mandate change. A strong message of change from a transformational CEO like, “use only cloud computing across our company”, or “I will not tolerate toxic behavior among my direct reports” sends it across in a way that drives employees to change their behavior. They understand and appreciate the importance of organization development in effecting culture change, i.e. implementing sustained intervention programs and activities to ensure culture change. They understand generational differences among employees and how they learn and adapt to changes. They also break down organization silos across departments that slow down business operations and affect service delivery to customers.
But how does one become a transformational leader and acquire these aforementioned capabilities? One needs to have a growth mindset and should be open to the external world. He should be willing to take risks and embrace technological drivers.
The author is President & CEO of Hungry Workhorse Consulting, a digital and culture transformation firm. He is the Chairman of the Information and Communications Technology Committee of the Financial Executives Institute of the Philippines. He teaches strategic management in the MBA Program of De La Salle University. The author may be emailed at rey.lugtu@hungryworkhorse.com.