How transformational leadership takes companies to new heights in any economy

Although increased innovation and cultural adaptation may top the agendas of business executives in 2011, few leaders possess the transformational skills to invigorate new ideas or the discipline to implement them.

Traditionally, leaders have relied on charisma to incite change. In fact, James MacGregor Burns had politicians in mind when he developed the transformational leadership theory in the late 1970s. But charm isn’t enough to achieve success in today’s business environment. Modern business leaders need a blend of transformational and transactional talents to create a vision, sell their ideas to stakeholders, engender trust and execute the plan, while keeping everyone engaged in the process.

“Transformational leaders must combine the audacity of imagination with systematic discipline to drive quality throughout the execution process,” says Dr. Mohammad H. Qayoumi, president of California State University, East Bay. “Many leaders have great vision, but unfortunately they don’t have the systematic discipline to transform a great idea on paper into a working model or the mental fortitude to execute the working model.”

Smart Business spoke with Qayoumi about the advantages of transformational leadership in today’s business environment.

How would you define transformational leadership?

Transformational leadership describes the ability to incite change in people and organizations, rather than simply managing the status quo. The theory is executed by an ethical, energetic leader who stirs others’ imaginations and invites them into the process. One of the key differentiators that separates a transformational leader from a transactional leader is support for risk-taking. Transformational leaders understand that promoting new ideas is bound to produce a few failures. Rather than being deterred by an occasional set-back, bold leaders view them as learning opportunities and subscribe to the notion that failure is nobler than not trying at all. Furthermore, they understand that risk tolerance engenders a culture that will support the transformation process.

Why is transformational leadership appropriate for today’s business environment?

The recent economic calamity accelerated the pace of change, and in taking a look back, we can see that linear thinking and rigid processes stifled creativity and contributed to our problems. Transformational leaders inspire innovation and intellectual stimulation by taking a fresh look at old problems and breaking down both the real and perceived constraints to creative thinking. They also anticipate issues and initiate change proactively, instead of sitting on the sidelines while others test the waters. Passive leaders, who merely react to unforeseen business events, will soon find their competitors dominating the market. In essence, transformational leadership creates a new mental model which is better suited to today’s rapidly changing environment.