Welcome to WorldsView™ Consulting

What does it mean for change?

Participants:
Craig Yeatman, Chief Executive and Consultant
Lee Knobel, Consulting Director
Donna Kipps, Consultant

Donna notes:

Current leadership literature¹ distinguishes transformational and transactional leadership styles – I’m interested in the implications for how these leaders lead change.

Where transactional leaders set expectations, define tasks and shoot for established goals, they achieve limited, incremental change. There is little strategic dialogue in the transactional organisation: the leader defines the future and how to get there. So the organisation is characterised by linear planning in entrenched paradigms.

Transformational leaders recognise the organisation as a complex system in a chaotic environment. Instead of linear planning, they respond to complexity by tuning into constant change. The leader creates a shared vision and inspires the organisation to learn and evolve in response to change. Responsibility is spread through the organisation, and structures and silos are broken down. Transformational leaders drive radical change, trading short-term stability for long-term survival as an adaptable learning organisation.

Craig responds:

I believe there are organisational contexts (people, environment, leader, knowledge, etc) that lend themselves to transactional leadership, and that transactional leadership does not necessarily result in “limited, incremental change”. I think we find examples of successful large-scale change led by transactional leaders. The problem for me is sustainability of the organisation under a transactional leader. The organisation doesn’t learn to think, adapt or survive.

Similarly, I’m not sure the emphasis on radical change is a desirable association with transformational leadership. Surely the emphasis should be on building sustainability and developing an organisation that can think deeply and broadly, react to its changing context and outlast any individual leader through organisation-wide strategic plays? It might provoke incessant change that, over a period of time, outstrips the lurches generated by the transactional process. Transformational change starts slower than transactional change - and there are no guarantees that it will result in change that is more or less radical than change driven by a transactional leader’s “do or die” edict.

Therefore, a key challenge for transformational leaders is to find tools to tap into the well of organisational knowledge and experience and bring them to bear on the co-creation and execution of sustainable, relevant strategy: to create the appropriate strategic responses in ways that enable simultaneous implementation; to break down the time lags from planning to execution that characterise transactional cycles. People must become accustomed to having a voice and playing a part in the generation of change – and not wait passively for instruction.

Lee comments:

Let’s go back to basics. The concept of transactional and transformational leadership styles comes from research that found that some leaders obtain extraordinary performance from followers while other leaders don’t.

Transformational leaders “inspire followers to transcend their own self-interest for the good of the organisation” and “are capable of having a profound and extraordinary effect on their followers”, leading to new heights of performance. Transactional leaders “guide or motivate their followers in the direction of established goals by clarifying role and task requirements”.²

To really get to grips with this, we need to distinguish between organisational climate and culture. Climate includes people’s perceptions and attitudes about the organisation, built on reactions to management and organisational practices. Climate is relatively easy to change by changing procedures, structures, etc. Organisational culture, on the other hand, includes the deep-seated assumptions, values and beliefs that are enduring, often unconscious and difficult to change.

Transactional leadership is sufficient to cause first-order climate change (change in structure, practices and systems) by setting direction and goals. Transformational leadership is required for more fundamental second-order change (change in strategy, leadership and culture). Change in these areas transforms the organisation permanently, transforming the people in it and creating “leaps” in behaviour.³

So it’s not that transformational leadership is ‘good’ and transactional leadership is ‘bad’ - but for second-order change to occur, transformational leadership is required. Transformative change is a journey that seems impossible when viewed in the traditional context. Transforming a living system, like an organisation, requires the enthusiasm and commitment of the whole system. Leaders need to allow ideas to emerge and be receptive to this journey, which involves innovative thinking and creative problem solving at every level of the organisation.

Donna responds:

To sum up: Transactional leaders create change by defining tasks and motivating through exchange: change driven from above. Transformational leaders create change by giving everyone a voice, distributing responsibility and building the organisation’s capacity to drive change from within.

To achieve first-order climate change (systems, management, policies), transactional leadership may be sufficient. But if you’re looking to change culture (values, beliefs, etc) then transformational leadership is required. So it’s not the scale of change (radical/incremental) but the depth of change that is the issue. For deep transformational change, the entire organisation must be engaged and involved, and that requires transformational leadership.

To address Craig’s point, the transformational leader’s challenge is to find tools that enable the organisation’s participation in the generation and execution of strategy and change. This speaks to the importance of collaborative tools in change, and this is something close to our hearts!

1. See James M. Burns, Leadership (New York: Harper & Row 1978); B.M. Bass, Leadership and Performance Beyond Expectations (New York: The Free Press, 1985); and N.M. Tichy and M.A Devanna, the Transformational Leader (New York: Wiley and Sons, 1986)
2. Stephen P. Robbins, 1989. Organizational Behavior, 4th Ed., Englewood Cliffs, N.J.: Prentice-Hall. (page 329)
3. W. Warner Burke, Organization Development, 2nd Ed., 1994. Addison-Wesley Publishing Co. Inc.