Every year new words are used to describe leadership. Most include characteristics of the leader. Some recent words include “resilient,” “visionary,” “mindful,” “humble,” “humorous,” “collaborative” and so on. Ever since the word “leadership” entered our vocabulary just after the Civil War, researchers, business gurus and authors have tried to understand all of its qualities, implications and practices.
All these attributes have boiled down into two major styles. Each style includes many of the characteristics of leadership tossed around in a salad of words. Together they bring some order and focus to the meaning of leadership. They appear to be mutually exclusive, but aren’t.
The two major leadership styles are transactional and transformational. They can be considered opposite poles on a leader continuum from command and control to collaborative behaviors. The transactional style is known for its emphasis on rewards and incentives in exchange for tasks accomplished. The core dynamic of transactional leadership lies in the idea that the leader, who holds power and control over his or her followers, provides incentives for followers to do what the leader wants. In today’s world of management, it seems old school, yet it still exists and is played out in companies large and small.
It is a model of accounting, not necessarily of accountability. It accounts for doing what a manager or leader wants to achieve. Such transactions are measurable and short-term. Some suggest that men use this style more often than women. That debate will continue as more women enter the C-suite.
Bernard Bass in his 1985 book “Leadership and Performance” has several assumptions about the transactional style, which include a clear and definite command and control structure, that people are motivated by rewards, that people must obey the instructions of the leader and that managers need to make sure subordinates meet expectations. Though still used, it is not likely to be a recommended style by a contemporary executive coach.
From rewards and incentives contingent on performance, we move to the second style of articulating a strategic vision that pays attention to stakeholders’ needs to drive performance. This new leadership style easily becomes a process where many participate. This transformational style involves making changes. It is a subjective style in a long-term process. It fosters interdependence among the various functions of a company; for example, across manufacturing, sales, finance, marketing, R&D and new products.
James MacGregor Burns, in his 2003 book “Transforming Leadership,” states the transformational leader “recognizes and exploits an existing need or demand of a potential follower… (and) looks for potential motives in followers, seeks to satisfy higher needs, and engages the full person of the follower.”
It transforms the follower and the organization.
The transformative style has a contemporary appeal, since companies are gearing up for the fast-paced, volatile circumstances they can experience in global economy where the threats are as real as the opportunities. Apple is a company that understands this dynamic, largely due to it co-founder Steve Jobs, who, despite a tough management style, was a transformational leader.
The real key to understanding the transformational style is to look at smaller companies. “Mom and pop” companies face domestic challenges from Wal-Mart and Amazon and from global competitors like Alibaba and Inditex (a South American clothing giant).
Can they transform themselves into at least a local company that can be agile enough to survive? The answer is yes. Here’s how:
Their key to success can be seen through the eyes of their employees. They begin to raise the excitement of employees and cause them to act at higher, more collaborative, levels. They ask questions that stimulate new ideas about products and services, greater efficiencies and customer satisfaction. They assign responsibilities that create learning opportunities for employees to solve problems, make timely decisions and inspire higher levels of performance.
These owners grow in their ability to influence employees and help them grow as well. With a strong sense of vision they can align employees’ skills for creative, marketable and affordable products and services.
Sole entrepreneurs have an advantage here, since they perform a lot of business functions themselves. The disadvantage is that they perform a lot of business functions themselves. If they are willing to change and grow, they can transform their initiatives into longer term success. They can easily link business strategy and their core capabilities, which are needed to deliver results.
Sounds efficient, and it can be done, but a sole practitioner who’s growing still needs other people to delegate to. Here, a reliance on family and friends — and even competitive alliances — are helpful. Sole practitioners also need to be motivated by rewards related to positive results.
Sole entrepreneurs and other contemporary companies, whether large or small, include both transactional and transformational styles. The style that is emphasized depends on their circumstances and maturity. Startups are likely to emphasize a transactional style until cash flow reaches a productive level. For the next growth leap, a transformational style is emphasized.
Along the way, mistakes will be made and they too will transform the leader and his or her company. Perhaps the words of Winston Churchill say it all: “Success is not final, failure is not fatal: it is the courage to continue that counts.”
Bob Vecchiotti is a business adviser and professional coach in Peterborough. He lives in Dublin.