What Are the Characteristics of Transformational Leadership?

There are several definitions of transformational leadership, each more majestic than the previous. But in the simplest terms, we think of transformational leadership as a style of managing that inspires people and drives positive change in ways that are innovative and sometimes even profound.

Few people attribute the term transformational leadership to James V. Downton, Jr., a sociologist who conducted research on charismatic leadership and religion, and actually coined the phrase originally. Most give credit to James MacGregor Burns, who developed the concept further, describing transformational leadership as being demonstrated when leaders and followers move one another toward “a higher level of morality and motivation.”

While some people possess transformational leadership capabilities naturally, others may need to actively work on developing the necessary skills. For those intent on leading their companies forward, it’s good to know that these skills are like muscles: We already have them and they can be strengthened with effort. 

In this article, we provide some examples of transformational leadership and then outline the actual characteristics that a transformational leader needs to succeed. 

Transformational Leadership in History

There are many examples of transformational leadership throughout history: Medgar Evers, Queen Elizabeth, Sojourner Truth, Mahatma Gandhi, Thomas Edison and many more. These are men and women who changed the course of history even before the term transformational leadership existed.

But transformational leadership isn’t just about enacting change. For example, during the 1930s, Adolf Hitler transformed Germany in disreputable ways. Was he a transformational leader? According to Burns’ definition, which includes moral values, Hitler was not. Although Hitler posed as a moral crusader, his actions were in complete opposition to his words. There is an element of morality in transformational leadership and although we don’t explicitly include it in our definition, it is implied.

Examples of Transformational Leadership in Business 

Today, transformational leadership is prevalent in the world’s most progressive companies. Management at these companies could have been content with their already enviable market positions. Instead, transformational leadership pushed them to excel in areas beyond their core businesses. At the helm were leaders who chose to identify new market opportunities and increase the sustainability of their market domination. 

These companies include:

  • Netflix: Led by co-founder and co-CEO Reed Hastings, Netflix went from DVD mail-order rentals to streaming movies and entertainment directly to consumers. According to Hastings, “Incredible people don’t want to be micromanaged. We manage through setting context and letting people run.
  • Amazon: Although Amazon was not the first company to sell books to consumers via dial-up modems, Jeff Bezos had an irrepressible dream. He wanted to be the biggest “everything store” online. As he steps down from his CEO position in 2021, the company is poised to disrupt even more traditional brick-and-mortar industries such as the grocery business.
  • Microsoft: Several key industry disruptors, mobile phones and media technology among them, threatened Microsoft’s market preeminence. Under the leadership and vision of Satya Nadella the company has emerged on top once again with its intelligent cloud technologies. 
  • Fujifilm: The company could have disappeared along with the easy-to-load 110 camera. Instead, CEO and chairman Shigetaka Komori rejected the idea that taking a bite from its own analog business was cannibalism. Fujifilm embraced digital technologies to become a major player in fields such as medical imaging.

This is just a short list. Today’s most progressive companies have continued to increase their market share, leverage new technologies and develop innovative products and services despite the present economic challenges and market uncertainties.

Transformational Leadership vs. Transactional Leadership

Before we explore further the characteristics of this management style, it’s important to understand what transformational leadership is not. The leadership style that’s considered its polar opposite is the transactional approach. Transactional leadership places a high value on structure and order, with strict adherence to policies and rules. There are many benefits to transactional leadership, among them its simplicity of implementation. With few ambiguities, this style has, admittedly, been the success formula for many world-class companies. However, the rigidity of transactional leadership tends to stifle creativity and generate more followers than leaders.

During periods of rapid change and market uncertainty, companies need to get the best from their people. Although transactional leadership places an emphasis on minimizing cost and maximizing production, it falls short when it comes to capitalizing on market opportunities. For this, leaders must be willing to color outside the lines and take the organization beyond its self-imposed limitations. These limitations, of course, don’t seem like impediments at all to entrenched managers. After all, what they have done in the past has been successful. So it’s a tall order for any leadership team to look beyond the horizon for the inevitable changes. But that’s what transformational leaders do best.

Characteristics of Transformational Leaders

Admittedly, the term transformational leadership has faded in and out of the spotlight, perhaps even rising to the level of buzzword. Recently, other theories have emerged, including visionary, authentic and collaborative. There is overlap between them; many good leaders are a blend of several styles. However, transformational leadership is the style most suitable for companies that want or need to reinvent themselves or reimagine the future. 

Transformational leadership can be defined by certain characteristics. People who exhibit these characteristics are well suited to become your company’s next generation of transformational leaders. 

1. Keep Their Egos in Check

Your ego wants to be the boss. It can, indeed, protect you. But it can also prevent you from learning and growing, blocking out or negating the opinions of others. Transformational leaders strive to keep their egos under control, putting the best interest of their team and their organization before their own personal gain. In this way, they also elicit trust that leads to the best performance company-wide.

2. Self-Management

Transformational leaders typically don’t need others to set a direction for them. They are able to prioritize, select a course of action and be held accountable for the outcomes. Further, they understand how to use their internal motivation to energize those around them. These leaders do what they love, and their values are aligned with the organizations that they lead.

3. Ability to Take the Right Risks

Transformational leaders overcome irrational fears and evaluate risks in terms of obstacles, capabilities and the vision of the organization. A transformational leader’s team is right behind them conducting the necessary research to evaluate the situation appropriately. Transformational leaders never allow complacency and self-satisfaction to prevent them from taking intelligent risks.

4. Make Difficult Decisions

Like any manager, transformational leaders make tough decisions. Unlike the transactional leader, however, the critical decisions transformational leaders make can cannibalize existing business and move the organization away from its tried-and-true. They might disrupt daily operations, discard the playbook and challenge the status quo. Transformational leaders do not shy away from the tough decisions. They never lose sight, however, of the values, vision, objectives and goals of the organization.

5. Share Collective Organizational Consciousness

A transformational leader shares and understands the collective consciousness of the entire organization. This makes them particularly attuned to the feelings of their team members and gives them a clear idea of what strategies to deploy to elicit desired actions from employees. Since they’re tapped into the organizational consciousness, they are able to make decisions that spur growth, and also create a shared vision for the organization that all employees feel a part of.

6. Inspire Those Around Them

People seek to be inspired. Transformational leaders are perhaps the most inspiring of all. They have the ability to motivate others to rise to the occasion. Their style of inspiration is not just limited to formal acknowledgement of a job well done, rather they treat each employee as a valued individual and take the time to understand what motivates them.

7. Entertain New Ideas

Transformation can rarely be achieved if the leader is not open or receptive to new ideas. Transformational leaders understand that success is dependent on the synchronistic efforts of the entire team, and that growth happens only in organizations that are open to new ideas — whether they are top-down or bottom-up.

8. Adapt Quickly and Easily

Adaptability means that a leader is more willing to undergo change. More than most, transformational leaders are able to think differently about the current situation. They see new possibilities where others may see only a problem. They are masters at reframing an issue, willing to ask themselves: What if the opposite were true? They readily rise to the challenge, seeking ever more creative responses to the dynamic business environment.

9. Proactive Approach 

The ability to be proactive offers two distinct advantages to transformational leaders. First, it helps them mitigate risks and avoid problems through the early identification of issues. Second, it helps them turn challenges into opportunities. This style of leadership can lead to innovative solutions to a problem the customer may not have even recognized. 

10. Lead With Vision

Transformational leaders set an inspiring, yet realistic and achievable, vision for the organization. They are adept at mobilizing others to create the necessary change that will actualize a different outcome. To do this, they must communicate effectively, cultivating a sense of purpose, commitment and belonging. Once they achieve buy-in to the common vision, transformational leaders are able to guide the organization in a direction that will increase the long-term viability of the company.

Start Your Search Today

Transformational leadership is not the right solution in every situation. However, given the current economic environment, it may be exactly what your company needs. When both performance and satisfaction are essential, transformational leaders bring out the best in others, inspiring innovation, and encouraging companies to make bold strategic moves that help ensure their future relevancy. 

If you want to add the right person to your executive team, Y Scouts can help you find your next transformational leader. We understand, however, that not just anyone can occupy a seat at your table. That’s why we go beyond the stacks of resumes (loaded with power verbs) and use our proven leadership model to seek true alignment — that one-of-a-kind fit for your culture and your vision. We call it hiring on purpose…it’s what we do.

This post was updated for clarity and accuracy in 2021.

Resume Background

My Y Scouts experiences have been terrific. From the very beginning Y Scouts was speaking my language about purpose, culture and alignment. I knew they were invested in finding someone who was the perfect fit for our company – and they did! No other search firm talks about “purpose”. They pay some lip service to “culture”, for sure, but the concept of alignment around purpose is not widely understood in the search business. The Y Scouts process ensures that everyone they put in front of me will fit our culture. Because their interviews are blind, the candidate is free to express their true nature, motivations and purpose. That prequalified alignment removes a huge burden off of me during interviews. While I still do some work to confirm the cultural fit, I can spend the bulk of my time evaluating their skills and talent.