What Transformational Leaders Have In Common
A recent paper, published by the Harvard Business Review, provides valuable insight into the characteristics of transformational leaders – defined as CEOs who have led the most successful strategic repositioning of their companies, creating new offerings and business models targeted at emerging growth markets.
According to the authors, transformational CEOs share five common characteristics and strategies:
The tend to be ‘Insider-Outsiders’
Interestingly, the companies who had most successfully transformed their business were headed by ‘visionary founders’ with no prior experience in the industry. Having an outsider’s perspective, with no predetermined way of doing things, turned out to be a major asset.
Most other transformational CEOs were what the report called ‘insider-outsiders’. In other words, they did have substantial ‘insider’ experience with an average 14 years of tenure. This, however, was combined with an ‘outsider’ perspective having worked in an emerging non-core growth business within the organisation.
After becoming CEO, this ‘insider-outsider’ perspective helped them explore new paths to growth without being constrained by yesterday’s success formula. Satya Nadella, Microsoft CEO, is quoted as an example having successfully built the company’s cloud computing business prior to becoming CEO.
Transformational CEOs strategically pursue two separate journeys
According to the authors, many transformation programmes fail because leaders adopt a monolithic process, attempting to transform the old company into a new one. There are many organisational, cultural and people barriers preventing this approach from succeeding.
Transformational leaders, on the other hand, reposition the core business while, at the same time, actively investing in new growth businesses. Apple and Amazon are quoted as examples with the latter growing its core retailing business while at the same time becoming a major supplier of cloud services.
Culture change is used to drive engagement
Again, Microsoft is used as a case example with CEO Satya Nadella being credited with transforming Microsoft’s ‘cautious, insular culture’ into one of risk taking and exploration. This was supported by initiatives to build employee engagement and motivation, empowering employees to work on projects they were passionate about.
This new level of employee engagement helped drive Microsoft’s expansion into cloud services and artificial intelligence, areas that now account for 32% of revenue.
Transformational leaders communicate powerful narratives about the future
The authors argue that to change culture and move into new growth areas, the transformational CEO needs to become ‘the storyteller in chief’, telling different aspects of the same transformation narrative to all the constituencies and stakeholders in the company. This includes narrative on the ‘stark reality of what the future holds, building plans for the organisation to meet those realities’.
They develop a road map before disruption takes hold
Successful transformations take years, with a 10-year time frame being used in the analysis. As a consequence, there is no time to waste according to the report. Many of the best known examples of disrupted companies – Blockbuster, Borders, Blackberry, Kodak and others – ran into deep trouble a decade or more after some of the early warning signs appeared. None of their leaders developed effective transformation plans in time to halt the decline.
Netflix is used as a counter example, with the foundations for the company’s transformation being established as far back as 2007, when deals were negotiated with Hollywood to test online streaming of movies and TV shows.
While not focusing specifically on ‘digital’ transformation all of the case examples presented in the report have a major digital element to them.
There are lessons to be learned from the ‘Transformation 10’ – the importance of adopting an ‘outside-in’ as well as an ‘inside-out’ perspective, the need to successfully integrate strategy, people, processes, systems, organisation, culture AND technology.
At Bridgeall, we facilitate this transformation by building bridges between IT and the business; between software implementation and tangible outcomes.
As always, comment and feedback are very welcome.
You can access the Harvard Business Review paper here – What the Best Transformational Leaders Do.