There is a great deal of discussion in the OD community around Transformational Leadership. Politicians, executives and other leaders like to position themselves as transformational leaders and use the term as a means to differentiate themselves. For example, you may hear such things as their intent to accomplish more than preserving the status quo or the need for “change”. Regardless of which political party you identify with, this mantra or other similar ones become all too frequent during major election years. Frequently, many of these individuals are actually transactional or even pseudo-transformational leaders who are disingenuous or inauthentic. To explain what I mean let’s first begin by defining what Transformation Leadership is.
According to noted ethical leadership author Joanne Ciulla, True Transformational Leaders have four key elements:
1) idealized influence
2) inspirational motivation
3) intellectual stimulation
and 4) individualized consideration.
In short, one of the key difference that separates transformational leaders is the requirement that they are morally uplifting. Let’s take a look at two opposite examples in Al Dunlap, the former head of Sunbeam, and Howard Schultz, the CEO of Starbucks.
Al Dunlap is an example of a pseudo-transformational business leader. Brought into Sunbeam in 1996 to rescue the company, Dunlap had a reputation of being a cost cutter, often at the expense of employees. While helming previous organizations, he cut labor to make the bottom line look better for shareholders. While this sometimes can be a business necessity, what makes this pill difficult to swallow is that Dunlap personally profited enormously from the cuts. While 18,000 individuals lost their jobs as a result of Dunlap’s cuts, he made millions. Ultimately, Dunlap made a series of bad (and illegal) business decisions that reflected his desire to make additional profit off of the ailing company. These decisions included bad acquisitions, falsifying financials, and alienating his board of directors . In the end, Dunlap left the company in worse condition than when he was brought in as its savior. Ultimately,Sunbeam was forced to file for bankruptcy protection in 2001. Dunlap later lost a $15 million dollar class action law suit and had to settle with the Securities and Exchange Commission for actions performed while he was Sunbeam CEO.
In stark contrast to Dunlap is Howard Schultz the CEO of Starbucks Coffee.
Viewed as an marketing innovator, Schultz turned a small Seattle based coffee store into a worldwide phenomenon. Schultz did this, in part, by recognizing the value of employees and being one of the first companies to offer health benefits to part time employees. This attitude also extended to vendors. For example, the company works hard to treat its coffee growers in Third World countries with the same type of dignity by purchasing their products at above-market prices. In addition, Starbucks constantly looks to innovate and provide new value to its customers. One recent example is the addition of the music division. While paying over two dollars for a cup of coffee may seem excessive to many consumers, the fact that the organization places a high value on the welfare of all involved in the business cycle is a refreshing philosophy.
As one considers each example, each of the four characteristics is evident in the corporate philosophy of Starbucks. This philosophy is a direct result of the actions and commitment of CEO Howard Schultz. As you look at your own leadership style, think about ways you can not only accomplish business objectives, but inspire and motivate others in the process. This is the true essence of Transformational Leadership.
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