Mark Heinlein.com

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.

Jerome Bettis

“Success is to be measured not so much by the position that one has reached in life, as by the obstacles which have been overcome while trying to succeed.”  –Booker T. Washington 

Let’s expand a bit on power and talk about formal and informal power.

Formal Leaders are the easiest to understand and recognize.  These are individuals who have been given title and authority to influence others to achieve established organizational goals and objectives.  They are generally measured and incentivized by their ability to motivate the team to accomplish these goals.  In this manner, success of the formal leader is linked directly to performance of the team.  If the team does well, the leader is considered a success.

Informal leaders are a bit more complex.  An informal leader is an individual, without formal title or authority, who is perceived by the group as an individual worthy of being followed.  This may be because of subject matter expertise, longevity with the company or in the industry, or prior successes recognized by the organization and/or team.  Informal leaders are critical to the success of the team and may wield more power and influence than the formal leader. 

Here are some of the key differences between the two:

1) Informal leaders are not accountable to the same group goals and metrics assigned to the formal leader. 

2) An informal leader’s influence can extend to areas outside of the organizational goals

3) Informal leaders demonstrate leadership traits that are recognized by the team.  They motivate, mentor and even inspire the team.  Formal leaders may or may not have these characteristics.

4) An informal leader has garnered the trust and respect of the team.  For the Formal Leader, this is something that often has to be earned.

Every organization and group has informal and formal leaders.  For example, sports teams have managers and Head Coaches, however, how often do you read about them being replaced because they simply could not relate to the players or motivate them?  A new coach comes in, recognizes who the informal leaders are and partners with them to point the team in the right direction.

Informal leaders can do things that the formal leader cannot.  Using the sporting analogy again, frequently you read in the media, especially during the playoffs, of informal leaders holding team meetings to inspire and motivate.

I’m a Steeler fan…so I’ll use them as an example.  Prior to the AFC Championship Game a few years back, Jerome Bettis stood up and gave an emotional speech to his team that culimated with the words “Just get me to Detroit” (where the Super Bowl was being held).  The Steelers later went on to beat the Broncos 34-17 and advance to Super Bowl (where they beat the Seahawks 21-10).  Bettis was the informal leader of the team.  His words motivated in a way that Head Coach Bill Cowher’s could never do.

This same dynamic holds true in the corporate world as well.  A team where the formal and informal leaders are working toward the same goal are incredibly effective.  Formal leaders who are able both through words and actions demonstrate that they are concerned about the organization, care about the welfare of the team members, and support developmental opportunities for the team, stand a far greater chance of achieving the goals for which they are being held accountable,

So…if you are a formal leader ask yourself, who is your Jerome Bettis and how can you partner with him/her to get your team to the Super Bowl?