It’s a simple truth that haunts many a corporate leader: “What made us successful in the past will not keep us competitive in the future.” Contributing to their restless nights is a growing awareness that, in complex and volatile environments, the future is no longer something that can be planned. So what must the nature of the long-term goals be with which they align the company? Which KPIs are truly relevant to what they are out to achieve? To make matters worse, innovations are barely predictable, because at least in the case of business models or digital services they are no longer the outcome of ring-fenced R&D processes but the product of open networks. And in a world of constant upheaval, even tried-and-tested mechanisms for team management or coordinating company-wide activities no longer fit the bill. Under these conditions, how is a leader to generate a sense of identity and belonging among their team? Also, unless companies can regularly demonstrate an ability to create value for society that goes beyond the purely economic, the very foundations of their business model are at risk.
What makes leadership transformational?
Where could the solution lie? In the past, to keep pace with the competition it was often sufficient to run a market analysis and maybe tweak the business model. Or launch a change initiative, which meant scrutinizing processes and structures before introducing best-practices defined by proven methods, leading to greater efficiency. Today, though, this traditional toolbox no longer sustainably delivers the goods. Time and again we see organizations quickly slipping back into their former ruts. All the signs seem to call for a radical rethink among top management, with leaders needing to abandon their comfort zones to seek out more viable ideas.
After all, structures, processes, products and external communications are merely the visible signs and drivers of a corporate entity. If these are the only points at which leverage is applied, no one is ever going to transform an average performer into a global champion. To do so predicates accessing the invisible dimensions of a company – informal communications, enshrined rituals and an unspoken collective agreement as to: Why are we here? Who do we want to be? How do we tackle challenges? And how do we relate to one another?
The aim of any genuine transformation is to address precisely these questions. The company needs to embark on a journey and find its very own way of dealing with a volatile world. The scale of the transformation can be as fundamental as a change in the physical state of matter – in the world of chemistry that would be from solid to liquid or gas, for example. Pivotal to this sea change is a new kind of leadership, because it is only through new forms of collective interaction that new relationships to people across the company can arise, shaping their behavior and thus the collective consciousness of the organization. At the heart of a full-blown transformation, leaders need to ask themselves: What do I declare is important? What kind of example do I set? What do I encourage and what do I declare no-go? How do I foster a real sense of responsibility at all levels of the company? How effective are our company-wide “rituals” such as strategic planning, performance management or talent management? Successful transformation calls for an equally transformed set of leadership skills at all levels of the hierarchy; skills that enable the development of new approaches with the capacity to mobilize, promote and strengthen the forces of renewal across the organization. This holistic and systemic ability to drive company-wide change in the modern world is what we mean by transformational leadership.
Before any transformation can begin, we must first determine the status quo. It is vital that – like the entire transformational journey – this first step be steeped in a positive spirit that reflects that of the ultimate goal. So as we set about this initial diagnosis, we are searching explicitly for the seeds of the future in our current behavioral patterns, not seeking to identify past errors. This is what we call “appreciative inquiry” and it holds the key to a flying start, because focusing on past mistakes leads to a defensive state of mind which is not conducive to a constructive start to our transformation initiative. The task here, then, is to appreciate the current capabilities of the company and use them to launch it into the future. It must be made perfectly clear that the primary reason for transformation is that the frame of reference and the criteria for success have changed, and not that our past was paved with errors.
As consultants, we embark on this diagnosis hand in hand with our client’s management team – although it is actually more of a self-awareness exercise than an external diagnosis. The aim, through dialogue, is to reach genuine agreement on the scale of the impending change and on the precise point of departure for the company and its management team.
The Spark that Lights the Flame
- Part 1: What makes leadership transformational?