6 Insights for Transformative Leaders

Keys to a Competitive Advantage

2014 Volume 17 Issue 2

Nearly 80 years ago AT&T’s Chester Barnard presented a series of lectures at Harvard University, declaring that successful cooperation in organizations “is the abnormal, not the normal condition” and that most organizations enjoy short-lived success at best.[1] More recently, this theme has been echoed by Stanford University’s Jeffrey Pfeffer who noted that most organizations are victims of ineffective leaders who fail to research or apply correct management principles.[2]

Transformative Leaders sizedDespite their best efforts, today’s leaders struggle to earn the trust of followers[3] according to recent surveys and apparently do not know where to turn as they search for a leadership model that will work in today’s globally competitive work world.[4] A new model of “transformative leadership,” an ethically-based integration of six other highly regarded leadership perspectives, offers valuable insights that may benefit modern leaders who seek to create organizations that can compete successfully in today’s incredibly challenging global climate.[5]

Transformative leadership asks leaders to be highly ethical stewards who seek the welfare, growth, and wholeness of all stakeholders in the pursuit of optimizing long-term wealth creation.[6] Combining key elements of charismatic, principle-centered, transformational, Level 5, covenantal, and servant leadership, this “transformative” model asks leaders to raise the bar of their personal accountability in honoring duties owed to others.[7] Honoring these duties will enable leaders to create greater value and compete more effectively in today’s chaotic and challenging business environment.

Charismatic Leadership’s Commitment to Calling

Charismatic leaders are committed to a personal calling that drives their pursuit of a noble purpose.[8] This noble vision is communicated to followers and inspires individuals to feel ownership in the pursuit of an ideal.[9] The passion to achieve worthy goals resonates deep within others, motivating them to achieve results that may even exceed their highest expectations.[10] Transformative leaders inspire others in the pursuit of a shared vision and empower others to excel in unprecedented ways.

Herb Kelleher, co-founder and former CEO of Southwest Airlines, is often cited as a charismatic leader who was both passionate about creating a new model to delivering airlines services and highly effective at motivating Southwest’s employees to work hard to achieve the company’s goals. Kelleher often surprised his employees by personally going the extra mile, even working a shift handling airline baggage on a holiday so that a regularly scheduled employee could have that day off.[11]

  • 1st Leadership Insight: Leaders need to examine what truly matters to them to discover their own calling.

That passion and purpose to meet the needs of others is when the leader’s inner voice or conscience declares to be how they ought to spend their lives. Transformative leadership urges leaders to discover their voice and to listen to it as they focus their lives. Finding their voice and discovering their purpose empowers individuals to utilize their best efforts to help their companies to excel.[12]

Principle-Centered Leadership’s Dedication to Universal Laws

Principle-centered leaders recognize that life is ultimately governed by universal principles and values that, when correctly applied, produce successful outcomes.[13] Stephen R. Covey explained that those principles and values encompass universal laws that cannot be broken, although we may find that we may “break ourselves against them” when we violate those laws.[14] The universal laws and values are common across time and across cultures. Transformative leaders seek to understand those universal truths and to incorporate them into their lives and their organizations. Only when organizations and individuals honor correct principles and values are they likely to achieve lasting long-term growth in a world that is increasingly cynical of companies and leaders who act unethically.[15]

Azim Premji, Chairman of India’s Wipro, Limited, a leading exporter of software services and one of India’s largest companies in terms of market capitalization has created a legacy of integrity for his company that has enabled the company to establish a reputation for honesty and the trust of global corporations worldwide.[16] Premji, a Stanford graduate, followed the high ethical standards set by his father to lead a company that has been frequently cited for its commitment to correct principles.

  • 2nd Leadership Insight: Effective relationships are based upon understanding, complying with, and honoring correct principles in the pursuit of organization excellence and trust.

Transformative leaders recognize that they must become lifelong students in the pursuit of the truth that is present in universal laws, and that the search for that truth will empower them and their employees to achieve personal and organizational excellence.[17] Honoring correct principles and exemplifying noble values also wins the high trust of customers and society.[18]

Transformational Leadership’s Pursuit of Synergy

Transformational leaders recognize that organizations must constantly evolve in the pursuit of excellence, but that they achieve true greatness when they demonstrate a commitment to the growth and success of their employees along the way.[19] This pursuit of synergistic “win-win” outcomes requires the ability to rise above suboptimal “settling” for second best compromise solutions that do not achieve excellence by partnering with others in pursuit of an optimal alternative.[20] The willingness to seek after solutions that benefit all stakeholders epitomizes the synergistic nature of transformational leadership. The transformative leader’s commitment to the welfare of others earns the high trust of employees that great organizations require and enables companies to respond to opportunities that arise in an ever changing world.

Daniel DiMicco, former CEO of NUCOR Steel, applied transformational leadership principles in leading that company to transform the steel industry. DiMicco’s willingness to fully engage employees as participants in operational decisions and sharing quarterly profits with employee teams exemplified transformational leadership’s ability to respond to the demands of change, while creating solutions that serve both the organization and its key stakeholders.[21]

  • 3rd Leadership Insight: Recognize that earning the trust of others is achieved by treating employees as full owners and partners who are critical for the organization’s success, but who are ends in and of themselves, rather than simply the means to achieve organizational goals.

Synergistic solutions, often called a “third alternative” approach, require the full trust, commitment, and creativity of those involved in crafting a winning outcome.[22] Transformative leaders know that they benefit by building organizations around a culture of trust and empowerment. Synergy, innovation, and creativity are well acknowledged as the keys to competitive advantage and depend upon that trust and empowerment.[23]

Level 5 Leadership’s Acknowledgement of Accountability

Coupled with a fierce and virtually unyielding resolve to achieve excellence, Level 5 leaders acknowledge the contribution that others make when success occurs but take personal responsibility for failures.[24] Level 5 leaders demonstrate profound humility in acknowledging their own accountability, while giving full credit to others for their contributions. Transformative leaders adopt this same ability to “look out the window” in giving credit to others for achievements but “look in the mirror” and recognize that poor leadership often is the cause of suboptimal performance.[25] This willingness to honestly accept responsibility for ineffective systems and to take prompt actions is key to organizational improvement and competitive success.[26]

David Packard, co-founder and former leader of Hewlett-Packard, is cited by Jim Collins as an exemplary model of the Level 5 leader.[27] Packard’s low-keyed and understated style and his personal humility were coupled with a fierce passion to achieve organizational success which enabled Hewlett-Packard to ultimately achieve a top ten Fortune 500 ranking as one of the world’s most respected companies.[28]

  • 4th Leadership Insight: Effective results are achieved by recognizing contributions at all levels of the organization and that the leader’s role is to remove barriers that cause failure and to assume accountability for system problems when failures occur.

Successful organizations recognize the needs of customers, understand their competitors, identify the root causes of problems, and provide employees with the resources to succeed.[29] Transformative leaders pay attention to the details in looking at each level of an organization’s performance and recognize that great results are achieved by great employees. Acknowledging the contributions of others and giving proper credit increases employee initiative and extra-role behavior so essential in providing great service to customers.[30]

Covenantal Leadership’s Pursuit of Truth

Covenantal leaders seek to empower others in the ongoing search for new insights, better ways to achieve results, and the ongoing quest for the knowledge and wisdom that transforms lives and improves the world. Covenantal leadership seeks to create new truth by involving all members of the organization in this noble pursuit and by empowering them to contribute to the learning process.[31] Transformative leaders engage others by creating organizational systems and a culture that enables learning,[32] with the leader fulfilling the roles of teacher, exemplar, and facilitator in the quest for truth.

Masaru Ibuka and Akio Morita, co-founders of SONY Corporation, adopted the covenantal leader’s commitment to constantly learning and modeling the way for employees in the pursuit of new and better ways to create better products in the electronics industry.[33] Their passion for achieving better results and their pursuit of new and improved product innovations has made SONY a worldwide brand name[34] and exemplifies the covenantal leadership passion for new knowledge.

  • 5th Leadership Insight: Leaders must recognize that the pursuit of new truths and clearer meanings is critical to creating value in a world dependent upon knowledge and information.

Investing continually in the learning process and empowering employees in the discovery of new truths enable organizations to survive in a fast changing world.[35] Transformative leadership embraces this need to constantly learn and to never be satisfied with the status quo in the pursuit of knowledge and truth. Keeping pace with competitors, incorporating new technology, and developing innovative improvements all depend upon this commitment to constant learning and the pursuit of new truths.[36]

Servant Leadership’s Authentic Caring

Servant leaders view the leadership responsibility as a moral imperative that treats others like valued “yous” or as ends in themselves and never as “its” or as simply the means to achieve an organization’s goals.[37] People are valued as worthy of the leader’s best efforts and the servant leader takes on a sacred duty in the service of others within the organization.[38] Transformative leaders honor the servant leader’s commitment to caring authentically about the duties owed to employees and view those duties as rising to the level of a sacred obligation which is fraught with a broad set of obligations.[39]

Max DePree, former CEO of the highly respected Herman Miller furniture company, is often cited as an example of the servant leader. Herman Miller has received dozens of awards for its management effectiveness and its employee-friendly culture;[40] and DePree’s Leadership is an Art articulates DePree’s philosophy that a great leader must become “a servant and a debtor” in honoring duties owed to employees.[41]

  • 6th Leadership Insight: Leaders must recognize that the most beneficial outcome possible for organizations is to care authentically for the welfare, growth, and wholeness of employees, recognizing that honoring those duties will result in employees responding with high commitment, greater trust, and increased creativity and effort.

Recent research not only confirms that organizations based upon high trust are more profitable and produce better quality, but demonstrates that those results are more likely to be achieved long-term.[42] Transformative leaders recognize that the most self-beneficial outcomes for their organizations are achieved when they genuinely are concerned about honoring duties that they owe to their employees. The evidence from companies like Herman Miller that apply this principle suggests that treating employees well and creating high trust increases corporate profitability and quality.[43]

Leadership Transformation Is No Instant Pudding

Dont push lead - sizedAlthough a growing list of management experts and practitioners have discovered that a new transformative leadership approach pays off in more competitive organizations, they have also recognized that the road to becoming a transformative leader is often personally demanding and is, in reality, a lifelong pursuit and a quest for personal self-mastery.[44]

Combining the traits of all six leadership perspectives of transformative leadership, Chick-fil-A’s S. Truett Cathy has been cited as an example of a modern transformative leader. Cathy’s corporation has become a cultural icon for the quality of its food and its personal service to its customers, but it was Cathy’s commitment to the values and duties that leaders owe to its customers and employees that has enabled Chick-fil-A to become a multi-billion dollar corporation. Cathy’s understated and people-oriented leadership style combines with a commitment to the highest principles and a dedication to excellence that exemplify transformative leadership.[45]

W. Edwards Deming, the Father of Total Quality Management and an expert on leadership, declared that “There is no instant pudding.”[46] Excellence, change, and redefining one’s leadership capabilities are worth the effort but the cost requires personal dedication, constant self-reflection, and the pursuit of truth and knowledge.[47]

Transformative leadership, while difficult for leaders to achieve, nonetheless can enable its adherents to achieve unparalleled excellence personally and in the organizations that they serve.[48] Transformative leadership creates competitive advantage because it builds employee trust, complies with correct principles, and demonstrates a ferocious commitment to constant improvement and the achievement of excellence.[49] As organizational leaders examine the ethical obligations that they owe their organizations and their employees, reviewing each of the six insights and duties of the transformative leadership model and the leadership perspectives upon which it is based can be a useful means for improving their effectiveness and creating value for their companies.


[1] Barnard, C. I., (1938).The Functions of the Executive, Cambridge, MA: Harvard University Press, p. 5. Barnard’s lectures were collected in a book often referred to as the first American book on leadership and has been cited by management scholars as the second most influential management book of the 20th century.

[2] Pfeffer, J., (1998). The Human Equation: Building Profits by Putting People First. Cambridge, MA: Harvard Business School Press, Chapter One. Pfeffer explains that following “conventional wisdom “ that is not empirically tested is the cause of most organizational dysfunctions and that it is the obligation of organizational leaders to confirm or disconfirm management concepts as part of their due diligence.

[3] According to a survey conducted by Maritz Research in 2011, “(o)nly 10% of employees trust management to make the right decision in times of uncertainty” found at http://www.maritz.com/Press-Releases/2011/Americans-Still-Lack-Trust-In-Company-Management-Post-Recession.aspx?from=%7BF7761035-E6F1-43C4-847E-4549BDDA49A0%7D.

[4] The struggles of today’s leaders are well documented in Bennis, W. G. and Nanus, B., (2007). Leaders: Strategies for Taking Charge. New York: HarperCollins.

[5] Caldwell, C., Dixon, R. D., Floyd, L., Chaudoin, J., Post., J., and Cheokas, G. (2012). “Transformative Leadership: Achieving Unparalleled Excellence.” Journal of Business Ethics, Vol 109, Iss. 2, pp. 175-187.

[6] The concept of ethical stewardship is explained in Caldwell, C., Hayes, L. A., Karri, R., and Bernal, P., (2008). “Ethical Stewardship: Implications for Leadership and Trust.” Journal of Business Ethics, Vol. 78, Iss. 1-2, pp. 153-164.

[7] The ethical duties of the six perspectives that make up transformative leadership are also cited in Caldwell, C.,Truong, D. X., Linh, P. T., and Tuan, A., (2011). “Strategic Human Resource Management as Ethical Stewardship.” Journal of Business Ethics, Vol. 98, Iss. 1, pp. 171-182.

[8] Lussier, R. N., and Achua, C. F., (2012). Leadership: Theory, Application, & Skill Development. Mason, OH: Thompson Higher Education, pp. 358-377.

[9] For a thorough review of charismatic leadership, this leadership perspective is well described in Conger, J. A., and Kanungo, R. N., (1998). Charismatic Leadership in Organizations. Thousand Oaks, CA: Sage Publications.

[10] For greater insight, please read Boyatzis, R. E., and McKee, A., (2005) Resonant Leadership: Renewing Yourself and Connecting with Others through Mindfulness, Hope, and Compassion. Boston, MA: Harvard Business School Publishing.

[11] Gittel, J. H., (2003). The Southwest Airlines Way: Using the Power of Relationships to Achieve High Performance. New York: McGraw-Hill.

[12] The importance of discovering one’s voice is clearly explained in Covey, S. R., (2004). The 8th Habit: From Effectiveness to Greatness. New York: Free Press.

[13] The importance of universal principles and virtues is an Aristotelian principle described extensively in Solomon, R. C., (1992). Ethics and Excellence: Cooperation and Integrity in Business. Oxford: Oxford University Press.

[14] Stephen R. Covey introduced this leadership model in his book, Principle Centered Leadership (1992), Denver, CO: Fireside Press

[15] This insight is contained in Caldwell, C., and Hansen, M. H. (2010). “Trustworthiness, Governance, and Wealth Creation.” Journal of Business Ethics, Vol. 97, Iss. 2, pp. 173-188.

[16] Premji’s commitment to values is chronicled in Paine, L. S. (2003). Value Shift: Why Companies Must Merge Social and Financial Imperatives to Achieve Superior Performance. New York: McGraw-Hill. Forbes cites Premji as a philanthropist and high tech mogul and one of the richest men in the world.

[17] Caldwell, C., (2012). Moral Leadership: A Transformative Model for Tomorrow’s Leaders. New York: Business Expert Press.

[18] These points are well made in Hess, E. D., and Cameron, K. S., (Eds.), (2006). Leading with Values: Positivity, Virtue, and High Performance. New York: Cambridge University Press.

[19] Bass, B. M., and Riggio, (2006). Transformational Leadership (Second Edition). Mahwah, NJ: Lawrence Erlbaum Assoc. Publishers.

[20] Searching for win-win alternatives is well summarized in Covey, S. R., (2012). The 3rd Alternative: Solving Life’s Most Difficult Problems. New York: Free Press.

[21] DiMicco, D., (2006). Steeling America’s Future. Charlotte, NC: Vox Populi Publishers.

[22] Pfeffer, J., op. cit.

[23] Christensen, C. M., and Raynor, M. E. (2003). The Innovator’s Solution: Creating and Sustaining Successful Growth. Boston, MA: Harvard Business School Press.

[24] Collins, J., (2001). Good to Great: Why Some Companies Make the Leap and Others Don’t. New York: HarperCollins, p. 191-194.

[25] Ibid.

[26] The importance of management accepting responsibility for systems problems is well documented in Deming, W. E., (2000). Out of the Crisis. Cambridge, MA: Massachusetts Institute of Technology.

[27] Collins, J., Collins, J., op. cit.

[28] Packard, D., (2006). The HP Way: How Bill Hewlett and I Built Our Company. New York Harper Business.

[29] This insight has been well documented by Pfeffer, J., 1998, op. cit. and Deming, W. E., 2000, op. cit.

[30] The importance of extra-role behavior in achieving competitive advantage is well made in Organ, D. W., Podsakoff, P. M., and MacKenzie, S. B., (2006). Organizational Citizenship Behavior: Its Nature, Antecedents, and Consequences. Thousand Oaks, CA: Sage Publications.

[31] Covenantal leadership is well explained by Moses Pava, who introduced that leadership perspective in Pava, M., (2003). Leading with Meaning: Using Covenantal Leadership to Build a Better Organization. New York: Palgrave Macmillan.

[32] The learning organization and the role of constant learning is presented effectively in Senge, P. M., (2006). The Fifth Discipline: The Art and Practice of the Learning Organization. New York: Doubleday.

[33] Chang, S. J., (2008). Sony vs. Samsung: The Inside Story of the Electronic Giants’ Battle for Global Supremacy. Singapore: John Wiley & Sons, p. 26.

[34] Nathan, J. (2001). Sony: A Private Life. New York: Mariner Publications.

[35] Christensen, C. M., (2011). The Innovator’s Dilemma: The Revolutionary Book that Will Change the Way that You Do Business. Boston, MA: Harvard Business School Press.

[36] Ibid.

[37] DePree, M., (2004). Leadership is an Art. New York: Doubleday.

[38] Ibid.

[39] Caldwell, C., (2012). op. cit.

[40] DePree’s achievements have been well chronicled at http://depree.org/max-de-pree/

[41] DePree, M., (2004). op. cit., p. 11.

[42] This research has been well documented by Cameron, K. S., (2012). Positive Leadership: Strategies for Extraordinary Performance. San Francisco, CA: Berrett-Koehler.

[43] Ibid.

[44] Compare that same message in Quinn, R. E., (1996). Deep Change: Discovering the Leader Within. San Francisco: Jossey-Bass,

[45] Caldwell, C. et al., (2012), op. cit., pp. 181-183.

[46] Deming, W. E., (2000), op. cit., p. 126.

[47] Quinn, R. E., (2005). “Moments of Greatness.” Harvard Business Review, Vol. 83, Iss. 7/8, pp. 74-83.

[48] Caldwell, C. et al., (2012), op. cit.

[49] Caldwell, C. (2012). op. cit.

About the Author(s)

Cam Caldwell, PhD, earned his PhD in Management from Washington State University after a twenty year career as a Management Consultant, Human Resource Director, and City Manager. He has written more than fifty articles about business ethics and leadership issues which emphasize the importance of leaders earning the trust of others to achieve unprecedented results. Dr. Caldwell is widely respected for his applied approach to organizational leadership and has contributed a number of innovative insights about leadership, trust, and wealth creation to stimulate academic scholarship and assist practitioners to create a competitive advantage.

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