MIT UNIT 5
(PREPARE SHORT NOTES ON THE ABOVE MENTIONED TOPICS – AS PER PYQ
TRENDS)
Transformational leadership
● Transformational leadership is defined as a leadership approach that causes change in
individuals and social systems. In its ideal form, it creates valuable and positive change
in the followers with the end goal of developing followers into leaders.
● Enacted in its authentic form, transformational leadership enhances the motivation,
morale and performance of followers through a variety of mechanisms. These include
connecting the follower's sense of identity and self to the mission and the collective
identity of the organization; being a role model for followers that inspires them;
challenging followers to take greater ownership for their work, and understanding the
strengths and weaknesses of followers, so the leader can align followers with tasks that
optimize their performance.
● Transformational leadership is an approach to leadership that moves followers to
transcend self-interest for the good of the organisation.
● Transformational leadership consists of six behaviours: articulating a vision; setting a
positive example; communicating high performance expectations; showing sensitivity to
individual followers’ needs; encouraging a team attitude; and providing intellectual
stimulation.
● Research shows that groups led by transformational leaders boast higher levels of
performance than groups led by other types of leaders.
● Transformational leaders' high expectations give their subordinates the self-confidence
to persist in the face of setbacks, often resulting in exceptional performance.
● Transformational leaders are sometimes call quiet leaders. They are the ones that lead
by example. Their style tends to use rapport, inspiration, or empathy to engage
followers. They are known to possess courage, confidence, and the willingness to make
sacrifices for the greater good.
● They possess a single-minded need to streamline or change things that no longer work.
The transformational leader motivates workers and understands how to form them into
integral units that work well with others. Transformational leaders create a culture of
active thinking through intellectual stimulation, and this culture encourages followers to
become more involved in the organization
Background on Transformational Leadership
● The concept of Transformational leadership was initially introduced by leadership expert
and presidential biographer James MacGregor Burns. According to Burns,
transformational leadership can be seen when "leaders and followers make each other
to advance to a higher level of moral and motivation." Through the strength of their vision
and personality, transformational leaders are able to inspire followers to change
expectations, perceptions, and motivations to work towards common goals.
● Later, researcher Bernard M. Bass expanded upon Burns's original ideas to develop
what is today referred to as Bass’s Transformational Leadership Theory. According to
Bass, transformational leadership can be defined based on the impact that it has on
followers. Transformational leaders, Bass suggested, garner trust, respect, and
admiration from their followers.
● Burns (1978) created the concept of transformational leadership as a description of
political leaders who transform the values of their followers,
● But Bass (1985, 1990) later expanded the scope to include leadership within
organizational settings. Since then, transformational leadership has become one of the
most widely-studied leadership styles due to its emphasis on changing workplace norms
and motivating employees to perform beyond their own expectations (Yukl, 1989).
Transformational leaders are believed to achieve such results through aligning their
subordinates’ goals with those of the organization and by providing an inspiring vision of
the future (Bass, 1985).
ELEMENTS OF TRANSFORMATIONAL LEADERSHIP
1. Individualized Consideration –
The degree to which the leader attends to each follower's needs, acts as a mentor or
coach to the follower and listens to the follower's concerns and needs.
The leader gives empathy and support, keeps communication open and places
challenges before the followers.
This also encompasses the need for respect and celebrates the individual contribution
that each follower can make to the team. The followers have a will and aspirations for
self development and have intrinsic motivation for their tasks.
2. Intellectual Stimulation –
The degree to which the leader challenges assumptions, takes risks and solicits
followers' ideas.
Leaders with this style stimulate and encourage creativity in their followers. They nurture
and develop people who think independently.
For such a leader, learning is a value and unexpected situations are seen as
opportunities to learn. The followers ask questions, think deeply about things and figure
out better ways to execute their tasks.
3. Inspirational Motivation –
The degree to which the leader articulates a vision that is appealing and inspiring to
followers. Leaders with inspirational motivation challenge followers with high standards,
communicate optimism about future goals, and provide meaning for the task at hand.
Followers need to have a strong sense of purpose if they are to be motivated to act.
Purpose and meaning provide the energy that drives a group forward.
The visionary aspects of leadership are supported by communication skills that make the
vision understandable, precise, powerful and engaging.
The followers are willing to invest more effort in their tasks, they are encouraged and
optimistic about the future and believe in their abilities.
4. Idealized Influence –
Provides a role model for high ethical behavior, instills pride, gains respect and trust.
As a development tool, transformational leadership has spread already in all sectors of
western societies, including governmental organizations.
As an example, the Finnish Defence Forces is using widely Deep Lead Model as basic
solution of its leadership training and development. The Deep Lead Model is based on
the theory of transformational leadership.
EXAMPLE OF TRANSFORMATIONAL LEADERSHIP
● Visionary Thinking - Ratan Tata had a clear vision of making Tata Group a global brand.
Under his leadership, the company expanded internationally by acquiring major
companies like Jaguar Land Rover (JLR) and Corus Steel, marking India’s strong
presence in global markets.
● Innovation and Risk Taking - One of his most transformational projects was the Tata
Nano, the world’s cheapest car, aimed at making cars affordable for middle class
Indians. Although the project faced challenges, it demonstrated his commitment to
innovation and social impact.
● Ethical Leadership and Social Responsibility -Tata Group has always been known for
ethical business practices. Ratan Tata strengthened corporate social responsibility
through initiatives like Tata Trusts, which fund education, healthcare, and rural
development.
● Employee Centric Leadership - He emphasised a people first approach, ensuring
employees felt valued. For example, during the 2008 Mumbai attacks, Tata personally
visited injured employees and their families, ensuring they received full support.
● Resilience and Crisis Management - When Tata Motors faced setbacks with the Singur
plant (Nano factory), he successfully shifted operations to Sanand, Gujarat, showcasing
adaptability and strong decision making.
● Mentorship and Legacy -Even after stepping down as Tata Group’s chairman, he
continues to mentor startups and young entrepreneurs, proving that transformational
leadership is about creating future leaders.
Transformational Leadership in Turnaround Management
Meaning: Turnaround management is a structured process aimed at reversing the decline of a
struggling organization and restoring it to financial health, operational stability, and strategic
competitiveness.
Involves crisis management, cost-cutting, cultural shifts, and long-term planning.
When is it needed?
● Financial distress
● Loss of market share
● Leadership failure
● Operational inefficiencies
Why Transformational Leadership is Crucial in Turnarounds?
❖ Navigating Fear and Uncertainty: During a turnaround, organizations often face layoffs,
declining profits, and loss of direction. Transformational leaders offer hope through a
compelling vision, emotional intelligence, and authenticity.
❖ Inspiring Ownership and Collaboration: Employees in turnaround situations may feel
powerless or disengaged. Transformational leaders create a sense of shared mission,
giving people a reason to care and contribute.
❖ Shifting Culture from Survival to Growth: Many companies in decline operate in “survival
mode”—reactive, risk-averse, and rigid. Transformational leaders reframe the crisis as
an opportunity to innovate and evolve.
❖ Acting as a Catalyst for Change: Transformational leaders are not just
managers—they’re change agents. They craft a clear, strategic vision and communicate
it consistently across the organization
EXAMPLE:
1. Background: In the mid-2000s, Ford faced massive losses, declining quality, and poor
morale. Alan Mulally joined as CEO in 2006—company was near bankruptcy.
2. His Transformational Actions:
➔ Unified Vision: “One Ford” plan—focus on core models and global integration.
➔ Cultural Shift: Promoted transparency and teamwork across departments.
➔ Empowerment: Encouraged open communication (e.g., weekly Business Plan Reviews).
➔ Avoided Bailout: Unlike GM/Chrysler, Ford avoided bankruptcy and government bailouts.
3. Results: Turned $12.6 billion loss into a $6.6 billion profit within four years. Restored
brand reputation and internal confidence.
Transformational Leadership in Downsizing
➢ Downsizing isn’t just operational—it's emotional. Layoffs can severely impact employee
morale, trust, and productivity, often long after the job cuts have been made.
➢ Poor leadership during downsizing leads to: Decreased employee engagement and
increased turnover.
➢ Damage to employer brand and internal culture. Resistance to future change initiatives.
Transformational leaders navigate this with vision and empathy. They don’t just inform;
they inspire.
➢ By offering transparency, support, and a renewed sense of purpose, they ensure that
even in loss, the organization moves forward stronger and more unified.
EXAMPLE:
1. IBM’s Silent Layoffs: A Case of Missed Leadership
Between 2016 and 2020, IBM cut over 100,000 jobs, often quietly, under the radar of public or
internal clarity. Employees reported confusion, low morale, and an absence of cohesive
communication from senior leadership. There was no visible transformational leadership to
frame a compelling future vision or engage remaining employees.
Outcome: IBM faced growing internal disengagement, bad press, and lawsuits from former
employees—demonstrating how downsizing without transformation leads to a talent and trust
drain.
2. Airbnb’s COVID-19 Layoffs: Humanity in Hardship
In 2020, Airbnb had to lay off 1,900 employees (25%) due to the pandemic’s brutal impact on
travel. CEO Brian Chesky took full accountability and issued a deeply empathetic letter
explaining the rationale, expressing gratitude, and laying out the
company’s next steps.
Airbnb provided:
14 weeks of severance, equity, and extended health insurance. A talent directory and recruiting
help for laid-off employees. 1:1 meetings with leadership to offer closure and emotional support.
Outcome: Despite massive layoffs, Airbnb’s public perception and internal loyalty remained
strong—an example of how leading with heart transforms difficult moments into legacy-building
ones.
Transformational Leadership in Mergers and Acquisitions
➢ Transformational Leadership in Mergers & Acquisitions refers to the strategic role played
by leaders who inspire, influence, and drive positive change during the high-stakes
process of merging or acquiring companies.
➢ M&A events often lead to uncertainty, cultural clashes, and employee resistance.
Transformational leaders help navigate these challenges by creating motivating teams,
aligning cultures, and fostering commitment among employees to ensure a smooth and
long-term integration.
➢ Maintaining productivity and focus is crucial during periods of disruption. Clear direction
helps reduce confusion and stabilizes team dynamics.
➢ Empowering employees to embrace change fosters a positive transition. An adaptive
mindset ensures flexibility in fast-changing environments.
Qualities of a Transformational Leader During M&A
● Strategic Foresight: Clearly communicates the purpose and future direction of the
organization, aligning stakeholders with a compelling reason for change.
● Emotional Intelligence: Demonstrates empathy for employees concerns and manages
emotions to build trust and strengthen relationships.
● Effective Communication: Communicates transparently and frequently, delivering
consistent messages to reduce confusion and resistance.
● Cultural Integration Ability: Bridges cultural differences within the organization and
promotes shared values while respecting legacy systems.
● Resilience and Adaptability: Handles setbacks with composure and adjusts leadership
style as the situation evolves.
● Empowerment and Motivation: Encourages participation and recognizes efforts,
motivating employees to engage positively in the transformation process.
EXAMPLE:
1. Vodafone and Idea Cellular Merger
● In 2018, Vodafone India and Idea Cellular merged to create Vodafone Idea,
India’s largest telecom operator. The deal, valued at $23 billion, was led by
Vittorio Colao, CEO of Vodafone Group, and Kumar Mangalam Birla, Chairman
of the Aditya Birla Group.
● Both leaders used transformational leadership to steer the integration of two
major telecom giants. Colao and Birla focused on creating a shared vision for the
new company while managing significant cultural and operational differences.
● They emphasized employee empowerment, and open communication, and
worked to align company cultures.
● Through continuous engagement and leadership at all levels, they worked to
reduce uncertainty among employees and ensure a seamless integratioN
process.
● Vodafone-Idea merger faced major challenges like workforce duplication, cultural
differences, and employee uncertainty. To address this, these leaders focused on
streamlining roles, aligning organizational culture, and transparent
communication to reduce anxiety and retain key talent during the integration.
2. PepsiCo’s Acquisition of Tropicana
● In 1998, under the leadership of Indra Nooyi, PepsiCo acquired Tropicana for $3.3 billion
to expand its portfolio beyond carbonated drinks. Nooyi displayed transformational
leadership by driving a vision focused on health and wellness, shifting PepsiCo’s
long-term strate
● Nooyi championed a “Performance with Purpose” strategy, emphasizing nutrition,
sustainability, and growth. She encouraged a culture shift, invested in employee
engagement, and supported innovation in healthier products.
● Through clear communication and purpose-driven leadership, she aligned the workforce
with a broader mission, making the acquisition a cornerstone of PepsiCo’s
transformation into a more diversified and forward-thinking company.
● Indra Nooyi addressed these by promoting a people-first approach, emphasizing the
shared mission of health and wellness. She ensured transparent communication,
preserved key talent from Tropicana, and fostered a unified culture through training,
inclusion, and purpose-driven leadership. This helped ease the transition and build
long-term commitment across both organization.
Developing a personal leadership approach for today’s global business
A personal leadership development plan is one of your best tools to help define and direct your
career goals. It can also help you achieve the following results:
● Be ready for stimulating opportunities and challenges for your career development.
● Leverage your executive education.
● Achieve personal career satisfaction.
● Make an impact on the business organization.
● However, certain questions still remain.
● What is the essence of a personal leadership development plan?
● How do we create it efficiently and effectively?
1. Include your career vision in the personal leadership development plan
It is very important to include your career vision in creating a personal leadership development
plan. Without it, you will never know where you are going. You can create your career vision by
asking yourself these series of questions:
What place does my career take in my life?
How does my career contribute to my life satisfaction?
How do I want my career to add to my overall satisfaction?
What impact do I want to make for my company and why?
What is my leadership style?
What are my leadership skills?
How important is leadership development to me?
By asking these questions, you will be able to honestly assess yourself on where you are
currently standing, and learn how far you are from achieving your goals and objectives.
2. Use the SMART approach in creating your personal leadership development plan
Your personal leadership development plan should not be vague in terms of goals, timelines and
overall structure.
The best way in order to make it clear is to use the SMART approach in creating the goals and
objectives incorporated in the development plan. The SMART system is defined as the
following:
Specific: You must make your personal development plan very specific. It should not be so
broad that it can’t actually be actionable. All plans should be clear and very specific in order to
be able to implement them easily and effectively.
Measurable: You must make a leadership development program that will have results that are
measurable. No matter how good the plan is, if it is not measurable, then you will have a hard
time achieving the results you really want. Results must be quantifiable in order to track
progress in the development program you created for enhancing leadership competencies. Key
performance indicators must be established in crafting the personal leadership development
program.
Acceptable: Your development goals must be acceptable to you and to the entire business
organization. You will only be able to successfully implement the career development plan if you
are willing to do it without anyone forcing you to do so. Moreover, seeking support from the
management of the organization can also help you lot in the implementation process.
Realistic & Results-Oriented: While it is good to aim high, you should still keep in mind that you
need to be realistic in your plans. It must be results-oriented. Accomplishments and
improvements in your personal growth must be seen after implementing the plans.
Time-Bound: Implementation of plans as well as evaluation of results must be time-bound.
There should be a specific time frame for every action and for every result. They should be
categorized ranging from 1 day, 1 week, 1 month, 1 quarter or 1 year.
3. Set firm action steps in your personal leadership development plan
Goals without specific action steps are only wishes.
Take each goal from your SMART assessment and write the necessary action to succeed into
your personal leadership development plan.
Ensure you also identify potential impediments, as well as resources - such as key people in
your network or targeted leadership training programs - that could help you.
These action steps should fit the timeline for goals in your leadership development plan.
4. Integrate personal leadership skills development into your plan
Many of the goals in your personal leadership development plan mean taking on challenges or
seniority postings that will be new to you. To ensure your success, integrate leadership skills
development to prepare for each of these steps. For example, a few years into a general
management career, you may aspire to a global-level position.
An executive leadership program at a top international business school will help prepare your
leadership skills and understanding of the global business environment.
Leadership coaching which may be given as part of a specific leadership program would also be
a boost at this time.
5. Assess, reassess and grow your personal leadership development plan alongside your
career
Your leadership development plan is not a static document: it should change and grow to stay
relevant.
Reassessment gives you the chance to adjust if it seems a goal wasn't realistic after all. It also
enables you to adapt to the unforeseen, such as an unexpected opportunity not to be refused.
Having a set leadership development plan will help you be clearer if this alternative direction is,
in fact, right for you. This is true even when this opportunity differs from the goals listed on your
personal leadership development plan.
Emerging dimensions in creativity, innovation, and organizational transformation.
1. Learning in the core business:
The value of every organization is increasingly based on the ability to learn quickly. Learning is
not only a department, but it’s also a crucial part of the work in every unit. According to Deloitte’s
2019 Human Capital Trends, 86% of organizations recognize changing the way people learn at
work as their biggest organizational development challenge in 2019 and beyond.
As we are moving towards a world of more uncertainty and less predictability, there is no time to
produce formal learning programs and courses for the new emerging topics and challenges.
Learning has to happen in the flow of work.
2. The breakthrough of AI
Practical applications of machine learning and AI are finally entering the market in many
different fields. Within organizational learning and change, their power is in helping people
connect with topics and each other based on their needs and interests.
AI is not something only IT professionals have access to, it can be utilized by everyone.
3. Sensemaking
The world is changing so quickly that it’s important for everyone to be involved in understanding
and responding to those changes. In the future, the ability to quickly adapt and make use of new
information will be more valuable than simply having a list of technical skills.
Sensemaking—along with abilities like team-building, coaching, and continuous learning—is a
long-lasting skill that can be applied across many different roles and situations. These
capabilities are more flexible and transferable than most hard skills.
To develop these abilities effectively, strong facilitation is needed to support learning at the
individual, team, and organizational levels.
4. From change processes to continuous development
Particularly in the United States, organizational change is seen as a process with a beginning, a
midpoint and an end when the goals have been achieved. This approach is being replaced by
transformation—that is, continuous organizational development.
Instead of purchasing the perfect plan, companies want genuine changes, where the general
direction is known, but the workplace community finds its way to the final destination together.
Transformation is not about having a set goal; rather, the result is created and shaped through
learning. I wrote about transformation in an earlier article.
5. Digitalization is transforming even the late-blooming organizations
Digitalization can hardly be seen as a trend no more. But the harsh reality is that we’re in the
stages where organizations unable to transform and develop are actually going out of business.
At the same time, it is true that different countries and continents are simultaneously at very
different stages of digital maturity and nevertheless doing business together.
In the best of cases, digital ways of working give people real opportunities to participate, and
decisions are made collectively. Digitalization enables transparent, real-time processes.
Digitalization is progressing more rapidly in countries with an existing analogue foundation,
such as the Nordic countries. Change is digitally driven in countries where traditional hierarchies
endure. This was the case when developing countries transferred directly to mobile networks
and took the leap onto the Internet, for example. The same will happen with corporate cultures.
Communities will be built on real-time technologies and new types of communication practices.
6. Collaboration over competition in open innovation ecosystems reflects a strategic shift where
organizations, including traditional rivals, join forces to achieve mutual innovation goals rather
than solely competing. This cooperative mindset recognizes that complex challenges—such as
climate change, digital transformation, or rapid technological shifts—often require pooled
expertise and shared resources. Companies collaborate through joint ventures, consortiums, or
open platforms, enabling them to combine strengths, reduce redundancy, and accelerate
problem-solving. Such alliances can lead to breakthroughs that would be difficult or
cost-prohibitive to achieve independently, fostering a win-win dynamic where shared success
often outweighs individual advantage.
7. Open innovation ecosystems represent a collaborative approach to innovation where
organizations—ranging from corporations and startups to academic institutions and
customers—work together to co-create value by sharing knowledge, technologies, and
resources. Rather than relying solely on internal R&D, firms engage with external partners to
accelerate innovation, reduce costs, and access new markets and expertise. This model fosters
platform-based collaboration, flexible intellectual property sharing, and rapid prototyping, often
resulting in faster innovation cycles and more user-centric solutions. By leveraging diverse
perspectives and distributed capabilities, open innovation ecosystems enable organizations to
remain agile, competitive, and responsive in a fast-evolving global landscape.
