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Why Leaders are Encouraging Transformational Leadership in 2023

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successful business leaders in India,

For the modern-day business leader, there is no dearth of leadership styles to pick from. From the old-school laissez-faire approach to the transactional leadership method, all such styles offer a wide range of benefits. Yet, the modern business context is not as it was before. 

Ruled by disruption, it requires a certain type of non-traditional leadership style that can ‘transform’ both people and processes and prepare them to embrace change. Research suggests that less than 18% of leaders are equipped to lead in a volatile, uncertain, complex, and ambiguous (VUCA) business environment. This is where experts believe that transformational leadership comes into the picture. 

So, what is it, what is the importance of transformational leadership for businesses, and what are the characteristics of a transformational leader that help one become a business enabler in 2023? Here is a deep dive into the topic. 

What Is Transformational Leadership?

Transformational leadership is a style of modern business and entrepreneurial leadership that emphasises the need for motivating and inspiring employees so that they organically embrace change and deal with disruption through a sense of autonomy, ownership, creative risk-taking, and innovation. 

Transformational leadership is based on the popular model developed through the works of James V. Downton, James MacGregor, and Bernard M. Bass from 1973 to 1985. As the name suggests, transformational leadership is all about the best entrepreneurs being able to ‘transform’ themselves, the business culture, and people/employees to deal with unpredictability and foster innovation. 

‘Agility’ and ‘flexibility’ are two main objectives for both international and Indian entrepreneurs who are looking to adopt transformational leadership from 2023 onwards. Here, they will find merit in learning from some of the best and most famous growth enabler businessmen in India such as Sanjiv Bajaj who have proven how transformational leadership is critical to building a future-proof business.

Transformational Leadership: An Example

One of the leading Indian entrepreneurs and financial visionaries of our age, Sanjiv Bajaj’s business leadership is a great example of transformational leadership at play. Sanjiv Bajaj is the Chairman and Managing Director of Bajaj Finserv and President of CII (2022-23) and over the last decade through typical transformational leadership mantras, he has been able to establish Bajaj Finserv as one of India’s leading financial services companies.

Amongst his transformational leadership strategies, the first one is to empower his employees and teams across levels to ‘think like owners’ and bring creative thinking, innovation, and calculated risk-taking to work. As one of the most inspiring growth enabler businessmen in India, he has always put innovation at Bajaj Finserv at the forefront by giving employees creative reins and encouraging them to differentiate the business from its competition. This has proven to be a masterstroke amidst an uncertain and heavily disrupted financial industry climate in India. As a result, Bajaj Finserv has been able to lead a fintech revolution in the country, especially by bringing personal, business, and consumer finance to underserved communities. 

What is the Transformational Leadership Model?

It is quite interesting to note that when Bernard M. Bass sought to define his now popular transformational leadership model, he picked the 4 ‘I’s: influence, intellect, inspiration, and individuality.  ‘I’ also stands to remind us of the ‘self’ – how one is the biggest tool of transformation. 

So, when you are grappling with challenges to implement transformational leadership at your workplace, remember the 4 ‘I’s as follows: 

  1. Idealised influence: The first premise of the transformational leadership paradigm is to set a standard for others. Becoming a role model by exceeding expectations in your role can help to spread efficiency and responsibility among others. In such circumstances, encouragement and inspiration are abundant, resulting in teams seeking to mimic the leader.
  2. Intellectual stimulation: Inventiveness, analytical reasoning, problem-solving, and creativity, are all required. These are four critical factors that every transformational leader must consider when deciding how to motivate their workforce. Transformational leadership flourishes by cultivating a free-thinking culture in which people are confident in their creativity and ideas and are not scared to lead innovation on their own.
  3. Inspirational motivation: What distinguishes transformational leadership from other types is the way it motivates employees by giving them a deeper sense of purpose. This could result from the company’s vision, the leader’s motivating remarks, the development of targets that fuel radical organisational shifts and contribute to societal progress, or the significant resolution of relevant difficulties.
  4. Individual consideration: Finally, the transformational leadership approach views each person as a unique person whose ability must be unlocked. This results in the creation of creative skill enhancement and training pathways that focus on both core competencies and the development of leadership qualities.

5 Essential Traits of a Transformational Leader

While the transformational leadership model gives us a fair idea of how such a leader should operate, aspiring entrepreneurs looking to embrace transformational leadership must exhibit the following essential traits:

  1. Original and innovative: They must be both original and innovative and also strive to engender it amongst employees by encouraging out-of-the-box thinking.
  2. Exceptionally curious: They must be curious about industry trends and relevant opportunities.
  3. Well-developed interpersonal skills: They must have exemplary communication skills and a high emotional quotient to build the right rapport with their teams and relay challenges, objectives, and visions clearly.
  4. High propensity for taking calculated risks: They should always be ready to throw themselves into uncertainty to prosper. This requires having no fear of failure. 
  5. Flexible and adaptable: They must be extremely dynamic and must be able to foster incisive decision-making with all business contingencies in place for crises.

Importance of Transformational Leadership in Business

The importance of transformational leadership in business is a widely sought-after topic as more and more Indian entrepreneurs look to style themselves on it. 

With the help of idealised influence, intellectual stimulation, inspirational motivation, and individual consideration, a business leader can build an agile, productive, and inspiring work culture. Most of all, transformational leadership is linked to nurturing positive emotions at work through empowerment and unleashing employees’ potential and individuality. This results in higher work satisfaction, contentment, and employee performance. Ultimately, since a transformative leader inspires others while also acting in their best interests, the team spirit and morale are always high – a necessity to deal with lean and challenging phases. 

Additionally, transformational leaders, who are also successful business leaders in India, believe in moving ahead of the game and are best positioned to quickly respond to disruption. This is a direct result of their capacity to inspire creativity and risk-taking proclivity among employees. As a result, an organisation is better positioned to innovate and break the status quo. 

Conclusion

As we have already learned, transformational leadership is a necessity for Indian entrepreneurs seeking to tackle large-scale change by honing human potential and encouraging innovation. If you find your company dealing with a VUCA environment, transformational leadership is certainly the way to go in 2023. 

By linking the goals of individuals with the objectives of their organisation, a transformational leader has the power to create a truly synergised and self-sustaining business environment, one that thrives amidst relentless chaos and manages to keep people motivated and driven to succeed.

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