Today, digitalization and globalization demand constantly innovation and change abilities from business organizations, which in turn produce great challenges to its leaders. Similarly, researches and literatures in this area often pointed out the crucial role of leadership in successfully managing innovation and change.
This research reviewed the connection between change and innovation as well as investigated the relationship between leadership, innovation and change. It strove to understand how transactional and transformational leaders influence and lead today’s organizational innovation and change, to determine the most efficient leadership styles for leading change and innovation.
Literature review was focused on the implication of the two different leadership styles to innovation and change management. The study guided by interpretivism philosophy was carried out through qualitative method such as semi structured interviews and questionnaires. Coding and themes/patterns were used for data analysis.
Key findings demonstrated that transformational leadership that emphasizes on people management and personal development promotes today’s change- and innovation management in the complex business organization. Moreover, top leadership plays a crucial role in supporting change and innovation.
I want to express my gratitude to all people who helped me and supported me during this process. Especially, I want to thank all participants who have contributed their valuable time, experience and insights to this study.
I would also like to thank all my colleagues, family and teachers who have inspired and believed in me during the years.
Lastly but absolutely not least, I want to say a big “thank you” to my supervisor
Dr. Radu Negoescu who supported and gave me constructive criticism during this research.
Special thanks also to:
Jean Kallmyr, life companion and closest friend
Roger Lindberg, my dear friend and mentor/coach (2004-2012)
Kjell Enhager, coach, lecturer and discourser
Per Dalén, education officer, Ericsson Leadership Academy
Karin Wigardt, psychologist and course leader Gällöfta Leadership Academy
David Herman, CEO (1990-1992) Saab Automobile AB
Jim Crumlish, CFO (1990-1994) Saab Automobile AB
Lars Kolind, professor, philanthropist and author of “The Second Cycle – Winning the War on Bureaucracy”
“Those who build great companies understand that the ultimate throttle on growth for any great company is not markets, or technology, or competition, or products. It is one thing above all others: the ability to get and keep enough of the right people. The management team”
― Jim Collins, Good to Great: Why Some Companies Make the Leap… and Others Don’t
We live in a time of paradoxes. We have never had it so good, and at the same time often felt so bad. Mental illnesses are rising and people’s needs to be seen and confirmed become increasingly difficult to satisfy. When people are stressed and unmotivated, it is usually difficult for them to engage any creative thinking. Therefore, a basic condition for creativity and innovation at work is to make people feel good and motivated.
According to Gallup’s latest global study State of the Global Workplace (2013), in Sweden, 16 % of the population is emotionally engaged in their work, 73 % uninvolved or passive, and 11 % is directly disconnected. Seventy-three percent uninvolved workers give big challenges for their leaders in Sweden.
However, many leaders in Sweden that the researcher has met still could not see the lack of engagement of their employee is a leadership failure. We know through researches that leadership is a big part of a company’s success or failure (Collins, 2001).
The truth is that the resistance of engagement is rather created by a leadership that leads by outdated methods and tools – in a way that often directly counteracts creativity, motivation, and ambition (Hamel, 2008).
Since about 120 years ago, business organizations have had the same kind of leadership style (Hamel, 2008) (appendix 1), which is often transactional leadership. The focus in business organizations was cost reduction and doing the same thing with more efficiency and strive for conformity (Burns, 1978). The organizational changes at that time could be managed with reasonable change management.
The situation today is very different. Deloitte (2016) recently released its Human Capital Trend Report 2016, which examined 7,000 companies in 130 countries. The report shows that companies around the world right now are changing their organizations to deal with the modern challenges of the future. The five strongest business focus areas/needs according to this report were:
- Organizational design (92 %)
- Leadership (89 %)
- Culture (86 %)
- Engagement (85 %)
- Learning (84 %)
In order to be successful, today’s leaders (according to studies) also need to have change capabilities and this is a challenge in our present time (Bettridge & Outhwaite, 2012). Transformational leadership style is change-oriented (Bass, 2008). The old school with control, command strategies and decisions made in closed board room meeting (transactional leadership) will only work in slow-moving companies and businesses where changes happen over decades.
Moreover, Hamel (2015) stated that this accelerating change requires companies to be more adaptable and inventive. Hence, today’s leadership is more about being adaptable, agile and building value to follow all new innovations and the constant changes. For example, banks that still hold on to their old system are gradually losing their competitive advantages, while newcomers with innovative approaches are taking their market share. Grameen Bank in Bangladesh that is founded by 5 poor women is making money by microloans with no paperwork, no collateral.
Finally, today’s volatile, uncertain, complex, ambiguous global environment forces the leaders not be interested in maximum benefits for the individual gain, rather, leader’s success is depending on the collective results in the organization. Therefore, a transformational leadership style that focuses on influence and interactions (Barker, 1994) would be more suitable than leadership style that has power focus.
Leadership is not a linear process. Instead, it is a social process that is ethnically constrained and often emerges from crisis. Bass & Avolio (1994) noted that organizational managers who want to facilitate a culture that is beyond self-interest, determined and liberated, needed to move towards the transformational leadership style, as leadership styles both create, influence and maintain the culture in a company.
Bass (2008) stated that in general intelligent people are more task-competent and emerge as leaders. In addition, “technically proficient individuals fail as leaders because they lack interpersonal competence” (Bass, 2008, p.135).
Starting from a high-performing specialist to become a generalist in a leadership position without education and training are often very challenging, as this shift could make the person confused and stressed. The risk is that the person goes into the classic trap to command and control in some areas and laissez-faire in other areas. Moreover, leadership often involves strategic thinking. To be able to do that leaders need to let go of the specifics as well as open and focus their mind more strategic on higher-level matters (Watkins, 2013).
New leaders who do not have suitable leadership knowledge will tend to continually focus on task performing (transactional leadership behavior) rather than creating motivation and incentives (transformational leadership behavior).
Based on previous research and literature, this study aims to investigate further what influence the leader has on organizational innovation and change. To emphasize the need for leadership and organization development in business organizations, this research wants to examine the impact of the leadership styles on innovation and change. This study will analyse the impact of transformational and transactional leadership’s effectiveness on innovation and change at a 140-years-old telecom corporation (company T) in Sweden. The telecom industry in Sweden has moved from Telecom business into ICT-business, where margins are much lower. This change demands the company T to perform more with less financials. Therefore, it is now crucial that leaders in company T have skills such as interpersonal leadership, innovative thinking and change capabilities, which are critically needed for enhancing organizational performance.
How do transactional and transformational leaders influence and lead organizational innovation and change in a telecom company in Sweden?
- Critically review literature on transactional and transformational leadership and how they support innovation and change processes/management
- Collect data from leaders in the organization through semi-structured interviews with a focus on how different leadership in company T support innovation and change.
- Analyse the data collected with a view to understand the important role that business leadership plays in assisting organizational change and innovation.
- Make recommendations on how to optimally lead change and innovation in today’s business organizations
A change may be urgent to get prioritized because there has been a known ineffective issue for a long time or need to work in new ways to meet the market requirements (Senior & Swailes, 2010).
Jim Collins (2001) and his research team analysed over five years in 28 companies. They considered why some companies continue to be great companies while others seem to remain as only good and what were the key determinants of this greatness. Logically it is simple to assume that to reach greatness one needs to make effort to elevate and change.
Einstein in his theory of relativity applied the laws of physics to the matter and we can, therefore, apply this theory to understand universal behaviors. Change is not something that just happens. Changes need a push in the right direction. This push or force applied to an object’s direction of movement creates object’s speed and gains energy. Collins (2001) also describes this in his flywheel theory, which creates momentum in a change.
Moreover, to get a contingency in the organization, one will need the Hedgehog concept (Collins, 2001), which also reflects Beer’s (2009) theory, is about a momentum in the organization that keeps the innovation continually in change. It consists of three parts. First part is, where an ethic of entrepreneurship is combined with a culture of discipline. Second part is that the company thinks more innovative and differently on their technology. Third part is that to have a contingency in the organization instead of radical restructuring changes.
The globalization moves companies against a much higher need for innovations and change behaviors. To be able to adapt to these new innovations and rapid changes, businesses need to continually improve. An organization that has people with high competence and talent will be able to cater nowadays changing problems that hit the business faster than ever and they need to be more innovative than ever (Appelo, 2011).
Today leaders need to bring about adaptiveness and innovative into their organizations. However, leaders in companies often notice that bring about innovation and change is extremely difficult to achieve (Bass, 2008). But then, do today’s leaders have enough mandate to act for innovation and change in business organizations? What is innovation? How is it related to leadership and change?
Denti and Hemlin (2012) have found in their research a strong connection between innovation management and leadership. Innovation management as a term is described in many works and Baregheh et al. (2009, p. 1334) defines it as “innovation is the multi-stage process whereby organizations transform ideas into improved products, service or processes, to advance, compete and differentiate themselves successfully in their marketplace”.
Innovation is connected to creativity, but that is not the only part (Amabile et al, 2004). Innovation consists of a variety of complex procedures and different activities for example dependencies, resistance and task completions. Innovation has also different impacts such as incremental or radical innovation (Dosi, 1982) and different types such as market, processes and organizational innovations (Schumpeter, 1934).
It is important for leaders to understand that these activities would require different demands on the leadership (Andersson et al. 2009, Nijstad & de Dreu, 2002). Hence, the activities also affect how to set goals in business. As the question, will come as; how do we use different leadership styles to achieve these innovative objectives? Moreover, there is also a need of change ability as innovation is a starting point of change.
Change management has a connection to innovation in the sense of that the innovation drives changes. Change agents need judgment, analytical- and implementation skills as well as self-awareness. They will need the ability to deal with complexity, to communicate with people at all levels e.g. different channels and cross functional, to be good at influencing people around them to promote the change, to deal with political issues, as well as to have visibility, persuasiveness, team building and communication awareness.
Beer (2009), emeritus at Harvard Business School, made his mission to support businesses to transform themselves to achieve high performance and commitment by using knowledge in leadership, strategic management, organizational design and -development. Beer’s (2009) theory and model is to look at the organization as a whole organism. Leaders need to define principles and make courageous decisions on how to lead, organize and manage the company to create a sustainable and learning organization. Beer (2009) stresses the importance to create a business with good organizational health as well as financially. Beer and Nohria (2000) have defined change into two theories; Theory E and Theory O (appendix 2). Theory E is about economic value while Theory O is referring to organizational capability. When leaders combine those two theories together they could strategically address and balance change dimensions in terms of goals, leadership’s role/style, focus, process, reward system and the use of consultants. A business that could react fast against changes highlight collective action learning and find issues that needed to be handled by reviewing and rearranging strategies, redesigning processes continuously and empowering people.
Kast and Rosenzweig (1973) stated that today’s change leader must view the organization as system (appendix 3) with many subsystems such as environmental, strategic, technological, human-cultural, structural and managerial that interact and influence each other, which in turn will affect organizational inputs (such as human, financial, information, material, resources) and outputs (efficiency and effectiveness). In this way, the leader can identify the need of change within the organization and adjust change efforts to balance internal needs as well as to adapt to its business environment. Kast and Rosenzweig’s study showed that an organization become “alive” and “survives” when it is adaptive, flexible and has achieved alignment between its subsystems and environment.
The globalization together with the booming of e-business, electronics, new technologies and more virtual companies makes the market change very fast. In addition to this, we need to add the unstable political situation. All these situations summarize that today’s businesses leaders need to adapt fast and grasp the insights that make a change to stay.
Lewin (1958) stated that change management is a theoretical frame work for the organizational effectiveness and management in three steps. Kotter (2009), a pioneer of change management argued that change management includes an eight steps plan (appendix 4):
- Establish a sense of urgency
- Form a powerful guiding coalition
- Create a clear and compelling vision
- Communicate the vision
- Empower others to act on the vision
- Create short term wins
- Consolidate and build
- Institutionalize the new approaches
Steps 1-4 are used to unfreezing the Status Quo of both individual resistance and group conformity, while steps 5-7 are referred to a change process that makes change occur – from status quo to the desired future. Finally, step 8 is used to stabilizing the change efforts.
Kotter stated that 70% of change programs fail big time. He described that the core of this problem is that leaders try to mix several theories together while they lead change, which gives the result that the company misses their goals and creates doubt within their staff. In addition, that too few managers have the knowledge to understand that change is a transformation. Today, managers often want to have efficiency and speed. Therefore, companies are trying to take a shortcut in the change-model and even take the victory in advance, i.e. before the change is completed. Managers, therefore, exclude the first steps in Kotter’s (2009) eight-part model of change management.
Leadership is a process where one person influences a group to achieve their goals (Northouse, 2004). Hogan, Cordon and Hogan (1994) argued in their study that;
- The leader’s personality predicts the management style
- The management style influences subordinates’ attitudes and progress of the work
- The attitudes about how the job should be done predicts in turn the organizational performance
Transactional Leadership, the traditional leadership style is based on leading by clearly describe the details in the work tasks, punishments, rewards (Eisenbach et al., 1999, Bass, 1990) and looks mainly at the subordinate’s basic needs.
In other words, the transactional leader gives something that the employees want in exchange for something that the leader wants, e.g. the leader rewards employee’s performance with salary, higher positions, more leverages and more influences and power (Jacobsen & Thornsvik, 2002). The relationship persists as long as both parties benefit from it.
There are three dimensions in transactional leadership (Judge & Piccolo, 2004):
- Contingent reward means that the leader distributes constructive transactions or exchanges to their employees. The leader clarifies and establishes rewards in exchange for employees’ work.
- Management by exception – active means that the leader actively looks for deviations in the work and acts only when the mistakes or incorrect work has occurred.
- Management by exception – passive means that the leader acts only when incorrect work has occurred (Den Hartog, Van Muijen & Koopman, 1997).
In sum, rewards give employees motivations to their work, which in turn make short-term employee commitments. Performances in the organization solely depend on the leader’s ability to fulfill the egoism of the employees. Hence, employees in the organization do not identify themselves with the organization (Bass & Riggio, 2006), rather individuals tend to engage internal completion in order to fulfill their self-interests. Furthermore, leaders own performances also depend on contingent rewards, which gives the employees no reason to be loyal to their leaders nor to their organization and its vision, mission and goal. Finally, leaders use power to manage resources and tasks. Hierarchy and centralized control are two typical organizational structures. Risk-taking such as innovative thinking are typically ignored (Bass & Riggo, 2006). Hence, one could conclude that this leadership’s view of employee achievement is also short-sighted and there is no elements of empowerment, trust, self-actualization and selfless team spirit in this leadership style.
Burns (1978) was the first to define the transformational leadership theory. Bernard Bass, a distinguished professor emeritus in the School of Management at Binghamton University whose legacy of leadership researchers are well-known in universities and researchers. Bass (1990) tested Burns’ theory empirically. Over the years transformational leadership became a universally recognized concept and was widely used for leadership studies and recognized as an effective leadership style.
Burns (1978, pp 20) defined the transformational leadership process as “leaders and followers raise one another to higher levels of morality and motivation”. This process contains visions, thoughtfulness, empathy, and respect. Hence, power exercising, forcing and maneuvering are not part of this process.
A transformational leadership style is describing a positive leader who use persuasive language to inspire and encourage as well as to motivate employees at work. A transformational leader puts feelings in focus rather than intellect, therefore the heart before the brain (Jacobsen & Tornsvik, 2002).
Bass (1995) defines a transformational leader as a leader who has increased awareness regarding consequences; affects a group not by focusing on the leader’s agendas, instead always looks at the benefit of the group and overcomes the mind constraint of make the impossible to possible. Bass & Riggio (2006, p. 4) stated that “Transformational leaders motivate others to do more than they originally intended and often even more than they thought was possible”. According to Bass’ conclusions, it is the leader of a transformational style that is creative and productive, which inspires their employees to exceed expectations by making an extra effort.
Shamir, Houses and Arthur’s (1993) study showed that leaders who are transformational and charismatic could change the employee’s self-perception. They create a social identification among employees to achieve objectives and work. This, in turn, leads to the employees feel that they can influence their situation and that confidence, strength and performance increases and betters (Bass et al, 2003).
Bass, Avolio, Jung and Berson (2003) believed that transformational leadership has an important role in building team confidence and getting the group to cope with difficult challenges such as innovation and changes.
The transformational leadership style has four dimensions:
- Idealized influence means that the leader’s behavior influences the employees to identify with the leader. These leaders are admired, respected and reliable. Leaders of this nature consider the needs of employees and operate in accordance with moral principles and values of the workplace.
- Inspirational motivation means that the leader is articulated, which affects and inspires employees. The motivation is occurring when the leader focuses on what’s important and challenging for the employees (Bass et al., 2003). Leaders with an inspirational motivation will focus on the development of their employees by discussing optimistically the future objective to be achieved. The leader also clearly clarifies to their employees about the organization and the group’s common goal (Judge & Piccolo, 2004). Key characteristics are enthusiasm and optimism.
- Intellectual stimulation is the dimension that describes a leader who dares to take risks and safeguard employees’ ideas. Leaders with this ability stimulate and encourage creativity in the employees by seeing old situations from new perspectives. The leader and his colleagues are working together to find solutions to various problems (Bass et al., 2003).
- Individualized consideration means that a leader who looks to each employee’s needs. A leader of this kind works like a mentor or coach who listens to their subordinates’ ideas and needs as well as gives personal attention (Judge & Piccolo, 2004). Employees develop their skills and potential through leadership and new learnings (Bass et al. 2003).
In sum, this leadership emphasizes a sense of purpose and moral. The organizational common goal has replaced individual’s personal goal. Transformational leadership builds employee motivation, trust, and self-development, which enhances long-term commitments and mutual interests beyond the personal level. The reward for the employees and the leaders become the success of the team and the good of the organization (Bass & Riggo, 2006). Leaders lead by example and serve as coaches. Adaptive thinking and change are encouraged by the leaders, which makes people view organizational change and innovation as challenges and opportunities rather than threats (Bass & Riggo, 2006).
Today, the working life is more about continuous improvements and knowledge, which will require more of the individual’s own willingness, motivation, and initiative to independently take more personal responsibility. These new activities could not be lead or initiated in the traditional hierarchical way (Melander, 2008).
Studies have shown that different styles of leadership have different impacts on the subordinate’s engagement and loyalty (Bel, 2010), which in the next phase the possibility to be innovative and creative – innovation climate. Creativity is important and necessary and it needs to be supported by the leadership. Rickards and Moger (2006) found a clear connection between innovation management and leadership. Some researcher such as Bass (1990) and Deschamps (2005) even stated that bad, inefficient leadership knowledge and skills are the main reasons of unsuccessful innovation implementation. In sum, researchers have found both empirical and conceptual evidence that linking innovation management with leadership styles/skills.
Vision is what one desires in a long-term perspective and often connected to the fact that one should change or want to change. The vision includes two categories; ability to inspire people to join the plan and that the plan would make the vision a reality is clear and indisputable. A clear vision must contain the elements visible in a better way to deal with the present and the future. The vision must create a context for addressing the most urgent issues in a way that is innovative and convincing for the employees. Leadership has been described as “the ability to influence a group towards the achievement of a vision” (Robbins & Judge, 2009:419).
In today’s world, change is inevitable. Companies such as Apple and Google have changed people’s daily life and their interaction with each other. Spotify, for example, has revolutionized the way people own and listen to music. Innovation is needed to describe what will affect the existing status quo. It must be very persuasive because if we want to achieve the change, vision must be understood and most of all are credible. Employees should feel whether this vision will lead to a better way of doing a better process etc. In organizations, this can be seen when the staff begins to adapt, for example, to make their work more effectively, to think on customer value, to think more creatively and innovatively, to create better products, to broaden their services and to become more profitable.
When people connect to an emotional and cognitive level it urges them into action. This action creates a point of change. Einstein (Calder, 2005) said that “no problem can be solved with the same kind of thinking that created it.” Inspired people with a different way of thinking allows them to use alternative ways of attacking challenges that come ahead. It is the connective element that provides the impetus and ensures a long life for a vision, which, makes it possible for people to adapt to each other in a different way and to meet challenges. By connecting with the vision, people also feel empowered to act. Motivation is where it all begins. People who are motivated to get involved and encouraged to act, do things in a different way, because they adhere to something that is inspiring, creative and exciting.
“Leadership is not value free.” (Robbins & Judge, 2009:457). When facing challenges such as today’s never-ending change world, leadership needs to deeply exam its fundamental state, which includes value and purpose (Beer, 2009). Despite all judgments and debates of leadership’s effectiveness and change ability, one must firstly exam whether the methods leaders used to achieve their goals and these goals are ethical. External motivators (used by the transactional leaders) such as tangible or monetary reward, will not win employee loyalty and support. Rather, as Burns (1978) pointed out that the transformational leaders can persuade their followers to target the common values and motives, i.e. their wishes, needs and expectations common to both the leader and the followers. Burns (1978) insisted that the leader has the greatest impact by motivating their followers to action, by appealing to their shared values and to achieve the higher needs available to management such as wishes and expectations.
Burns (1978) stated that transformational leadership ultimately creates a morality in raising the level of human behavior and ethical pursuit of both leaders and followers, and therefore have a transformative effect on both parties.
When there is trust between a leader and his follower, the follower is willing to expose to the risks the leader’s action might produce (Robbins & Judge, 2009), because the follower believes that the leader will not abuse his interests and rights. Transformational leaders understand how to communicate effectively at all levels by first providing facts and logic, as well as by establishing an emotional connection, and finally by being open, honest and transparent to develop the trust and support from the followers. Moreover, Transformational leaders understand that withholding information will create speculation, fantasies and sometimes even both fear and panic that are often more harmful than reporting facts straight off. Furthermore, having high transparency will support employee creativity, commitment, which in turn leads to engaged/empowered employees who will discover new opportunities for creativity. Finally, according to Beer (2009) only by encouraging honest, open and collective conversations leaders are able to build trust and “enable real and fundamental change.”
Today’s vibrant and fast changing environment demands a more flexible and adaptive leadership style (Bass, 2003). Bass (1985) labeled this these adaptive leaders to transformational leaders. These adaptive leaders creating an environment for the employees to work efficiently. A creative environment that makes sense to the employees, to challenge themselves, solve complex issues and develop in (Bennis, 2001).
One of the big challenges in business today is to adapt to the digitalization and to reconcile the old business models that sometimes are outdated. Moreover, the staffs are emphasizing a more meaningful work life.
When the organization reaches some level of paradoxes and tensions, it creates difficult challenges to keep the efficiency up, even for leaders that are competent, capable and professional (Ready, 2016). The paradoxes could be;
- Revitalization vs. Normalization. Means that a change aims to revitalize the organization by new thoughts, behaviours, and processes. But the change could end up into that the people could be worn out by all changes and the change has become other type of change that was not according to the original plan. So, it is a conflict between the desire to revitalize and to not tire out the staff.
- Globalization vs. Simplification. Globalization is a necessary but very complex business. Thus, these difficulties are against the organizations strive for simplicity of doing business with their customers and employees.
- Innovation vs. Regulation. Due to the finical crisis, regulations increased. So, the challenge is to balance the tension between increasing innovation power under the pressure of increasing regulation such as heavy tax burden.
- Optimization vs. Rationalization. Customer power is today a fact in many areas and something that companies today must consider in their business. Customers demand higher quality and more product upgrades frequently at lower price. Leaders are struggling to consider the tension of rationalizing cost and optimize the customer demands.
- Digitization vs. Humanization. Companies’ business models are digitizing the whole value chain, while there is a strong feeling among employees to find meaningful employment. Leaders are therefore looking for an organizational environment where there is a more humane and collective ambition.
All these tensions are of course demanding for today’s leaders, however, a successful leader must take on these challenges, even if they are complex, or the change he desires will never happen (Ready, 2016). The key is to balance those paradoxes by using adaptive leadership such as transformational leadership that reflects more on social values, stress, and changes (Bass, 1995).
Bass (1990a, pp. 19) described leadership as “consists of influencing the attitudes and behaviors” of people and “the interaction within and between groups for the purpose of achieving goals”. Bass (2008) further pointed out that the team efforts exceed the sum of its individual members. “In a fast-moving world” according to Potter (1996:163) teamwork is tremendously useful at all time.
One of the major differences between the modern leadership styles and the traditional leadership styles is that leadership is not just depending on the top management or even the top 100 managers that exist in the company. It is a leadership that reaches down to the single individual in the organization. Furthermore, it focuses on the collective efforts that spread all over the company to achieve a transformation into a strong and viable company. This is, of course, a defiance for the change manager that now needs to go beyond inspiring, arrange and storytelling. Rather, the change manager needs to find out how to build a team that is fit for these new challenges in form of process improvement, agile way of working, talent management and cost efficiency. At the same time, the change manager also needs to be observant about if he really creates a collective one-company-culture. Leaders need to have the courage to stop and to secure that all employees are onboard before their change/progress continued. One threat to watch out is for example a lot of acquisitions (M&A) that were never get integrated in the new company culture thoroughly.
DeGroot, Kiker and Cross (2000) did also a meta-analysis of the leadership literatures and found differences in terms of efficiency between the transactional and the transformational styles. They summarized the study that the transformational leadership had a more positive effect on the group. Furthermore, according to Bass & Riggo (2006:56), transformational leaders have shown the ability to “develop followers to be better contributors to the group effort”, in terms of being further creative, open minded, stress tolerant and inclined to change. Finally, Ozaralli (2003) found a significant correlation between transformational style and empowerment and team effectiveness. On the contrary, Judge and Piccolo (2004) found that leaders of a transactional style often failed job performance of the group. Leaders of the transactional style emphasize a greater extent of a good order in the group.
One proactively way to manage change is to establish a learning organization (Robbins & Judge, 2009), which is an organization that has the ability to constantly adapt and change. An ordinary organization learns and corrects its error by applying old routines and new rules. In contrast, a learning organization corrects its error by challenging and changing its deeply rooted norms and policies. In doing so, the learning organization provides itself opportunities for innovation and adaptation, which in turn could deliver improvements for the organization.
According to Senge (1990), a learning organization always has a shared vision and open communication. People in the organization are not afraid of criticism or punishment. They reject old ways of thinking and problem solving while also strive to work as a team to achieve goals.
This renewal or revitalization of the organization means that leaders go from words to action. Companies that have to succeed in this change had transformational leaders that are committed and persistent in securing the continuous learning organization. Alan Mulally did this collective transition and turnaround at Ford Motor Company by involving all stakeholders from the board members to the employees, union, vendors, and banks etc. by using the philosophy of “leading together” (Ready, 2016).
Mulally met and communicated weekly with his managers, even if the managers were afraid of acknowledging the problems. Mulally was consistent and continuously worked towards the vision. He finally succeeds in building trust. He implemented learnings from mistakes, open discussion climate, solutions to correct problems, open attitude to problems and most important of all, solve problems together.
Eventually, Mulally’s approach achieved the collective deed that gave the energy to keep it running over the change period and beyond, as a transformation journey is a never-ending journey. These collective efforts created a new agile and irrepressibility culture in the Ford company that will create distributed profit in the future as well as great organizational capabilities, not a top management blue print (Ready, 2016). Mulally’s combination of never losing focus on the implementation and take the needed decisions moved Ford from a stand-still company on the edge of bankruptcy to one of the world’s most successful companies (Ready, 2016).
Bass (2008) stated that there existed a clear connection between transactional, transformational leadership and capacity of their employees.
The traditional leadership such as transactional leadership, in a hierarchical organizational structure, tends to use power to lead, where information, decisions, and goals are done centrally by the higher management (Bass, 2008). This makes the transactional leadership occur as a natural leader style (Judge & Piccolo, 2004), which keeps an eye on standards and rules as well as appreciates and rewards hard work. Transactional leadership style is often not sustainable as its goal is short-sighted and it certainly will not promote innovation as leaders do not facility creativity, collaboration, and common goals. Moreover, this leadership does not have a good base for creating real trust from the employees toward the organization.
On the other hand, transformational leadership, the paradigm of the last twenty years, is charismatic and has focused on visionary thinking as well as value. A transformational leader, on the contrary, inspires creativity, decentralizes decisions and creates motivated employees. Those elements are particularly important during change and setbacks, which is why transformational leaders usually are very successful in leading changes. Being in constant change affects how a leader should lead, because the challenges that organizations are exposed to, during a change, is large. If the leader is aware of the stimuli that allow effective organizational change and able to manage behavior, motivate as well as demonstrate the benefits of the change, his result of the change will be a good one.
As the name indicated that the transformational leader has the appropriate style and conceptual mindset to drive organizational change (Yukl, 2006). Tichy & Devanna (1986) defined the name transformation is about change, innovation, and entrepreneurship. Transformational leadership is a process of macro-level and micro-level influence (Yukl, 2006). To begin with, the leader needs to handle the macro-level – the social systems and restructuring the organizational by building an appropriate power setting. Secondly, the transformational leader needs to attend to the personalities in the establishment and enable change at an interpersonal level.
Moreover, Hater & Bass (1988) found a positive match between test on the transformational leader’s capacity and their career advantage (Waldman, Bass & Yammarino, 1990), ability to build innovative teams within R&D projects (Keller, 1992) and reach economic targets (Howell & Avolio, 1993). Strang (2005) found that managers of transformational style are increasingly more efficient and they improve job satisfaction and employee relations. Ozaralli (2003) found that transformational leader developed and improved efficiency among the subordinates. Subordinate to a transformational leader sensed that they had a good and developed capacity for innovation, communication, and an improved job performance.
Finally, the need of digitalizing in businesses also brings the need for knowledge workers. As transformational leaders have a changing nature (Bass & Riggio, 2006, pp. 224), it is, therefore, suitable for these workforces that are working in a constant change environment. Globalization demands business organizational to increase its competitive advantages by making better products/services that meet the real market needs at the lowest cost possible. In order to do so, change is unavoidable and would certainly not happen “in this kind of enterprise as a means of satisfying someone’s ego” Kotter (2009:171). Hence, transactional leadership with its emphasis on self-interest is less suitable than transformational leadership that promotes job performance (Lowe, Galen and Sivasubramaniam, 1996) in leading change in today’s business environment.
According to Burns (1978), when companies are in a transformation, two most important elements include firstly leaders nurture the needs of the employees and the leaders are accountable for their actions. The employees want and need to follow a winner with high moral values.
Firstly, the followers like to feel the higher organizational transcendent purpose of the mission that guides their motives. By using Idealized Influence, transformational leaders lead by example, build trust and incorporate moral standard into daily work.
Secondly, the followers need a paradoxical energy for consistency and conflict. In other words, the employees need a transformational leader to add up inconsistencies and to use conflict as a tool to create changes and alternatives.
Conflict often occurred when there is a problem. It usually followed by criticism and feedback. By accepting and analyzing feedbacks, leaders could better understand the problem and come up with change solutions. At the same time, they helped their followers to confront and resolve a conflict. In contrast, the transactional leaders do not emphasize moral nor use conflict to enhance creativity, as their focuses are on transactions and short-term performances.
This review explored the linkage between change and innovation as well as the relationship between leadership, change, and innovation. Today’s trends such as digitalization and globalization demand business and its leadership constantly being adaptive and innovative. Change and innovation are closely linked and interdependent. In conclusion, researchers have shown that transformational leadership with its emphasis in motivation and empowerment, morale and trust, collaboration, learning and creativity (soft leadership skills according to Nye (2017)) is more suitable and effective for change and innovation. On the contrary, transactional leadership, which also could be efficient in various of situations often prohibit change and creativity.
As Beer and Nohria’s (2000) theory E and theory O indicated, a collective learning organization will secure opportunities for innovation and change. Transformational leaders that emphasize open communication, encourage new creative thinking will be able to refine organizational process and strategy, in turn to enable change and innovation. Transactional leadership, on the other hand, rejects the new way of thinking and problem solving as the leaders stress the importance of following routines and established principles to minimize risk-taking. In doing so, transactional leaders do not promote a learning organization, which in turn discourage change and innovation.
In identifying the need of change and at the same time balancing change efforts with different parts of the organizational system according to Kast and Rosenzweig’s (1973) framework, transformational leaders are most likely be successful, because the leaders constantly pay personal attention to their follower’s needs as well as other organizational subsystems such as culture, structure, and environment (hard leadership skills according to Nye (2017)) etc. The leadership’s approach reflects empowerment, employee commitment, organizational flexibility rather than authoritarian, control, and routine, which is especially needed in change environments. However, the transactional leader only acts when mistakes or errors have occurred. Furthermore, the leader’s focus on the exchange of performance and reward prevents him to realize his follower’s other needs such as acknowledgment and self-development etc.
A transformational leader would appreciate Kotter’s (2009) eight step plan for implementing change, because the leadership itself promotes change and creativity, utilizes vision and communication, foster empowerment and trust. The leaders also use themselves as a role model to inspire its followers to get out of their comfort zon, to perform, to develop beyond their own expectations. In contrast, transactional leaders focus on achieve performance and result through rewarding people’s self-interests. Hence, change will not occur unless it meets people’s personal goal. It is likely that their change efforts will fail already during step one or two, as people do not see the benefit of unfreezing the status quo.
Burns who introduced the concept pointed out that transactional and transformational styles are each other’s counterpart, which Bass (1998) considered as not correct. Bass argued that these leadership styles could be used as a combination. Furthermore, Bass argued that the transformational style was based on the transactional style (Hater & Bass, 1998). Bass, therefore, believed that the best leaders should have both transformational and transactional leadership style in their skills (Judge & Piccolo, 2004). However, Burns and Bass were speaking on general terms of leadership. The researcher, therefore, wishes to highlight in consistency with this literature review that transformational leadership is more efficient especially in leading change and innovation.
Exploratory qualitative research will be used in this study to analyse the connection between leadership styles and their effect on innovation and change (Saunders, Lewis & Thornhill, 2009). Cross-sectional approach would be used to collect the data (Robson, 2011), and a flexible strategy where the design evolves during the data collection has been applied.
The purpose of this research is to provide further knowledge development on leadership, therefore research philosophy, which addresses the origin, character and development of knowledge (Bajpai, 2011) needs to be outlined.
This research was guided by the researcher’s Interpretivism Research Philosophy as the sample size is small and there is a need for in-depth study of leadership and its impact. The researcher’s worldview perceives reality as it is based on meanings and understandings of social experiences. Hence, the researcher interprets elements of this study and believes that one could only access reality via social constructions such like language, meanings and awareness etc. (Mayers, 2008). In doing so, leadership and its impact on change and innovation could be investigated profoundly.
This philosophy is also associated with phenomenology, which strives to interpret the world via exactly experiencing the phenomena (Littlejohn & Foss, 2009). Hence, the interpretivist approach collects its primary data through naturalistic approach such as interview. Primary data are therefore credible and genuine, which gives high validity. For the secondary data collection, the researcher has focused on interpreting and finding meanings.
Furthermore, the researcher believes that the socially constructed reality contains often multiple realities. Hence, the goal of the research is to obtain understanding via careful interpretation and anticipation.
The best way to examine leadership is in their natural environment, which requires a lot of time. A good enough option, which is sufficient for this research is the qualitative method (Creswell, 1998; Denzin & Lincoln, 2000). The strength of the qualitative method is that it can provide information, in this case, on how the relationship between leadership, innovation and change (views and mind-sets), which of course influenced by the prevailing situations, in which context it is and under what conditions. It would therefore allow this research to study the set of facts or circumstances that surround a situation or event (Barbour, 2008). Thus, it helps the researcher to deeply understand behaviours, in this case the leaders’ and their followers’ behaviours within its large context. The nature of research objectives further justifies the use of qualitative method.
Qualitative research contains “an iterative process”, in which the research design can evolve accordingly as the project develops (Barbour, 2008:31). This approach is therefore more flexible, which is more suitable for this research as the research question is related to process such as organizational change and individual’s view, feeling as well as belief (Barbour, 2008).
William (2005:85) argued that qualitative data collection replaced quantitative data collection because it can express human’s feelings and emotions via words, deep insights and value etc. Leadership study is mostly about people and their experience. The qualitative approach can therefore produce distinct enriched information that is needed in this research.
The inductive approach is most suitable to find answers to the research question and to fulfil research objectives during the research process. This approach allows the study to generate untested conclusions (such as if different leadership styles have different impact on change and innovation) and to generalizing from the specific (e.g. leader’s view and experience) to the general (e.g. leadership). Data collection can consequently be used to explore a phenomenon, while data analysis would be able to identify themes and patterns, which allows the development of theories based on the findings in these patterns (Saunders et al., 2009). According to Cooper & Schindler (2008) semi-structured approach is able to generate qualitative data for exploratory research. Semi-structured interviews have therefore been selected.
The semi-structured interviews will have several theme questions that will be probed. Depending on the answer from the interviewee it will give the interviewer the direction for the next question. This would be a very effective way in studying a social science area (O’Leary, 2010). Henry Mintzberg (1979) argued that a simple research methods could produce better results than those who used larger statistical surveys.
The interpretivist approach emphasizes the researcher’s role as a social actor that appreciates differences between people. (Saunders, Lewis & Thornhill, 2012). Furthermore, the interpretivism philosophy do not separate people from their knowledge, hence, the researcher’s more than 20 years of leadership experiences show an obvious link between him and the research subject, which gives the researcher the advantage to focus on finding and understanding uniqueness. In addition, the researcher has strived to use critical thinking in data analysis to ensure a good quality of this study.
The researcher further desires to use the findings in this project as an eye opener for the leadership in company T, as well as to encourage other academics to continue to research on the subject, as it will increase the knowledge of the importance of leader’s role in today’s business.
The researcher has tried to anticipate any likely impact on participants during the whole research process. The researcher strives to preserve all participants’ integrity, confidentiality and anonymity at the highest level possible. Hence, no real names or information that would reveal participants’ real identity, gender or age were used in this research.
Detailed information about the interview process has been provided to the participants before the interview. All participants in this study are absolutely voluntary and have been given the rights to end their participation at any time when they chose to do so.
The researcher has committed himself to a strict confidentiality in all interview and questionnaire materials of this research.
This research adopts a strategy through theoretical lenses try to understand how leadership styles could affect innovation and change, which is defined as;
- Effect; as the power to produce efficacy, results, force and influence people
- Innovation leadership; as encompasses encouragement of a creative, autonomy workforce and certain leader attributes
- Change; as transitioning individuals, teams, and organizations using methods intended to re-direct the use of business process, resources, or other modes of operation that significantly reshape a company or organization
The research design used is exploratory, as this study requires flexible data collection, especially if new evidences would be gained during the research process. Thus, it would allow the researcher to slightly amend the direction of the study. The aim of the study, the small size of sample, the needs of generalization of insights and the qualitative approach further justify the choice of this design.
The research sample consists of 10 leaders in charge of departments of different size in company T, a larger Swedish corporation, with approximately 112 000 employees. Hence, this is a relatively small sample.
To ensure diversity of the qualitative sampling (Barbour, 2008:30), those selected leaders have different gender, heritage/culture backgrounds and age. Initially the researcher contacted 22 leaders. 10 leaders (all are male) have agreed to participate. Due to time limitation, the researcher was not able to recruit new candidates. Most of leaders are from countries in Europe (north, south and west).
To meet research objectives, the researcher selected the leaders in middle management level that had a closer and more direct contact with staff, who have knowledge of implementing larger change programs. Another reason to select the middle management is that “a lack of leadership in middle management” (Kotter, 2009:20) is one of the reasons that change management stalls. Six leaders have been the researcher’s previous colleagues, while four leaders were recruited via LinkedIn network.
Qualitative data collection about participants’ experiences and insights in innovation and change process has been generated via semi-structured interviews and questionnaires with open-ended questions. The benefits of semi-structured interviews are that the researcher could ask pre-arranged questions but depending on the answer, could pursue interesting views that could be of value for the understanding of influence of the scope. The semi-structured interviews will provide with explanatory data to understand the phenomena in the what, why and consequences in each situation and give insights into the leader’s behaviours, motivations, values, attitudes and concerns (Robson, 2011).
O’Leary (2010) pointed out that the goal of the interview should be that the interviewee should feel that the interview was interesting and pleasant. The pre-agreed interviews took approximately one hour each, have been conducted in private facilities via video-/telephone conference tool such as Skype. All interviews are first recorded and then transcribed by the researcher. The researcher delivered one question (appendix 6) at the time without use any leading questions (appendix 7) and made sure that the interviewee understands the questions. The researcher had a good control over the process and time and could explore interesting controversial areas and secure that the goal of the interview was achieved.
The interviews focused on collect non-quantifiable data such as words, feeling, emotions, experiences, beliefs, and value etc. Qualitative data that determine participants’ leadership style were collected via Fiedler’s Least Preferred Co-worker Scale (LPC) (appendix 5) and The Leadership Development Framework (LDF) (appendix 5). The participants’ leadership styles according to LPC-framework and LDF-framework are (TA = transactional, TF = transformational, the participants are listed with number 1-10):
Leadership style; 1 leader is transactional (TA 8), 3 leaders are transformational (TF 2, TF 6, TF 10), 6 leaders are both transactional and transformational in different degrees (TA/TF 1, TA/TF 3, TA/TF 4, TA/TF 5, TA/TF 7, TA/TF 9)
The researcher did not anticipate that some of the participants would not go deeper in reveal their experience as a leader (in terms of leadership philosophy) and in leading change and innovation (in terms of measurement of success/failure). The reasons could be confidentiality or the Swedish culture or the effect of the company T’s culture influence?
Secondary data collection has been focused on books, journals, online portals etc. In order to increase the levels of research validity and reliability, high reliable sources, e.g. academically peer reviewed publications with credible, recognize and famous authors has been chosen. Those sources have been deeply discussed in chapter two Literature Review.
It is important to be transparent about the process of analysis, in particularly how coding categories were developed and used. Furthermore, common themes and patterns from interviews were also identified and critically analysed.
Coding, which is categorization of data is used in analysis. A code, which is a word or a short phrase sentence that represents a theme has been pre-determined and adjusted slightly after the interviews to match the research objectives. Non-quantifiable elements such as meanings, experiences, behaviours, actions, feeling etc. were also coded. Linkages between categories have been identified.
The need of transformational leadership versus transactional leadership regarding supporting innovation and change.
Categories (appendix 8):
1. Leadership behaviours – transactional traits such as Contingent reward, Management by exception (active), Management by exception (passive) and transformational traits such as Idealized influence, Inspirational motivation, Intellectual stimulation, Individualized consideration.
2. Leadership skills – lead change and innovation, balance organizational subsystems, as well as economic value and organizational capabilities.
Identifying common themes and patterns within responses of participants in relation to codes that have been selected.
- Identify in primary data – word and phrase repetitions, most commonly used by participants; words and phrases used with unusual emotions/feelings
- Compare primary and secondary data- the findings of interview/questionnaire with the findings of literature review and discuss the differences between them
- Look for missing information– discuss about which issues (that the researcher expected to talk about) was not mentioned by the participants
To answer the research question by:
- Interpretations and understandings of leaders’ (with different leadership styles) perceptions, emotions, actions and attitudes of innovation and change management.
- Linking research findings to research objectives to understand how different leaderships in company T support innovation and change as well as the important role of business leadership in innovation and change management and how to successfully lead change and innovation.
Considering the research objectives and the areas of this study, interpretivism research philosophy with qualitative method and inductive approach is most suitable. The explorative design has been chosen to allow collection of primary data via semi-structured interviews and questionnaires and secondary data via books and peer reviewed publications. Coding were used to identify themes and patterns to critically analyse the collected data. This chapter further discussed the ethical consideration and the role of the researcher, which is also very important in order to conduct this research in a correct academic manner.
The research question: How do transactional and transformational leaders influence and lead organizational innovation and change in a telecom company in Sweden?
184.108.40.206 Finding one – Leadership’s Pro-Change Attitude
Change tends to in many times make people feel uncomfortable and produces fear. One of the biggest challenges is changes to the ways of working, according to TA/TF5. “Driving change is therefore hard” (said TF2) and “you are always on an uphill road” (said TF10), but it is the role of leadership to do it indicated the interviewees. Change involves risk-taking and responsibility, said TF2 and TA/TF7. “Today, we need to embrace change”, said several leaders. Despite the difficulty, all leaders in this research are pro-change and most of them believe that changes are inevitable and produce opportunities. The most commonly used word by participants (appendix 8) is therefore “change” (spoken 239 times).
However, some transformational leaders recognize changes by starting to embrace change at their own personal level (“…my own passion for the change”, said TF2, “…more connected to change in my role… how I use to do it in person”, said TF10), which is not directly included in Kotter’s eight steps plan. However, Kotter (2009:21) did mention at step four that leadership must “role model the behaviour expected of employees” and stress at step eight the importance of leadership development in change management.
220.127.116.11 Finding two – Trust and Empowerment are Important for Team Performance
The word “communication” was one of the most commonly used by participants (70 times, appendix 8). However, some leaders with transformational traits (TA/TF3, 7, TF2, 6) tend to frequently choose the word “discuss” in their communications, which reflected the Inspirational motivation trait according to Bass’s framework. The employees that are going to perform the change need to be thoroughly motivated via a two-way communication (both talk and listen). Discussion needs therefore to go into details repeatedly to clear misunderstandings, to be pedagogical, preferably in small groups or even at individual level, “as change is not a one-man-show”, said TA/TF3.
Words such as “trust”, “motivation” and “moral” were often spoken by participants, but transformational leaders (TF2, 6, 10) and leader TA/TF7 spoke those words far more frequently. “Trust is one core value for me”, said TF10. Also, “Walk the talk/leading by example/personal leadership” are used only by transformational leaders (TF2, 6, 10). TF2 and TF6 were the only leaders who used word “empowerment”, while TF10 talked about his role of being a leader at the “backseat”. These behaviours are connected to Bass’s Idealized influence traits. Trust is a key to drive change. With deep trust, people are open to becoming vulnerable and they will follow their leader almost unconditionally, because their leader sees them, gives them recognition and cares about them. All three transformational leaders gave this view during the interviews.
Transformational leaders (TF2, 6,10) and leader TA/TF7 view teamwork as the leader himself is a part of the team. Leader TF6 and TF10 let their people know that the leader does not know everything, which resembles Ozaralli’s (2003) finding. They always share their failures with their people. In addition, they view failures as a necessary step in the learning process. So, trust is a two-way concept for them. They value the collective effort and success higher than the achievement of the business goal. “…deliver business value makes me very happy, but I’m much happier if my team succeeds with me”, said TF10. In other words, transformational leaders (TF2, 6, 10) view their success not only on achieving an organizational goal (new way of working, value etc.), but also that their people, who were actually the ones that brought the value, be happy, received value and be successful. In this way, they are successful in building high-performing teams in managing change and innovation (Bass, Avolio, Jung & Berson, 2003).
On the other hand, leaders with transactional approach (TA8, TA/TF3, 4, 5, 9) view teamwork somewhat as valuable as the successful achievement of the organizational goal. This is a very interesting finding, as in today’s business, the concept of team is widely accepted and appreciated (the word “team” was spoken 129 times by participants). As the transformational leader’s approach emphasizes the team itself, the leader is most likely to able to motivate and empower his people to perform beyond their common goal and intention. This finding is in line with Bass & Riggo’s (2006) findings.
None of the participants talked about the transactional approach of Contingent reward and Management by exception (active and passive) during the interview. However, leaders with transactional traits (TA8, TA/TF3, 4, 9) focus more on control/direction and task/objectives such as (Judge & Piccolo, 2004) mentioned. They tend to manage in details more than to lead by vision and by example. They somewhat see people as resources for goal achieving rather than “evolvable smart individuals who need to be inspired by leaders”, mentioned by TF6.
18.104.22.168 Finding three – Change Management Needs Support from Top Management
The resistance for change can come both from individuals and the top management, good support from the leadership is another key of in change management. It is very hard to drive change without the support from top-management, said many leaders. Especially in big companies that has many departments, it is difficult to have a shared vision that everyone agrees on. When people do not agree, they tend to create their own vision and goal. In doing so, different departments work toward different goals in the same company.
Hence, large organizations need to expect and understand that the pace of change is so much faster and difficult than a smaller company, said TF2. When not supported by the top management, leaders feel less confident, emptiness, upset and anger or “totally blank in my thoughts” and “I totally lost respect”, said TA/TF3. Some of those feelings are quite strong. Strong negative feelings were also noticed when leader TA/TF4 have been told in detail about how to do things. Some leaders are struggling between being able to promote creativity/change and follow the T-company’s strict rules, routines and deal with internal political power. Hence, they need to have courage as well as protect their people. There is a lot of frustration (many leaders spoken about it). Some leaders view organizational politics as a game, which they do not enjoy but can’t avoid, while others could manage organizational politics in achieving their goals (including TF6,10). One leader TA/TF4 could attract supports from top leaders by showing how top-management’s objectives could be met through the change.
22.214.171.124 Finding four – Innovation Needs Leadership Encouragements
Innovation, which is about improvement, is mandatory and fun. It needs to be pushed and encouraged such as by using innovation workshops (among others to listen to successful stories) and innovation board (make sure the quality is good). Innovation connects leaders and followers to a team, where decisions are decentralized, structures are simple and brainstorms are used. The hierarchic model which is more the industrial model is not the most sufficient for innovation. Support (such as creative environment), encouragement and being open-mined is crucial, which will make people to think out of the box, said TF6. Small innovation is easier to sell to the customer. Implementation is very important. One notable finding is that there are less information and insights from the leaders (most information came from TF6, TA/TF4, 9) about innovation management compare to change management. Since the company’s culture is to promote innovation, this finding could indicate that this goal was not well achieved by company T, because creativity tends to disappear fast when goal achievement focus become too strong. Unbalanced cost-saving strategies give great challenges to innovation management.
126.96.36.199 Finding five – Personal Development and Learning Enhance People’s Change- and Innovation Abilities
The word “care” was only used by three transformational leaders. Leaders with more transformational approaches talked about enhancing personal development of their followers (“help them to excel”, said TF6, “get the best out of people” said TA/TF9) and give credit for people’s work (said TA/TF7, TF6, 2). All these behaviours are in line with Bass’s Individualized consideration. These leadership traits influence people to perform beyond their original intensions and self-interests as Bass & Avolio (1994) and Robbins & Judge (2009) stated. Furthermore, TF2 and TF10 talked about their efforts to enhance their own personal development.
Only one leader TF6 used Intellectual stimulation (Bass, 2008) to enhance and stimulate creativity. He said: “Learn from your failure, not burn people when they fail, I thank the person who did that (mistake)… people that do not make mistakes, they do not work…defend people that make mistakes and coach them.” He also said: “ask your people – what do you need to get this done by using 10% less of the time that you use today?”, in doing so “you then force people to think out of the box, you should not say e.g. you have to do it 10% faster”.
Some of the change failures hit the leaders really hard, because a lot of effort did not produce positive results. There are a lot of feelings (such as frustration, depression, disappointment, annoyance) involved when change does not work or fails and is time-consuming, however many leaders always manage to gather themselves and their team to move forward and see the setback as a good lesson learnt (the word “learning” was spoken frequently by participants) and to reflect on how we could have done this differently and better. “If we don’t succeed then it’s a new change that needs to be done”, said TF10.
188.8.131.52 Finding one – Change Management Needs Both Soft- and Hard Leadership Skills
Change is a constant process that involves producing the value in the long run – a long-term success.
First, one of the most important steps is to convince people (everybody) the urgency of change, e.g. to let people see the desired future picture (e.g. be connected to a business case) and to understand why change is needed. For example, “burning platform” is a tool to create the change where there are no alternatives or options, said TF10. The change leader needs to lift his view to look beyond targets. Change and innovation will need some push from time to time.
Second, Change needs openness, flexibility, capability, training, commitment, and passion. Job rotations might help to facilitate constant changes. Change managers need to have energy, a good skill of execution, good social skill as well as field competence. Make sure to celebrate the victories to lift team spirits and to mark that the change is here to stay.
Finally, change management sometimes needs to include culture change, due to national and organizational differences especially in multinational organizations, said TA/TF1. Managing, balancing and changing cultural difference is the key to making change to stick.
The researcher noticed that leaders do not strictly follow an established framework in leading change and innovation, rather they used mixed methods, which is part of the company T’s way of working, which is not necessarily an optimal way according to Kotter (2009).
Some leaders found that change theories are difficult to implement in complex real life situations where a lot of imperfect conditions such as different strategical objectives, targets, systems, and resources etc. need to be considered and coordinated. Often, at a large organization such as company T, some leaders were not even able to complete step one in Kotter’s 8 steps.
In leading change, leaders with transactional approaches (TA8, TA/TF1, 3, 4, 5, 7, 9) do not emphasize empowering their people to act on the vision (Kotter’s 5th step, which refers to Soft skills), instead they try to make efforts on pushing through the change. Some of them (TA8, TA/TF3, 5, 9) do not work hard enough with coalition (which involves both soft and hard skills) and vision. All leaders with transactional traits also tend to underestimate the role of vision in change compare to transformational leaders (TF2, 6, 10). TF10 stressed that “create the vision of the new nirvana where you want to look for” is an important step in change management.
184.108.40.206 Finding two – Balance Organizational Subsystems, Economic Value and Organizational Capability are More Challenging if Soft Leadership Skill is Lacking
According to Kast and Rosenzweig’s framework and the company T’s ever-changing and demanding market environment, both innovation and change are very important for company T’s ability to achieve competitive advantages. Company T has project-drive structure but it is not efficient enough due to the overall bureaucratic structure. Many people in the organization are loyal but not always deeply committed as they are sometimes unmotivated, indicated TA/TF1, 3, 7.
Hence, leadership should emphasize motivation, flexibility, and trust. This research found that company T’s culture and top leadership is somewhat transactional and hierarchical. The word fear was mentioned by several leaders. Hence, company T is sometimes a frustrating place to work as people’s initiates are not always allowed by the organizational subsystems.
Some leaders found that to balance organizational subsystems is the hardest thing to do, some believe that it is impossible to achieve in a big complex organization. This is the time that leaders need the support from the top management. There have been “many fights”, said TF2. Often, the need of change was identified when one have considered all those systems and common goal/solution in a “bird’s eye view”, not only one department. Leader must coordinate the whole organizational resources and capabilities to make it “all fit together”, in order to be successful with the implementation. It is a process that involves paying attention to both “in-put” and “out-put”, said TF10 who agreed with Kast and Rosenzweig’s (1973) framework. Stakeholder analysis and risk analysis are two very good tools to use, according to TF6. Leaders with transactional traits (TA8, TA/TF4, 5, 7, 9) tend to pay more focus on the out-put than the in-put (which involves soft skills) and probably therefore experienced more difficulties in balancing the subsystems.
In balancing economic value with organizational capability, leaders in many times need to take hard/courageous decisions, which is similar to Beer’s theory E and O. The leaders tend to focus on obtaining team-agreement/understanding in these cases.
It is also important to connect both economic value and organizational capability to business case. In doing so, leader could minimize the disruption during the change and increase effective productivity and create value, said TF10. Focus on bring the right people (TA/TF1) and long-term competence (TA/TF5) to the project and the value of the change will most likely produce economic value as a side effect. The skill of balancing can be trained in terms of measuring, planning and optimizing the way of working, said TF6. TA/TF4 found that it is very difficult to measure efficiency especially when there is a lot of outsourcing.
Today’s turbulent business environment due to digitalisation and globalisation demands constant change and higher change and innovation abilities from business leaders and their teams. A leader is someone that people want/chose to follow, said several participants. Today’s knowledgeable people do not blindly follow a leader because their leadership position. Rather, they tend to attract to visionary leaders with soft leadership skills such as people management and personal leadership. Hence, transformational leadership style with its emphasis on people and personal development provides essential elements in leading change and innovation management, as they are able to influence people to perform beyond their original intentions, while transactional leadership style that views people as a tool to achieve an organizational goal and apply large focus on structure and strategy (hard leadership skills) is less suitable.
Furthermore, multinational business companies give more challenges to their leaders when many systems and dimensions need to be balanced during the change. Hence, soft leadership skills such as people intelligence, culture intelligence, and emotional intelligence as well as hard leadership skills such as strategy, structure and political skills are both crucial.
In sum, findings of this research could not 100% clearly confirm the findings of reviewed literature in chapter two, since six leaders exhibited both transactional and transformation traits. However, this research has clearly demonstrated that solely transformational leaders work more in line with the theories.
Findings of this research are based on a small sample, which does not allow the researcher to state that all leaders with similar transformational traits are more suitable in leading change and innovation. However, as solely transformational participants in this research clearly demonstrated that their leadership styles promote change- and innovation management, the researcher, therefore, would like to suggest that those findings might widely applicable to many leaders and further studies with larger samples would be needed.
This research further indicate that leadership development is greatly affected by organizational structure and top leadership philosophy. Majority of the leaders in this research would like to practice more transformational style if the organizational structure and top leadership would allow them. In line with the reviewed literatures, this research suggests that an optimal organization structure that could promote change and especially innovation is a decentralize organization that builds a culture of trust and empowerment. This research therefore wishes to shed light on the important role that the top leadership plays in leading change and innovation. More research will be needed to further explore how top leaders could best support today’s change and innovation needs.
There are some deficiencies regarding interpretivism philosophy and qualitative approach as well as research design and process.
Interview shortcomings consist of the researcher’s limited interview techniques, interviewee’s memory capacities of their leadership experiences and the use of English language that is not a mother tongue language of participants. Furthermore, as the researcher has been employed by the company in the past and knows six participants personally, his interpretation of the participants’ answers could be affected. Bias can, therefore, occur even if the researcher has made effort to be as neutral as possible.
The study is limited by a small sample that ended up only including male leaders, which means a lower degree of representativeness and reliability. Hence, this might affect the external validity. The small sample size also gives limited generalizability. Similarly, the qualitative method and the interpretivism philosophy do not allow much generalization as primary data generated via interviews contain largely personal views and beliefs.
Qualitative method is also known as to be difficult to copy (Vaus, 2002), since different researchers can use different techniques as well as possess different level of critical thinking skills. Hence, the findings of the study could be affected accordingly.
The single research method was chosen, partially due to the limited resources and time. A better approach would be as, Saunders et al. (2009) have suggested that a combination of both quantitative and qualitative methods, which could give different perspective to the research as well as help the researcher to better interpret the collected data.
My reflection goes back to when I was very young, I have always been interested in human behaviour and especially how we collaborate in teams toward a common goal. My interests of leadership became more obvious during my military service, where I received my first leadership education. In Sweden, we do not have so many people and therefore need to collaborate much more. So, the military organization was built by many small efficient teams, which also means a flat hierarchy that uses consensus. Later, I continued my leadership practices in the business area and today have been working as a leader for over 20 years.
Leadership has always fascinated me. Today I still seek deeper knowledge within leadership, via academic courses, seminars and lecturers. I can now conclude that this course in York St John has greatly added value in my leadership development.
My feelings during this journey has been mixed. Firstly, I was very fascinated about research and theories, literature and lectures. I have in many times felt very happy that I could gain a deeper understanding of my own leadership behaviour.
Secondly, I have noticed that the more I know about leadership (models, methods and theories) and human behaviours, the more complex my job as a leader becomes. But it is good to know that science can explain a lot of behaviour including my own. I was not sure about if I should start a master study when I am almost 50 years old. However, I believe in constant self-development, so I thought about the pros and cons and finally decided to go for it. I must admit that it was really tough to study while also having a full-time job. But I am glad that I took this journey. Today, I feel very happy and proud that I have finally reached the goal.
The whole experience was very interesting and gave me better knowledge and competence. Although it has been difficult to prioritize sometimes between studies and give time to my family, I found that with my new learned knowledge, I could become a better coach to my children so they could learn leadership in early age. My wife has also an MBA in Leadership and she was very happy that I took the opportunity to take an academic level of leadership study. My studies have created very interesting discussions at home, and helped to widen our perspective as we often discuss from different views, cultures and experiences, but at the same time we could meet on common grounds.
The secondary data was very rich and interesting. In writing the literature review, I struggled to get the right angle and to boiled it down in a comprehensive way to focus on to the research question. When I looked at Bass’ 1500-page book about leadership I sometimes wondered if it was possible to define leadership in words once forever. The answer probably is no, as our development is a never-ending activity. Dalai Lama said that “when you talk, you are only repeating what you know; but when you listen, you learn something new”.
It was important to find a line of argument through the whole research. Furthermore, to create a good research question was just as important. Finally, the interviews produced very rich information, which was a bit surprising, as I was aware that the interview techniques could be difficult to handle.
My research is about transactional and transformational leadership in change and innovation, but I now also want to include another dimension such as the differences between female and male leadership perspective. I am not happy that I was not able to include female leaders in my research and thus missed an opportunity to understand the female leadership’s impact on innovation and change.
My time management did not do a good job, especially when I got sick in the beginning of the research. My heavy workload at my job made things even worse for me. This is something that I really need to improve. A lesson learnt from this is that as often happens in projects you should put a lot of efforts in the beginning of the project, as you will always face difficulties later.
I think another lesson learnt has been that one needs to bring a theory to your daily life. Covey’s (2009) book “the seven habits of highly efficient people” is a good one. So, if I ever do more academic studies I think I need to use this theory to change my behaviour and my way of acting (Brookfield, 1999).
Moreover, also use the good feelings to gain some energy and motivation and frustrations to secure that I have learned my lesson well and never do the same mistakes again.
To study is like a job, you need to be dedicated and focused. What I could have done better is that I should have seen the studies as my second job. In doing so, I would probably have prioritized the studies higher and could see more of the benefits that enrich me as a person in a lifelong learning journey.
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Table of management and Leadership History
|374 BC||Platon||Government, management would be entrusted with the insightful|
|1532||Machiavelli||The Prince, how a state should be controlled|
|1800||Napoleon||Revolutionized the art of war|
|1831||Clausewitz||“Vom Kriege”, i.e. The war|
|1922||Weber||Gave bureaucracy a face|
|1925||Fayol||Created the line-staff organization|
|1933||Mayo||Predecessor of the Human Relations School|
|1947||Lewin||Leadership styles: democratic – authoritarian – laissez-faire|
|1950||Stogdill||Opposed to unilateral property research|
|1954||Maslow||“Hierarchy of Needs”|
|1957||Argyris||Single loop and double loop learning, reflection|
|1958||Tannenbaum and Schmidt||“Democratic management”|
|1959||Herzberg||Studied satisfaction at work|
|1960||McGregor||Theory X and Y|
|1961||Bion||Pioneer in group therapy, Tavistock Clinic|
|1961||Likert||Examined the leadership styles|
|1964||Blake & Mouton||“Managerial grid”|
|1969||Hersey & Blanchard||“Situational leadership”|
|1978||Burns||Predecessor of transformational leadership|
|1982||Peters & Waterman||“On the hunt for the championship”|
|1989||Yukl||Interdisciplinary approach to leadership|
Table Addressing the Tensions between Competing Change Management Strategies.
|Dimension of Change||Economic
Value Theory (E)
Capability Theory (O)
|Theories E and O Combined|
|Goals||Maximize shareholder value||Develop organizational capabilities||Explicitly embrace the paradox between economic value and organizational capability.|
|Leadership||Manage from the top down||Encourage participation from the bottom up||Set direction from the top and engage the people below|
|Focus||Emphasize structure and systems||Build up corporate culture; employees’ behaviour and attitudes||Focus simultaneously on the hard (structures and systems) and the soft (corporate culture)|
|Process||Plan and establish programs||Experiment and evolve||Plan for spontaneity|
|Reward system||Motivate through financial incentives||Motivate through commitment – use pay as fair exchange||Use incentives to reinforce change but not to drive it|
|Use of Consultants||Consultants analyse problems and shape solutions||Consultants support management in shaping their own solutions||Consultants are expert resources who empower employees|
Source: Beer, M., & Nohria, N. 2000. Cracking the code of change. Harvard Business Review (May-June):133-141
Organizational Sub-systems: Kast and Rosenzweig’s Organization and Management
Organizations use systems to help the recognition of organizational context, which in turn highlight the understanding of interrelationships among different kinds of activities that are essential to accomplishing organizational goals. There are also several major subsystems under the organizational system.
Technical Subsystem – knowledge required for the performance of tasks that varies according to the purposes of the business and the task requirements.
Social/Political Subsystem – individual behavior and motivation, status and role relationships, group dynamics, and influence networks.
Structural Subsystem – intermixed with technical and social/political subsystems. The structure represents by organization charts, job descriptions, floor diagrams, and rules and procedures, as well as patterns of authority, communication and work flow.
Goals and Values Subsystem – is one of the more important subsystems, which also influences societal values.
Figure 1: Contingency views of Organizations and Management
Source: Kast, F. & Rosenzweig, J. (1973)
Organizations as living organisms e.g. is an open-system – emphasizes adaptation, flexibility and the importance of the environment and its interrelated subsystems
A living organism can be born, can grow, become sick, and even die. This view allows for understanding organizations as inter-related subsystems. A living organism can also be observed within the environment it exists. In order to survive, the organism must adapt to its environment.
The contingency theory – mapping the of various organizational subsystems
Through visualization of various organizational characteristics, the theory analyzes the relationship between the organization and its environment. The management can therefore make adjustment to balance internal needs and to adapt to environment circumstances.
The contingency theory in practice
Four different organizations (A, B, C and D) have been reviewed along with five subsystems (strategic-, technological-, human/cultural, structural-, and managerial) to outline if those systems fit with the organizations environment.
|Organization / Environment||Managerial||Strategy||Technology||Structural||Employees|
|‘A’ – stable||Trouble-free, good quality product produced in a cost-efficient way||Defensive strategy to protect its niche||Uses mass-production||Structured and managed mechanistically||Content with their narrowly defined roles|
|‘B’ highly dynamic, turbulent, e.g. products and technologies are constantly changing and they often have a short life span||Motivate people and manage them in an organic way||Continuously search for new ideas and opportunities||Relies heavily on its technological advantage, innovation is the core foundation and lifeblood||Balanced both internally and in relation to its environment.||Employs people who are prepared to make mass commitments to their work|
|‘C’ markets are in a constant state of transition||Encountering a moderate degree of change in its environment, its competitive advantage rests in being able to produce the same or better product in cost-effective way||Must keep up with these developments and analyse emerging tendencies and trends, update production methods, and creating a flow of product modifications||Technological developments are occurring at a regular pace||Adopts an effective project-drive matrix organization||Commands the required flexibility and commitment from its employees.|
|‘D’ medium turbulent||Authoritarian||More defensive than proactive||More routine than complex||Bureaucratic organization that is more inclined to defend its own position on the market than to seek out new opportunities||A frustrating place to work as the employees are searching more challenging, demanding and open jobs than the strategy, technology, organization and managerial style allow|
According to Figure 2 below, organizations “A”, “B”, and “C” show alignment to between their various subsystems and their environment, while organization “D” is clearly an under optimized organization.
Figure 2. Profile of organizational characteristics
Lewin (1958) created the 3-step change model, which Kotter (2009) developed in more detail steps to support change management in today’s business that reflects new opportunities but also big threats. Traditional companies need to challenge themselves to be able to keep up with the new future where the norm is change. They often use their best resources to implement their new strategic initiative. But the effect, efficiency, increased value, timelines get lost and processes drifting back to the default position. Kotter (2012) suggests a new way, a more agile and networking structure that don’t use hierarchies to make a “dual operating system”. A system that allows people’s energy and focus to be aligned towards something even bigger than the vision the company has set up.
|8 Steps Model||Description|
|1. A sense of urgency||Help others see the need for change through communication. Management control systems and damage control experts serve a critical purpose and also need to be handled properly.|
|2. Build a guiding coalition||A volunteer army needs a coalition of effective people – born of its own ranks – to guide it, coordinate it, and communicate its activities.|
|3. Form a strategic vision and initiatives||Clarify how the future will be different from the past and how you can make that future a reality through initiatives linked directly to the vision.|
|4. Enlist a volunteer army||Large-scale change can only occur when massive numbers of people rally around a common opportunity. They must be bought-in and urgent to drive change – moving in the same direction.|
|5. Enable action by removing barriers||Removing barriers such as inefficient processes and hierarchies provides the freedom necessary to work across silos and generate real impact.|
|6. Generate short-term wins||Wins are the molecules of results. They must be recognized, collected and communicated – early and often – to track progress and energize volunteers to persist.|
|7. Sustain acceleration||Press harder after the first successes. Your increasing credibility can improve systems, structures and policies. Be relentless with initiating change after change until the vision is a reality.|
|8. Institute change||Articulate the connections between the new behaviors and organizational success, making sure they continue until they become strong enough to replace old habits.|
Source; Kotter, J. (2009). Leading Change. Boston: Harvard Business Review Press.
The model was created by Fred Fiedler, a scientist during the mid 1960 who studied characteristics and personality of leaders. Fielder’s LPC scale is used to determine the leadership style of an individual.
The model has two parts; “leadership style” and “situational control”.
The leadership style is the first part and Fiedler et al (1994) was convinced that the leadership style was fixed and could be measured by using the so called Least-Preferred Co-Worker (LPC). The test asks the person the questions; think about a person that you didn’t enjoy working with and then rate this persons in each factor (see test below). In the LPC test the personal scores are between two factors; positive (Sincere, Kind, Considerate etc.) and negative (Insincere, Unkind, Inconsiderate etc.).
Fiedler noticed three factors that identified about the leader, member and the task, as follows:
- Leader-Member Relations: The extent to which the leader has the support and loyalties of followers and relations with them are friendly and cooperative.
- Task structure: The extent to which tasks are standardised, documented and controlled.
- Leader’s Position-power: The extent to which the leader has authority to assess follower performance and give reward or punishment.
If the LPC test result is higher points the leader that did the test would be more of a human relationship-oriented leader. If the result is lower points the leader is more of a task-oriented leader.
Figure 1: Least-Preferred Co-Worker Scale example
|Unfriendly||1 2 3 4 5 6 7 8||Friendly|
|Unpleasant||1 2 3 4 5 6 7 8||Pleasant|
|Rejecting||1 2 3 4 5 6 7 8||Accepting|
|Tense||1 2 3 4 5 6 7 8||Relaxed|
|Cold||1 2 3 4 5 6 7 8||Warm|
|Boring||1 2 3 4 5 6 7 8||Interesting|
|Backbiting||1 2 3 4 5 6 7 8||Loyal|
|Uncooperative||1 2 3 4 5 6 7 8||Cooperative|
|Hostile||1 2 3 4 5 6 7 8||Supportive|
|Guarded||1 2 3 4 5 6 7 8||Open|
|Insincere||1 2 3 4 5 6 7 8||Sincere|
|Unkind||1 2 3 4 5 6 7 8||Kind|
|Inconsiderate||1 2 3 4 5 6 7 8||Considerate|
|Untrustworthy||1 2 3 4 5 6 7 8||Trustworthy|
|Gloomy||1 2 3 4 5 6 7 8||Cheerful|
|Quarrelsome||1 2 3 4 5 6 7 8||Harmonious|
Source: University of Minnesota https://cyfar.org/sites/default/files/Least_PreferredCoworkerScale.pdf (accessed 2016-11-25)
This framework outlines sense-making processes by which people interpret and give meaning to their experiences. It summarizes participants’ worldviews and their so called “action logics” (leaders’ thinking and action on an everyday basis). This information has a deep impact on the participants’ leadership approach and ability.
This Leadership Development Profile evolves from the studies and research surrounding the Loevinger Washington University Sentence Completion Test (WUSCT) and by Torbert (1987, 1991) and Cook-Greuter (1999) as well as constructivist developmental psychology by Piaget (1952), Kohlberg (1984) and Kegan (1982, 1994).
The LDF-test is derived from the open-ended completion of 32 sentence stems.
Key Action Logics
|Avoids overt conflict. Wants to belong; obeys group norms; rarely rocks the boat. Effective as supportive glue within an office; helps bring people together.||0,2%|
|Expert||Rules by logic and expertise. Excellent in pursuing technical quality. Strong as an individual contributor.||12%|
|Meets strategic goals. Effectively achieves goals through teams; juggles managerial roles; action and goal-oriented.||51%|
|Interweaves competing personal and company Action Logics.
Creates unique structures to resolve gaps between strategy and performance. Effective in venture and consulting roles.
|Generates organisational and personal transformations. Exercises the power of mutual inquiry, vigilance and vulnerability for both the short and long term. Effective as a transformational leader.||8%|
|Generates social transformations. Integrates material, spiritual, and societal transformation. Effective at leading society-wide transformation.||1%|
Source: Harthill ‘The Leadership Development Framework’ http://harthill.co.uk/the-ldf-profile/getting-own-ldp/
http://harthill.co.uk/the-LDF-profile/the-leadership-development-framework/ (accessed 2017-01-05)
- What does leadership mean to you?
- Which are the most important leadership skills that a successful business leader must possess, according to you?
- What moral principles do you follow when you work as a leader?
- What is your point of view about the necessity of innovation management and change management in today’s business?
- How do you support change and facilitate innovation in your department during change projects?
- What is your role as a leader in leading those change and innovation in your department?
- How do your success and/or failure in leading change and innovation affect you?
- How do you feel if your leadership efforts were not supported by your organization or top management?
- Is there anything else you would like to add on?
- Operationalize concepts
- Explore existing possibilities
- Draft questions
- Decide on response categories – eg Yes/No, sliding scale, how many response categories, free text
- Review – could your questions be considered ambiguous, leading, confronting, offensive, based on unwarranted assumptions, double-barrelled, or pretentious? On occasion, you may need to take advice from local experts
- Rewrite questions and review them
- Repeat stage 6 as many times as necessary
- Order questions – use a logical order. Try to use some interesting ones early on in the questionnaire
- Write clear instructions
- Lay out – clear and pleasing layout and design
- Write a cover letter/introductory statement
Source: O’Leary, Z. (2010). The Essential Guide to Doing Your Research Project. London: SAGE Publications.
Category one Leadership Behaviours
|Code||Word and phrase repetitions (total quantity)||Word and phrase most commonly used by participants||Words and phrases used with unusual emotions/feelings||Leadership styles
TA = Transactional
TF = Transformational
Category two Leadership Skills
|Code||Word and phrase repetitions (total quantity)||Word and phrase most commonly used by participants||Words and phrases used with unusual emotions/feelings||Leadership skills
|Role of leadership||38||X||Change/Innovation|
|Common goal||17||Balance system/value/capability|