From transactional to transformational
August 23, 2010 § Leave a Comment
Late last week, I came across a blog post by Dr. Cleve W. Stevens, the founder and President of Owl Sight Intentions, Inc., giving his perspective on BP’s management of the Gulf oil spill earlier this year.
He talks about the differentiation between a transactional approach to operations, problem-solving, and leadership, compared with a transformational approach. My own personal interpretation is that much of the world still operates within a transactional paradigm, driven by the short-term motivation of economic profits. A transformational way of being occurs when a greater vision is taken on that strives towards enabling the personal growth and holistic well-being and betterment of other people and a community alongside a person or organization’s development. It is a long-term motivation driven by mutual benefit and sustainability. Dr. Stevens uses BP as an excellent example highlighting not only the difference between the two approaches, but also the magnitude of the outcomes: both potential and actual.
The original post can be found at CSRwire’s Talkback blog and I have also included it here below. I highly recommend reading it. It’s not only a great read, but offers compelling insight into the way companies and individuals carry themselves. If nothing else, it presents interesting food for thought.
At the end of the day, only you can decide what kind of leader or company you want to be.
If BP Had Been A Different Kind of Company
How can companies avoid disasters?
By Dr. Cleve W. Stevens
Let’s assume that BP’s leaders and their leadership mindset are the primary cause of the Gulf Coast tragedy. It follows, then, that a different leadership approach may have produced a different and better outcome, for the gulf and for BP.
Three decades ago scholar James MacGregor Burns identified two fundamental types of leaders. The conventional leader, the transactional leader, assumes the leader-follower relationship is based on an exchange: the leader has money, the follower has labor, so they make a trade, a transaction of mutual self-interest. In this model the accepted moral imperative is profit.
The second type, the transformational leader, understands leadership as a means of growing the follower, the moral imperative being the followers’ development – profits matter but are seen as a natural by-product of the followers’ personal and professional growth.
BP’s leadership approach has clearly been transactional, so what results might have emerged had BP’s approach been transformational?
- Most desirably, the spill never happens in the first place.
But assuming it does still happen,
- BP accepts real responsibility, and thus better partners with others to more swiftly stop the spill and clean up the mess.
- Victims of the spill are redressed faster, reducing BP’s need for costly PR campaigns, eliminating its unnecessary self-imposed suffering, and preventing its possible collapse.
- BP emerges a stronger, more profitable company, the leader in clean, sustainable energy – “beyond petroleum” actually comes to mean something.
Pollyanna though they may seem, these suggestions are not only possible, they’re likely in a transformative environment. Here’s why.
1. No Corner-cutting, No Disaster. The Transformational Leader understands the stake-holders to whom he is responsible go beyond corporate share-holders. They include every employee, the customer, the local and global community, even the environment. This isn’t noble; it’s smart – good business. Cutting corners to pad profits is short-sighted, missing the full stakeholder-spectrum. And it’s bad business.
Thus, BP does not circumvent safety measures (doesn’t use a cheaper well system, say) to cut costs. The failure of Deepwater Horizon is possibly prevented altogether.
2. Responsibility Liberates Response Capacity. Central to Transformational leadership is true responsibility – operating as if everything in my life, good or bad, is there because I have caused it. Accepting that we are the causal agents in our lives, we don’t waste time blaming others or denying what we’ve generated. We flatly (i.e., without blame or guilt) respond to the question, How have I have caused this result and what must I do about it? If the result is good, we seek understanding in order to replicate it. If it’s bad, we connect the causal dots in order to fix it.
Thus, BP’s CEO doesn’t deny his company’s obvious responsibility before congress. BP immediately, publicly acknowledges ownership of the spill and its aftermath in toto. Creative energies otherwise misspent positioning the company are refocused on stopping the gusher. A faster response, as Energy Secretary Chu recently noted, may have allowed Top Kill to work, containing hundreds-of-thousands of barrels of crude.
3. Transformational Leaders are Hosts. Transformational leaders always operate as the hosts rather than guests – always. Since the host’s job is to assure the guests are satisfied, BP (the host), rather than spending tens-of-millions to control “the story,” directs their considerable resources into addressing the needs of the gulf-coast citizenry (the guests) damaged by the company’s enterprise (the hosted event). Chairman Carl-Henric Svanberg doesn’t step on his tongue trying to look concerned – he actually is concerned. Costly PR becomes less necessary, perhaps irrelevant.
Moreover, as hosts they accept their rightful burden (for the industry, the government and the environment), getting their own inevitable suffering over sooner rather than later – rather than decades in court, it’s years; rather than tens-of-billions lost, its billions; rather than possible chapter 11, BP actually survives.
4. Beyond Petroleum. The Transformational leader operates from the domain of possibility (the yet-to-be-done), not from the optional mindset (the already-established). So rather than merely attempting to fix the “what is,” BP recognizes opportunity born of suffering. Leading from the possible, what might be, BP summons the courage to take seriously their own ad campaign, “Beyond Petroleum,” and boldly challenges a morbidly entrenched status quo. Leveraging the disaster to persuade the board and influential shareholders, they launch an unapologetic expansion into alternative energy. Over time BP becomes the vanguard of new energy and emerges as the most progressive and successful energy corporation in industry history.
…All too fantastic to be believed? Consider, then, Starbucks, or Southwest, or British retail giant John Lewis. They’re not living in a fantasy. They’re living in a future that only the bravest and brightest – and those who’ll be most successful – can imagine. If only that had included BP.