Transformational Leadership for the New Economy

Chairman and Co-CEO of Salesforce Marc Benioff recently declared, “Capitalism as we have known it is dead.” In making this claim, Mr. Benioff stated that the traditional business economics model – maximizing shareholder value is dead. Instead, he argues that we are entering a new phase of capitalism, the age of stakeholder value. In this model, shareholders are but one entity that must be acknowledged. The others are the workforce, community, and even the environment. When highly successful titans of industry make these kinds of prophetic statements, we tend to give them the weight of Biblical oratory. Members of the media frantically copy down each word for their next article or book. However, to make this new capitalism work will require a kind of transformational leadership we have seldom seen.

Millennials Got There First

However, if anyone would pay attention, millennials rejected the standard shareholder value model long ago. Being reduced to a simple unit of production is not in their DNA. The revenue they produce for shareholders does not define them. How do they make this kind of bold statement? With their feet.

All their lives, older adults have reached out to millennials to encourage and nurture their dreams and aspirations. When they enter the marketplace, they expect the same kind of treatment from superiors. Unfortunately, in the workplace, managers are not trained, nor are they supposed to care for their subordinates’ aspirations. From their perspective, the primary role of the workforce is to create revenue. Direct, simple, and clear.

Self Absorbed Millennials?

In response to their refusal to be defined by the units they can produce, they are labeled self-centered and disloyal. Unfortunately, we raised them this way. Frankly, I see nothing wrong with their value system. Their only crime is being twice as smart as their parents and grandparents when they were the same age. This intelligence terrorizes existing managers and leaders because millennials are not only asking for authentic relationships with their superiors; they fully expect it. The fact that 6 in 10 millennials are looking for a new job should be a wake-up call. If organizations are going to retain and leverage millennials’ value, they will need to transform their understanding of leadership.

A New Age of Transformational Leadership

If business models that give employees a stake right next to shareholders, they will require new models of transformational leadership. This new understanding of leadership is what Dr. Barbara Kellerman, professor of public leadership at Harvard’s Kennedy School of Government, refers to as the “system of leadership.” When leaders lead according to a system, their impact is leveraged because all leaders lead in cadence. If the system says leaders are mentors and coaches, then specific training and feedback loops can be designed to teach leaders and managers how to be effective coaches and mentors. Unfortunately, too much training of leaders is outside the context of a designed system. Therefore, the training becomes a good suggestion but not a requirement. When the system requires leaders to be coaches and mentors, training becomes a requirement for success.

Stakeholder Value = Transformational leadership

In my research, I discovered a small manufacturing organization that has built the company on servant leadership principles. Every leader is trained and coached in how to be a servant leader. They have even changed traditional names. Leaders are called mentors. Their job is to facilitate their subordinates to find and eliminate waste. Eliminating waste begins with the President and CEO. Want to see him? He will not be at his desk. He does not have one. There are no offices in the facility at all. The company has determined that offices are a waste of space and a bottleneck to improvement and waste reduction. The CEO is working directly with his staff. The result is a workforce with very low turnover and a waiting line of customers.