Some optimists are heralding in the age of higher productivity, a transition to a service economy, and a brighter competitive picture for U.S. corporations in world markets. We certainly would like to believe that the future will be brighter, but our temperament is more cautious. We feel that the years it took for most U.S. companies to get “fat and flabby” are not going to be reversed by a crash diet for one or two years. Whether we continue to gradually decline as a world competitive economy will largely be determined by the quality of leadership in the top echelons of our business and government organizations. Thus, it is our belief that now is the time for organizations to change their corporate lifestyles.
To revitalize organizations such as General Motors, American Telephone and Telegraph, General Electric, Honeywell, Ford, Burroughs, Chase Manhattan Bank, Citibank, U.S. Steel, Union Carbide, Texas Instruments, and Control Data — just to mention a few companies currently undergoing major transformations — a new brand of leadership is necessary. Instead of managers who continue to move organizations along historical tracks, the new leaders must transform the organizations and head them down new tracks. What is required of this kind of leader is an ability to help the organization develop a vision of what it can be, to mobilize the organization to accept and work toward achieving the new vision, and to institutionalize the changes that must last over time. Unless the creation of this breed of leaders becomes a national agenda, we are not very optimistic about the revitalization of the U.S. economy.
We call these new leaders transformational leaders, for they must create something new out of something old: out of an old vision, they must develop and communicate a new vision and get others not only to see the vision but also to commit themselves to it. Where transactional managers make only minor adjustments in the organization's mission, structure, and human resource management, transformational leaders not only make major changes in these three areas but they also evoke fundamental changes in the basic political and cultural systems of the organization. The revamping of the political and cultural systems is what most distinguishes the transformational leader from the transactional one.