Digital Leadership
vs.
Transformational Leadership

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Leadership in the Digital Age:
Digital Leadership vs. Transformational Leadership

'Digital Leadership' and 'Transformational Leadership' are two key concepts of modern corporate management. But how do they differ in practice and what do they have in common? We compare both leadership styles here.

Introduction

In the age of digitalization, leaders must constantly master new challenges and adapt their business models and processes if they do not want to lose touch. In this context, 'Digital Leadership' has recently been widely discussed. This term is so new that there is not even an entry on Wikipedia yet! Nevertheless, there are already many studies on the new demands on leadership in a digitized world.

The four most valuable companies today emerged from digitalization: Microsoft, Apple, Alphabet, and Amazon. Tesla overtakes classic automotive companies in the digital fast lane. New terms are being coined to describe the developments. One of these new terms is "VUCA," which characterizes the new world of work: ("volatility, uncertainty, complexity, and ambiguity") (see also Bennett & Lemoine, 2014a; Rodriguez & Rodriguez, 2015)

In this article, we will examine the differences and similarities of these two leadership styles in more detail and present relevant studies.

Digital Leadership: Leadership in the Digital Era

Digital Leadership refers to the skills and strategies necessary to lead companies through digital transformation. The focus is on using digital technologies to improve business processes, foster innovation, and increase the company's agility. Digital leaders must have technical knowledge and the ability to develop and implement digital strategies. They also place great importance on data analysis and digital communication tools to make informed decisions and lead teams efficiently.

The use of digital possibilities creates complete working environments: home office, remote work, 24/7 responsivity, digital key figures, and even automation with the help of artificial intelligence.
While leaders previously faced the challenge of influencing people and relationships, tasks are now shifting towards digital processes, process control, and machine learning. From now on, it's about managing and interacting between employees and machines or AI processes. The focus thus shifts away from people and towards technology.

To manage this steadily increasing speed and complexity, Digital Leaders must simultaneously manage interdisciplinary teams, incremental processes, and customer needs. For this, more and more agile methods and concepts are being developed.
Speed also means increasingly more decision-making freedom for employees, as control and approval processes slow down significantly.

Here is an overview of how Digital Leaders deal with these challenges:

VUCA	Challenge	Solutions for Digital Leaders
Volatility	The speed of change is increasing enormously.	Delegation of decision-making powers, incremental development, customer-centric development
Uncertainty	The future is hardly predictable. Results of events and measures are harder to prognosticate. This makes it difficult for leaders to develop a clear vision.	Prototyping, Design Thinking, customer involvement
Complexity	Problems are becoming increasingly difficult to solve, as more and more dependencies, interconnectedness, and unpredictable variables make a reliable decision impossible.	Interdisciplinary teams, flexible processes, flexible goals
Ambiguity	There are increasingly fewer clear solutions. Many possibilities and ambiguities make clear decisions difficult.	Experimentation, gradual approach, AI and AR

Transformational Leadership: Inspiration and Change

Transformational Leadership, on the other hand, focuses on a leader's ability to inspire and motivate their employees to drive change and increase company performance. Transformational leaders are characterized by their vision, charisma, and the ability to build a strong emotional connection with their employees. They foster innovation and creativity by encouraging their teams to think outside the box and explore new paths. In contrast to Digital Leadership, the focus here is on the human being and their development.

The concept of Transformational Leadership was developed in 1985 by Bernard Bass and is one of the most researched and demonstrably successful leadership concepts. Bass essentially defined four characteristics (the 4 I's) of Transformational Leadership: Idealized Influence, Intellectual Stimulation, Inspirational Motivation, and Individual Consideration.

The 4 I's	Challenge	Solutions for Transformational Leaders
Idealized Influence Role model and trust	Leaders should not appear disconnected from employees. Trust and credibility are the crucial interpersonal values for (voluntary) followership. The goal is to create mutual "commitment".	Communication of company purpose, appreciation, feedback - also taking it oneself
Inspirational Motivation	Instead of motivating extrinsically with reward (and sanction), transformational leadership tries to enable intrinsic, human-inherent motivation.	Communication of a clear vision, goal agreement instead of prescription, decision-making powers
Intellectual Stimulation	If employees are led by announcement or instruction, they lose initiative and remain passive. Intellectual stimulation aims to achieve the exact opposite: active participation with creative ideas.	Creativity techniques, participation methods, non-directive leadership
Individual Consideration Individual Consideration	Employees have highly individual strengths and weaknesses and want to be seen as individuals. The more an employee feels valued, the more likely they are to engage with full commitment.	Individual development talks and tasks, mentorship/coaching

Similarities and Differences

Conclusion

Both 'Digital Leadership' and 'Transformational Leadership' offer valuable approaches to guide companies through times of change. While Digital Leadership focuses on technological innovation, Transformational Leadership emphasizes the importance of vision and inspiration.

The most successful leaders are often those who can combine elements of both approaches to develop a holistic and adaptable leadership strategy.

In the future, leaders must formulate a (digital) vision that is clearly articulated and thus understandable (and acceptable) to employees. Empty phrases like "we all need to digitalize our processes" are too imprecise and unsuitable to encourage employees to support digitalization. Furthermore, the digital vision must be ambitious enough to compete internationally against agile and innovative start-ups as well as large digital companies from the USA (e.g., Uber and Airbnb) and Asia (e.g., Alibaba and Tencent).

Vision alone is not enough; it must also be successfully implemented. For this, leaders need an open attitude towards new technologies, as well as the ability to use them and recognize their benefits.

You can read another article on the practical implementation of Transformational Leadership here

Studies and Resources

1. Digital Leadership:

• "The impact of digital leadership on sustainable performance: a systematic literature review" by Tze Yin Khaw, Ai Ping Teoh and Siti Nabiha Abdul Khalid (2022).
  Available at: [Link to study]
• "Digital Leadership: A Framework for Successful Leadership in the Digital Age" by Simon Hensellek (2020)
  Available at: [Link to study]

2. Transformational Leadership:

• "Transformational Leadership and Organizational Performance" by James MacGregor Burns (1978).
  Available at: [Link to study]
• "The Role of Transformational Leadership in Enhancing Organizational Innovation" by Bernard M. Bass (1985).
  Available at: [Link to study]

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	Transformational Leadership Seminar Inspire instead of dictate: Transformational Leadership in contrast to classical leadership. Participants of this workshop learn and practice solution-focused questioning techniques and instruments of non-directive leadership. Transformational Leadership Training

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About the Author:

Tom Senninger

Tom Senninger is a personnel and organizational developer and has been conducting leadership development programs for 25 years. Weiss & Senninger The Leadership Professionals Platenstr 6 80336 Munich 089 97392288