Transformational vs Transactional Leadership (Become A Better Leader)

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Meet Catherine Eddy. While transactional leaders abound in business, far fewer achieve transformational success. Transformational leadership (and all of the advantages it offers) requires, above all, the bravery to move out of one’s comfort zone.

Catherine has the necessary moxie.

Not to mention, the enthusiasm to share her story with honesty and wit. Catherine took on the Managing Director at GfK ANZ in early 2015, and spent the previous 10+ years in leadership roles at Nielsen Indonesia.

Throughout her career, Catherine’s humour, boundless curiosity and willingness to take intelligent risks make her an exceptional example of transformational leadership in any industry—in any part of the world.

We had the great opportunity to chat with Catherine recently about her leadership style, her unique life experiences and her views on what makes a leader transformational.

View Catherine’s Full LinkedIn Profile (new tab).

Arielle: Catherine, thanks for taking time out of your busy schedule to chat with us.

CE: Great to be here.

Arielle: Let’s begin with your views on transformational leadership and then delve into specifics regarding your career. Are you ready?

CE: Let’s do it.

Arielle: In your opinion, what differentiates a transformational leader from a transactional one?

CE: A transactional leader is one who will keep things on track and ensure that it’s business as usual (BAU).

They’re a safe pair of hands when the business environment is 100% predictable.

But really, when has that ever been true? Especially now, with the dramatic pace of change afoot, the notion of pursuing BAU has never been less relevant.

Arielle: I’m not surprised that you have a strong opinion on the topic. [Laughter]. Was there ever a time in your career when you could have been described as a transactional leader?

CE: I really don’t think so. Because even when the direction of the business was to take a careful and guarded approach, I believe there’s always room to transform.

There might not be an opportunity to invest, for example, so you can focus on achieving big impact on costs and operations to free up cash for even small investments.

(Related Article: What Is Transformational Leadership?)

Arielle: Are transactional leaders needed at any level in a business? In other words, is transformational leadership just reserved for those few at the top?

CE: Absolutely not! I encourage transformational thinking at all levels. Honestly, you can’t be sure where that next magical idea will come from.

It’s not necessarily from senior people – although dramatic shifts tend to start there, since it’s those leaders who have the bird’s eye view.

But by empowering everyone in the organisation to contribute to the discussion around change and transformation, you can kick start a whole lot of small and sometimes unexpected goals that translate into big wins.

(Related: How To Showcase Leadership Skills On Your Resume).

Arielle: What specific advantages do you see to transformational leadership?

CE: Done right, transformational leadership gives a team permission to change, to adapt and to control its destiny.

It encourages new ideas—new thinking about old problems and challenges.

And increasingly, it’s about adopting new technologies to tackle those problems and challenges.

Without it, you won’t survive unless you have a bullet-proof industry and no competitors. Even then (and I’m thinking of the public sector) there are stakeholders who will demand transformation.

(Related: Best 5 Types Of Feedback To Use In The Workplace).

Arielle: Who were some of your inspirational mentors along the way?

CE: One was Byron Sharp from Ehrenberg-Bass Institute. He had strong and not so popular opinions on how brands grow and he never wavered—gathering more and more empirical evidence to support his opinions.

I was inspired by his resilience and grit, and I’d like to think I’ve taken some of that on.

The other leader was a Nielsen Managing Director Steve Mitchell. Steve encouraged me to take risks with my business; to have the courage to place the big bets knowing that without them, I would only end up with the BAU scenario.

He led with refreshingly high levels of trust.

Arielle: You’re people-centric and culture is one of your passions. What barriers do internal silos present to the growth of a business?

CE: The biggest barrier silos create is that they give people an excuse not to work with each other so it becomes incredibly important to communicate the benefit of integrated behaviour—both to the individual and to the business.

This is especially critical when you’re in a transformation state and need to garner belief and support in the new vision.

Arielle: So silos prevent a singular vision?

CE: Exactly. Without a single and compelling vision, you can’t move forward to ensuring that every single communication and action supports it.

Ultimately, you’ll fail if you don’t have the backing of a strong guiding coalition who sees the need for change—and a broader group that understands the vision and the transformation that’s required for sustainable growth.

I can’t stress enough the importance of investing time in getting those building blocks in place.

Arielle: Many leaders talk about breaking down silos. How have you actually achieved it?

CE: I replaced two Managing Directors as I came into my last role, both with very distinctive styles.

I started at T minus 60 (so 60 days before I began the job). I met with the team before I started so that they could learn a bit about me; but more importantly, so that I could learn about them.

Then over the next two months, I gave a lot of thought to developing and articulating my vision for the integrated business; what it would bring to our clients; and what opportunities it would bring to our people.

Being able to start on Day One with that vision, and the strategy to get there, meant we could start to run immediately.

(Related Reading: Create Effective Employee Recognition Programs).

Arielle: Tell us about a time when you used humour to break apart silos and barriers.

CE: Humour touches everything that I do; it’s a great eliminator of barriers.

At Nielsen, we wanted to reward those people who really embraced the transformation and growth of the business in Indonesia. So we did a couple of things to make that really visible:

• The first was Banging the Gong. We bought an enormous Chinese gong and whenever we had a really significant win as part of the servicing transformation, the gong was sounded (and amplified across 3 floors).

• The second was a chocolate wheel we had made. Every month, we’d reward integrated behaviour by giving those individuals tickets entitling them to a spin of the wheel. They’d then be awarded a prize which ranged from movie tickets to mobile phones. The Friday monthly spin session was highly anticipated.

More recently, at GfK, I created the Kick Ass award. [Laughter].

It’s a gigantic mounted stiletto and we awarded this to the individual who was contributing most to the One GfK philosophy that quarter:

These are all small things but they create buzz, conversations and excitement that give permission for more open discussion around the strategy.

(Related: Australia’s Top Outplacement Services).

Arielle: This leads me to my next question. You’re game for trying any new challenge that comes your way. It’s almost a kind of fearlessness. Is this an innate trait, or something you cultivated in yourself?

CE: I wouldn’t say I’m fearless. That sounds uncalculated. But I’m definitely not fearful.

A little bit of fear of failure is a good thing. I think I was attracted to consultancy because you’re always dealing with a different industry, a different client, a different problem so perhaps I’m just easily bored. [Smiles].

That said, I do like to seek out challenges and I have been told that I’m resilient with a healthy amount of courage.

I have to credit my family for being extremely supportive of whatever I wanted to do (hang-gliding off Adelaide cliffs probably being the least popular of my ventures).

But if something went wrong, it was up to me to dust myself off and start again.

Arielle: Tell us more about how this tendency toward boldness manifests in your decisions.  

CE: I think my parents would have described it as madness rather than fearlessness when we packed up our family of five in Adelaide to live in an Indonesia that was in the midst of some real terrorism challenges in the early 2000’s.

I guess that was a bold decision.

But again, I’d say it was calculated and we knew that it would have a huge upside for everyone involved in spite of the very real risks.

Arielle: What key leadership advantages have you found to your attitude and approach?

CE: I’m a passionate person with a genuine interest in the people who work with me.

To me, that makes it easy to lead because I’m not pretending to care about, or understand, their desires and challenges.

I think that authenticity quickly builds a trust between us such that—for the most part, even if they have doubts—they will follow me because they believe that I will only ever act in their best interests. And it’s true!

Arielle: How do you go about uniting people behind your vision? 

One example I think our readers will be keen to learn about is your Nielsen project where you transformed your business from a silo operation to one that provided a 360-degree view of Indonesian consumers and markets. What inspired the solution?

CE: In the Indonesian business at Nielsen, we were in an extremely fortunate position.

We had media measurement assets, a large household consumption panel, a very strong ad-hoc research business as well as a modern and traditional trade FMCG market measurement.

The business had grown well, as the different services evolved to a point where we had almost the holy grail of consumer information.

But it wasn’t being leveraged to understand ROI.

And as countries like Indonesia develop, client needs get more granular.

In a country of 7,000 islands with a growing middle class and increasing affluence, the opportunity was enormous if our clients had access to granular analytics capabilities.

This project involved getting the voice of the client as a first step so that we could analyse how our current capabilities were placed to match their future requirements.

Then we set about closing the gaps.

There was a huge amount of work involved in the project and we needed people to step up into project teams to work on the expansion and transformation.

With a staff of more than 2,000 across a little under 20 offices, getting the compelling message across was very challenging. You can only do so much in written communications so I had to rely on our network of leaders to convey the messaging.

For our people in rural and remote areas, that meant crafting the message a little differently with more of a focus on what was in it for them and the importance of business sustainability for their future personal success.

When you’re earning a basic wage in Indonesia, it’s understandable to be focused on the short term.

Arielle: Reinvigorating HR and empowering it to take an active role in cultural transformation is a tall order. And yet, you’ve accomplished it in your role at GfK. How did that come about?

CE: I don’t think there is a more important relationship that the one between CEO and HR Leaders—especially when you are a transformational leader.

A truly transformational CEO needs to be walking lock step with their HR Leader because people make the transformation happen.

But as I’ve already described, it’s all about getting the communication right. This means it’s your job to ensure that your senior HR partners understand where you are headed and why you’re moving in that direction.

They need to be inspired, empowered and informed to have conversations when people start to waver; because invariably they will.

Transformation isn’t easy and in the early stages, people sometimes want to revert back to the way things were done before.

HR plays a vital role in helping manage the information communication and to feeding back when there is something that needs to be addressed.

Arielle: You’re adept at leading change in both mature markets (ANZ) and emerging markets (APAC). What is the relationship between company culture and local culture when it comes to creating and executing on a vision?

CE: Local culture should always inform company culture. You can’t separate the two so it is incredibly important to spend time to immerse yourself in that culture if you are in a foreign market.

I found that in SE Asia there was enormous loyalty to the company brand. In ANZ, it’s less so.

ANZ is more individualistic; SE Asia more collectivist. The family is important to both although it’s articulated and accepted more readily in SE Asia.

In my experience one of the other fundamental differences is respect.

Respect is earned in Australia and New Zealand while in SE Asia, a President Director is deemed to have a mandate simply because of his or her title—though obviously there is an expectation that you will rise to the occasion.

But you are and always will be a foreigner and you need to acknowledge that and be genuinely keen to learn about the culture in which you’re operating.

One of my proudest moments was receiving some anonymous feedback (which I still keep) “Ibu, you are more Indonesian than Indonesian.”

This was after 9 years and I was still learning…

Arielle: What specific nuances/differences between Vietnam and Indonesia influenced your decisions and your leadership style?

CE: Both are very respectful cultures and both love karaoke!  If you’re not willing to lock yourself up in a ten square metre room and belt out Adele, you will never survive. [Laughter].

On a more serious note, what I found most interesting was the in-country cultural differences that influenced my style and communication.

Hanoians are very different to people from Saigon, just as the major islands of Indonesia have fundamental differences in how they communicate and how open you can expect them to be.

I found Sumatrans most closely aligned with Australians. They’re more than happy to tell you a few home truths whereas the Javanese are not.

It’s fascinating and anyone who tells you they understand it 100% is lying.

The last insight I’ll share is that religion plays a central part in their lives so you need to understand that there are times where religion will trump work.

The traffic in Jakarta is no fun and when you’ve been devoid of food or drink for 12 hours during Ramadan, the last place you want to find yourself when the fast breaks, is sitting in your car.

This means the office empties early so that everyone can get home to be with their families to breakfast.

These are relatively small things but if you didn’t take the time to understand or ask, you could make some poor assumptions that could have the potential to be very offensive.

Arielle: You’ve succeeded in reducing attrition and boosting employee engagement and retention.

A big part of this was through internal marketing, specifically the “Orange Spirit” initiative. How did the campaign evolve; was it your brainchild?

CE: It was clear to me that I needed to do something quickly bring the whole company together – a way to unite them under the one family.

The reduction in attrition was a pleasant by-result.

While I can lay claim to the Orange Spirit ideas, I can’t take the credit for the branding. Our HR Director came up with the Orange Spirit branding as we developed new initiatives and integrated existing ones into the program.

We created several sub-brands or initiatives to epitomise Orange Spirit—Orange Heath, Orange Social, Orange Summer, Orange Rewards.

It was a stroke of genius because the sum of the initiatives was very powerful while individually they were just small things.

Arielle: How did the creation of this program help to overcome employee anxiety and quiet the naysayers?

CE: Orange Spirit was something tangible that people were able to point to and say “hey, things have changed” and that “this is a great place to work.”

We worked really hard on communications.

Especially important was making sure that Town Halls were regular and that we celebrated successes at those events by acknowledging the people who were contributing to the integration of the business.

I also sent out regular but short email communications to All Staff. These were a combination of business and personal with the personal side often self-deprecating.

I wanted people to know that there was no pretention and I think that helped in engendering trust.

Arielle: What advice would you offer to a leader looking to make the leap from transactional to transformational?

CE: First off, don’t move too fast.

I think a leap might indicate a lack of authenticity so it’s going to be very important to give your guiding coalition a compelling reason why you ALL need to change.

Transformation overnight isn’t going to happen, so workshop some ideas among your brightest leaders— those who are likely to want to be involved in transforming and placing some big bets for the future of your business

Reach out to other leaders whom you know have transformed themselves and ask for their advice and counsel.

I’m sure most would be happy to help you out with suggestions and mentoring.

Of invaluable assistance to me was the training I received at Nielsen in the use of Business Process Improvement tools and Lean Six Sigma approaches to improving performance.

I’ve used that training at GfK and I’m sure I will use it again in the future.

Arielle: What else should we know about you?

CE: We’re originally from Adelaide and I’m loving living in Sydney but I also take every opportunity to travel back to Asia, particularly to Indonesia.

I miss nasi goreng, cap cay noodles and martabak especially—as well as the resilience and grit of the Indonesian people.
I visited Yogyakarta two days after a devastating earthquake and went to the home of one of our employees.

The home had been flattened and the family were living under a blue tarpaulin.

His mother was still battered and bruised from her escape from their crumbling house, wearing only a sarong and yet she invited me to stay for dinner!

Who has that sort of resilience?

We bought a little apartment when we moved here but somehow all three of our adult children have ended up here and two of them are living with us, albeit temporarily. Or is that just a story they’re giving us?

It’s cosy but a lot of fun!

Arielle: Catherine, thanks so much for a fun and enlightening conversation.

CE: My pleasure and I’d love to chat again in the future.