Víctor García-Morales, Francisco Lloréns-Montes and Antonio Verdú-Jover published a paper in the December 2008 issue of the British Journal of Management titled, “The Effects of Transformational Leadership on Organizational Performance through Knowledge and Innovation.”
In it they set out to prove the following hypotheses:
- Transformational leadership will be positively associated with knowledge slack (prior knowledge), absorptive capacity, tacitness, organizational learning and innovation.
- Knowledge slack will be positively associated with absorptive capacity.
- Absorptive capacity will be positively associated with tacitness.
- Tacitness will be positively associated with organizational learning.
- Organizational learning will be positively associated with innovation.
- Tacitness, organizational learning and innovation will be positively associated with performance.
- Size will be positively associated with strategic variables that affect organizational performance.
In summary and at its core, the authors wished to prove the relationship between transformational leadership, learning and organizational performance.
The authors worked with 408 Spanish firms in food farming, manufacturing, construction and services industries interacting with CEOs and other personnel, including on-site visits and conference calls. In my opinion, the sample size was not only large, it was thorough.
And what were their findings? The word "compelling" comes to mind.
Firstly, the research proved that organizations must pay attention to the development of transformational leaders. That is, leaders are people who should be inspirational, coaches, collaborators and explicit motivators. Failing to have this archetype in leaders predicts the future demise of a non-performing organization.
Secondly, elevating prior knowledge in the organization is critical. In the author’s words, “It must thus devote continuous and substantial investment to developing knowledge slack in the organization.” Performance, therefore, will increase if barriers are eliminated between leadership and learning, such as organizational structure, compensation policy issues and general flexibility and access to acumen.
Thirdly, to increase organizational performance, leaders must not only make deep investment, they must scream from the hilltops that it’s an important piece of organizational culture. Collaborative learning in a positive environment is critical to success. The authors state, “The leader should be a good mentor, capable of guiding the other members of the firm in their professional trajectories, supporting their growth because he or she has faith in people’s capacity to learn and innovate.”
And lastly, a leader must project a culture of innovation (through learning), otherwise performance will suffer. “Because innovation is not an individual act but a collective achievement, it takes work to create a context that legitimates innovative behavior, dedicates resources to innovation and assumes the structure and culture that nourishes the development and implementation of innovation.” In a nutshell, leaders had better link innovation with learning, or else organizational performance will lag or default.
Although the research focused solely on Spain and just four industries, it clearly paints a Picasso-like picture that I’ve been discussing for years.
When an organization truly embarks on a plan to create an open, connected and collaborative leadership framework (for both leaders of people and individual contributors) with a learning model that is also open, connected and collaborative, organizational performance will be positively impacted.
Leadership is linked to learning. Innovation is a part of the leadership and leadership partnership. If assembled correctly, organizational performance is the benefactor thereafter.