What Is Transformational Leadership: Examples (2026)

Transformational leadership is a management style that motivates employees to pursue a shared vision and improve how they work. These leaders set a direction, model the behavior they expect, and give employees a sense of purpose.

Employee engagement puts that influence into context. Only 20% of employees worldwide were engaged at work in 2025, according to Gallup’s State of the Global Workplace report. Gallup also finds that managers account for at least 70% of the variance in team engagement.

This guide explains how the transformational leadership style works in business. It covers its defining characteristics, its benefits, and steps for using it to guide a team through growth or change.

What is transformational leadership?

Transformational leadership is a leadership style in which a leader motivates people to strive for a shared goal, improve their performance, and develop their abilities. It revolves around communicating a purpose, encouraging new ideas, and giving team members individual attention. As a result, employees commit to the work because they believe in the shared vision.

Political scientist James MacGregor Burns introduced the concept of “transforming leadership” in his 1978 book, Leadership. Burns described leaders and followers elevating one another’s motivation and values. 

Organizational psychologist Bernard Bass expanded the concept in his 1985 book, Leadership and Performance Beyond Expectations. Bass adapted the theory for organizations and explained how leaders inspire people to exceed their initial expectations.

The 4 I’s of transformational leadership

In his book Transformational Leadership, Bass introduced and popularized four key components of transformational leadership, known as the four I’s:

• Intellectual stimulation
• Individualized consideration
• Inspirational motivation
• Idealized influence

1. Intellectual stimulation

Intellectual stimulation encourages employees to question assumptions and explore new ways to solve problems. This type of thinking calls for resourcefulness, especially when a team has limited time, money, or information.

A leader practicing it asks for ideas, welcomes thoughtful disagreement, and lets the team test promising approaches. When an experiment fails, the leader reviews what happened and shows the team how to deal with failure before trying again.

2. Individualized consideration

With individualized consideration, a leader adapts their guidance to each employee’s needs, strengths, and goals.

For example, a new manager might receive coaching on how to delegate before taking responsibility for a larger team. Relevant feedback and assignments give each employee opportunities for personal growth.

3. Inspirational motivation

A compelling shared vision is the basis of inspirational motivation. Leaders keep that vision visible and use it to guide the team’s priorities.

Unbound Merino Cofounder and CEO Dan Demsky describes his role in a Shopify Masters interview: “What the team really needs is me to remind everyone where we’re going, what the vision of the company is.” Dan sets the direction, checks that current work advances it, and gives employees the resources and autonomy to execute.

4. Idealized influence

Leaders demonstrate idealized influence by modeling the conduct they expect from others. Like authentic leaders, they use stated values to guide decisions and take responsibility for their actions.

Transformational leaders keep commitments and apply the same standards to themselves. Consistent behavior earns employees’ trust and gives them a reliable example to follow.

Characteristics of a transformational leader

Transformational leaders influence employees through four behaviors described in Bass and Riggio’s framework. The following checks apply those behaviors to the daily decisions a merchant makes when leading a team:

• They model the expected behavior. Idealized influence comes from acting as a credible example. Review your most recent difficult decision. Check whether you followed the same standards you expect employees to follow, especially when doing so came with a cost.
• They give the work a clear purpose. Inspirational motivation centers on a shared vision. Ask an employee to explain the team’s current goal, why it matters to customers, and how their responsibilities contribute to it. Their answer indicates how clearly you communicated this information.
• They invite better ideas. Intellectual stimulation encourages employees to question assumptions and reconsider familiar problems. At your next planning meeting, ask the team to identify one weakness in the current approach and propose another way to address it.
• They develop each employee. Individualized consideration treats people as individuals with different needs and goals. Name one skill each direct report is developing, then identify a current responsibility that lets the person practice it.

How to develop transformational leadership skills

A field experiment involving 20 bank managers tested a one-day leadership session followed by four monthly coaching sessions. Managers studied transformational leadership, practiced new behaviors, received employee feedback, and set individual goals. 

Employees later rated the trained managers higher on intellectual stimulation than the control group. They also reported higher organizational commitment. 

Follow a similar development process in your business. Select one of the four behaviors, ask employees for feedback, set a specific goal, and review your progress each month.

Shopify Academy offers free and paid educational content on running a store, operating a B2B business, and other Shopify topics. Choose training related to a current priority and complete it with a team member. Ask that employee to question one existing process and lead a small improvement. 

Transformational vs. transactional leadership

Transformational and transactional leadership differ mainly in how leaders motivate employees and manage performance. They aren’t strict opposites, but vary when it comes to key behaviors.

Transactional leadership is effective when employees need clear roles, measurable targets, and predictable rewards. Whereas transformational leadership is better-suited to work that calls for new ideas or a major change in direction. You might use transactional leadership to manage daily fulfillment targets and transformational leadership when introducing a new business model.

There’s also transitional leadership, which falls in between these two styles. The American Management Association describes it as an approach that links short-term priorities to a longer-term change. For example, a transitional leader might set milestones while a business moves from wholesale-only sales to a combined retail and ecommerce model. It’s not another name for transactional leadership.

Transformational leadership examples

Transformational leadership is visible in how a person communicates a vision, questions existing methods, and models the behavior they expect from others. These examples show those behaviors in business, technology, and social change.

Dan Demsky, Unbound Merino

Dan encourages experimentation and hires people with expertise he lacks.

A 2025 Shopify Masters episode shows that Unbound Merino continues testing marketing channels even when its main channel performs well. That willingness to question a working strategy reflects intellectual stimulation.

Dan took a similar approach when customers requested women’s clothing. He hired experienced women designers because the existing team lacked expertise in that category. The women’s line now generates more than half of the company’s revenue.

Satya Nadella, Microsoft

Satya uses mission and continuous learning to guide Microsoft through change.

In a 2025 message to employees, Satya organized Microsoft’s direction around its mission, priorities, and culture. He identified security, quality, and AI transformation as the company’s main priorities.

Satya also credited Microsoft’s “learn-it-all” growth mindset with encouraging humility, empathy, and continuous learning over the previous decade. This approach combines inspirational motivation with intellectual stimulation as Microsoft changes its products, organizational structure, and business model.

Jackie Robinson

Jackie led by aligning his actions with the principles he promoted.

In 1947, Jackie became the first African American to play Major League Baseball in the modern era. He faced sustained racism while breaking the league’s color barrier, making his conduct a public example of courage and restraint.

His leadership also continued after baseball. The Jackie Robinson Foundation records that he advanced civil rights, improved working conditions for employees as a corporate vice president, and co-founded a Black-owned bank. He also founded a company to provide housing for low-income families.

Pros and cons of transformational leadership

Successful transformational leaders can build an innovative organization with an engaged workforce, but it may not be the right choice for every company or organization. Learn more about the advantages and drawbacks of transformational leadership.

Pros of transformational leadership

• Associated with stronger employee engagement. A meta-analysis of 43 transformational leadership studies covered 23,194 participants across several countries and industries. It found a significant positive correlation between transformational leadership and work engagement.
• Linked to lower turnover intentions. A study of 326 younger knowledge workers in China found that transformational leadership was negatively associated with employees’ intentions to leave. A stronger match between employee and organizational values partially explained the relationship. 
• Encourages employee recovery. A 2024 literature review concluded that employees under transformational or transactional leaders were more likely to participate in recovery activities than employees under passive-avoidant leaders. These non-work activities restore energy and attention after demanding work.

Cons of transformational leadership

• High expectations can coexist with burnout. An ambitious vision doesn’t offset an unsustainable workload. Gallup reported that 27% of US employees experienced burnout very often or always in May 2026. Leaders need to encourage recovery and avoid treating constant availability as proof of commitment.
• Charisma can be used for personal gain. Bernard Bass and Paul Steidlmeier distinguished authentic transformational leaders from pseudo-transformational leaders. The latter use vision and influence to advance their own interests.
• The framework is difficult to measure. A critical review of transformational leadership research found unclear definitions, incomplete causal models, and problems with common measurement tools. Assess concrete behaviors, such as coaching and inviting new ideas, instead of assuming that business results prove a leader is transformational.