Transformative leadership for MSMEs

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I recently spoke at a conference for MSMEs (micro, small and medium enterprises). I met many old business-owner friends I had not seen for years. Many of them have grown their businesses, adding more branches to their lineup and introducing more brands and concepts, and I was delighted to see them succeed. But when we talked about some old business-owner friends we knew when we were starting, I also discovered that many had closed shop and could not cope with the changing times.

But there is something deeper to reflect on than simply blaming closures and losses on the “changing times” or the economy. If that were the case, then how could others continue to grow and expand?

Business success is not determined solely by market conditions or financial strategies. It also depends on the confidence and contentment of employees. To thrive in an ever-changing landscape characterized by persistent attrition and high turnover, rising operational costs, an increasingly competitive landscape and changing consumer behavior and demands, transformative leadership is essential.

I had a business-owner friend who teased me and said, “Francis, you do a lot of speaking and training for the big business companies in the country, and I know they need it, but for ‘small businesses’ like us, I don’t think you would have many MSME clients, do you?”

I responded, “Yes, you are right. I only get to address the MSME sector when these big companies organize and sponsor events for their dealers and distributors, and I get to speak to them. To my delight, they appreciate it immensely.” They may not have the same budget capabilities as big companies, but today’s business owners – many of whom are second- and third-generation participants – know they need to learn and adapt to grow their business.

There is much to be said on the subject, but let me focus on one area that MSMEs need, but only a few are conscious about.

Future-ready business owners train their key managers and leaders regularly in transformative leadership. 

The role of transformative leadership can be seen in the following areas:

1. They motivate and inspire

Transformative leaders are masters at motivating and inspiring their teams. Their passion for the company’s vision is infectious, igniting enthusiasm among employees. They believe in the potential of their team members, fostering a shared sense of purpose.

Gallup has found that highly engaged business units experience significantly lower absenteeism and higher productivity. In one widely cited Gallup report, this translated to 41 percent lower absenteeism and 17 percent higher productivity.

2. They fuel thought and spark ideas 

Transformative leaders encourage employees to think critically, challenge norms and innovate. They create an environment where employees feel empowered to contribute unique insights and creative solutions. Ideas are the currency of the future, and some of the most practical innovations can come from the crew members – if only given the chance to present them.

According to a study by McKinsey & Company, companies that promote innovation are 50 percent more likely to outperform their competitors financially.

3. They take the high road

Transformative leaders prioritize ethical conduct, moral values and the company’s welfare over personal gain. They lead by example, embodying the principles they expect from their teams. It is no secret that pilferage remains a problem, but transformative leadership can help mitigate it. 

4. They invest in employees

Transformative leaders take the time to understand each team member’s personal and professional aspirations and needs, fostering a sense of belonging and appreciation. They practice empathy management.

Transformative leadership is life-changing. Taking steps to incorporate its principles can profoundly impact your life and your business’s success.

Embracing transformative leadership is not an overnight transformation. But for businesses to grow, business owners need to embark on a leadership journey that motivates, inspires, nurtures innovation and prioritizes employee well-being, thereby creating an environment where everyone thrives.

“The greatest leader is not necessarily the one who does the greatest things. They are the one who gets the people to do the greatest things,” says former US president Ronald Reagan.

 The path to success is paved with leadership that empowers and inspires, and this is the common trait I see in many of my old business-owner friends who have grown and expanded their businesses over the years.

Catch Kongversations with Francis on YouTube and all major podcast platforms: Spotify, Apple Podcasts, Google Podcasts and more. Plus, listen to Inspiring Excellence wherever you stream.