Stages of Leadership and Business Transformation

Excerpt from “Mastering Leadership: An Integrated Framework for Breakthrough Performance and Extraordinary Business Results” by Robert J. Anderson and William A. Adams (Wiley, 2016).

Leaders develop, if they develop, through a series of sequential stages. These same stages exist in all cultures worldwide. They are, therefore, universal and invariant, that is, built into human nature. In our book, from “Mastering Leadership: An Integrated Framework for Breakthrough Performance and Extraordinary Business Results,” we describe five levels of leadership:

1) Ego-centric

2) Reactive

3) Creative

4) Integral

5) Unitive

While a description of each of these stages is beyond the scope of this article, our research shows that these stages are strongly correlated to leadership competency, capability, and effectiveness. In other words, with each progressive-stage evolution, leaders become more effective and more capable of leading amid complexity.

In order to compete in today’s increasingly competitive, complex, and volatile business environment, organizational cultures and structures are transforming to become more flat, lean, agile, adaptive, innovative, engaging, high-performing, and high-fulfilling. Reactive Level (and earlier) leadership is not capable of orchestrating and sustaining such cultural/structural shifts. These new organizational cultures require Creative Level leadership or higher. Since only 20 percent of leaders are operating from at or beyond a Creative Mindset, transformation in the leadership of the organization is required. Unless this personal leadership transformation occurs, any organizational improvement will be temporary.

Personal transformation is the movement, primarily in the leader’s inner-game, from one stage to the next. At each progressive developmental stage, a new, higher-order structural design principle is established to relate the self to the world. Reality does not change. What changes is the way we organize the inner game of the self-world relationship. Leadership is the deployment of self into circumstances. As the self adopts a higher-order Internal Operating System (IOS), the interface between the self and the world is at once more complex, simple, and elegant. Now it can handle more complexity with more grace, greater ease, and lower energetic cost—in short, mastery. Unsolvable dilemmas (adaptive challenges) at previous stages evaporate in the new reality. What was not possible in the prior stage becomes doable. The person experiences a new burst of creativity, efficacy, freedom, power, and joy. The organization experiences a person standing more fully in his or her leadership capacity. The world gains someone capable of greater contribution and service.

As leaders move to higher levels (higher versions of themselves), so, too, evolve the system and culture. The evolution of the individual and the organization is interdependent. The organization cannot organize at a higher level of performance than the consciousness of its leadership. Until the system organizes at the new level, it hinders the development of most people in the system. Moreover, advanced business structures place an evolutionary demand on all stakeholders. As conscious leaders invent higher-order systems, the design mandates development in everyone. As critical mass develops to a new stage, a new tipping point is reached, enabling the system to sustain its evolutionary leap.

The inner dynamics of identity (self-world relationship) are powerful forces. They operate at both individual levels (who I am) and at collective/cultural levels (who we are). For most of us, these powerful forces were organized years ago. They have decades of momentum behind them. If these internal dynamics are ignored, they can easily scuttle the most well-intentioned change process.

There is no organizational transformation without first transforming the consciousness of the leadership. To ignore this reality is to jeopardize our efforts to transform organizations and develop effective leaders. Transformative change requires all stakeholders to shift to a higher stage of development. Since the inner game runs the outer game, if there is no evolutionary leap in the inner game of leadership, both individually and collectively, the organization likely will revert back to normal, its prior equilibrium, and the change effort becomes the most recent flavor of the month.

The process of cultural evolution first happens in the awareness of individuals. These individuals exert influence on the system and change it. The new system encourages a critical mass of people to develop. As that critical mass develops, the full potential of the new order is realized, the likelihood of regression to an earlier level of development is reduced, and the platform is built for the next evolutionary leap.

Yes, 70 to 85 percent of change efforts fail, but we can do better if we manage change in Creative and Integral ways, addressing the inner and outer demands of transformation. We must be willing to go through the same Metanoia (shift of mind and heart) that we want for the enterprise and engage in the difficult, ongoing dialogue that surfaces what is hidden in our culture, thus allowing personal transformation to translate into cultural and systemic change.

For organizational change to be real, we need to personally transform ourselves. Much “resistance to change” is actually the struggle people have with reorganizing their identity. People need help and support to make this inner journey. They seldom get it in change efforts. We know that personal transformation precedes organizational transformation; however, until recently we lacked the development pathway for creating sustainable personal and, therefore, business transformation.

Deep systemic change occurs only if we can be the change we want to see. This shift is what we mean by evolving from one level to a higher-order level.

Throughout our careers, we have partnered with CEOs and their teams across dozens of organizations and can say with confidence that successful transformation efforts were those in which the extended leadership team “did its work” of mastering leadership and improving their individual and collective effectiveness while tending to the health of the Leadership System. These transformation efforts were not only successful, but more importantly, the success was sustained over time. Sadly, we also witnessed transformation efforts that were less than successful and, in some cases, failed. These failures could be linked directly to a failure of leadership to consciously transform individually and collectively. Without a mature, highly evolved, and fully functioning Leadership System, transformation efforts will not succeed—PERIOD!

Excerpt from “Mastering Leadership: An Integrated Framework for Breakthrough Performance and Extraordinary Business Results” by Robert J. Anderson and William A. Adams (Wiley, 2016).

Bob Anderson is chairman and chief development officer and Bill Adams is CEO of The Leadership Circle and the Full Circle Group. They are coauthors of “Mastering Leadership: An Integrated Framework for Breakthrough Performance and Extraordinary Business Results” (Wiley, 2016). For more information, visit or

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