Transformational leadership in a chaotic world
A CEO & CHRO imperative for 2026 and beyond
Having recently returned from a wonderful leadership team event in Istanbul, with a global team and their leader who have reinforced and inspired my optimism about new ways to lead, addressing adaptive challenges head on with humility, collaboration and real authenticity, I have been left reflecting on the challenge for leadership in today’s ever-changing environment.
The context in which our organisations operate today is no longer merely volatile - VUCA doesn’t even come close to describing reality for most leaders now! The more popular phrase being used is BANI: Brittle, Anxious, Non-linear, and Incomprehensible. Systems breaking, anxiety and crisis feeling ever-present, and cause and effect relationships becoming increasingly difficult to work out.
As Amy Elizabeth Fox aptly put it recently, "chaos is the new black”, where adaptive leadership is no longer optional, it’s essential for survival and success. Emotional intelligence, change agility and resilience remain critical, but even these may not be enough. We’re entering uncharted territory and the solutions to our challenges may lie in new ways of thinking, even new ways of ‘being’. And this chaotic world it is not going to change back to the old norms any time soon…
For CEOs and CHROs, this is not an abstract framework any longer. It shows up daily as talent fatigue, leadership overload, culture strain and decision-making under relentless uncertainty. To navigate this complexity, we either reduce it, which is often simply not possible, or expand our own capacity to manage it.
The critical question is no longer “do we have the right strategy?” It is “do our leaders have the inner capacity to execute strategy in constant disruption?” This is where, and why, transformational leadership becomes a strategic necessity, not a developmental luxury.
And many organisations may not be doing enough.
The strategic risk of outdated leadership models pervades
Most leadership systems are still designed for predictability over emergence, control over adaptability, performance over sustainability. Many HR systems and processes are old and lack imagination now, such as the ever present ‘yank and rank’ [1] performance management systems primarily designed to keep Executives and Shareholders happy, while potentially disengaging 80% of the workforce!
In a BANI world, these models could break down. Organisations, and leaders, may still hit short-term targets, but often at a cost:
burnout at senior levels
cultural fragmentation
reduced innovation and trust
values conflicts and extreme tensions
Leaders are finding that they are simply not properly equipped to deal with complex, adaptive challenges which are increasingly prevalent, and critically important.
For CEOs and CHROs, this represents a material risk to enterprise resilience. The default may be to go back to technical leadership styles, it’s what we know after all, and focus on the things we can control and/or use the tried and tested HR models. At Flipside, we still see CEO’s in many organisations primarily chasing cost reductions and short-term profit targets without seeing the damage they may be doing to their organisations. It simply isn’t sustainable for long term success.
What transformational leadership means today
The challenge many executives feel, but rarely name, is that the complexity of the role has outgrown the leader’s way of making meaning. This is key, especially in a world where change is going so fast many leaders simply can’t keep up.
So, leadership growth must be seen as an inside job, and that’s where we need to start to understand how to genuinely transform it and take the time and effort to invest in something so critical.
Bob Anderson’s work[2] shows that real leadership effectiveness, creative leadership, is constrained less by skill gaps and more by ego-driven reactivity - fear of failure, need for control, protecting, pleasing or approval-seeking, for example. Understanding what drives these inner needs, fears and limiting beliefs is the route to real, sustainable, and more compassionate leadership.
For CEOs and CHROs, the implication is clear:
leadership capability cannot be separated from leadership consciousness and working from the inside out is the only way forward
Executive Development must address how leaders show up under pressure, not just what they ‘know’. How they are, their presence, being, values and beliefs really matter far more
in a BANI world, leaders who lack inner coherence and are driven by their reactive behaviours can become amplifiers of organisational anxiety, and that effects performance, and cultures, adversely.
The culture these leaders create reflects their collective values, and values determine behaviour, especially in times of stress. This strategic infrastructure is therefore critical for long term stability. Under sustained pressure, organisations tend to regress unless leaders actively reinforce purpose, model trust and accountability and create psychological safety.
So, for all business leaders, values-driven leadership is not “soft” - it is foundational to retention, engagement, and decision-making. It’s even more essential for passion, purpose and progress and it is a primary lever of long-term performance. And we are talking about the real values of an organisation, not the espoused ones that have been in place for years. What are they now, and what do you want them to do[3] - then do the work!
When we work with senior teams, and individuals, we often talk about peeling layers of an onion as we continue our personal and professional development. This is not about a ‘fix’ and there isn’t a switch that suddenly changes everything (although deep insights are entirely possible). It is about constant, and regular reflection, awareness, choice and growth. This is where change and transformation really starts to happen.
The risks of unconscious leadership and the transmission fear:
A lack of attention to our inner state as leaders carries other risks too. In anxious, non-linear systems, leaders transmit their internal state to the organisation far more than they realise. It is often done with little or no awareness and the impact - which can be significant - is not what was planned, intended or desired.
How many senior leaders, in an honest moment, would agree that they have repeatedly done this over their career? I know I have been one of them – many times! And, of course, this reactivity at the top cascades quickly thorough teams and organisations.
Most leaders basically "download" (repeat past habits)[4]. But transformational leadership is different, it requires an Open Mind, Open Heart, and Open Will. This allows leaders to let go of outdated certainties and "let come" new, innovative possibilities. It’s a shift from download to presencing.
Otto Scharmer often speaks of the "blind spot" of leadership: the inner source from which we operate. In anxious, non-linear systems, leaders transmit their internal state to the organisation. Those who lack awareness become amplifiers of organizational anxiety. Leaders who cultivate presence[5]:
· regulate organisational anxiety
improve decision quality by "sensing" the system rather than just reacting to data
create clarity without offering false certainty
Presence strengthens credibility and trust, it underpins emotionally intelligent, humane systems of work and nourishes cultural outcomes. Critical areas for all leaders.
So, what does this mean for CEOs and CHROs?
Transformational leadership today requires intentional investment in:
· inner leadership maturity, not just external competence
· values-led cultures that hold under pressure and perform
· developmental pathways that grow leaders’ capacity for complexity and the unknown. It’s ok not to know!
· presence and self-regulation as core executive capabilities
· leaders’ capacity to ‘hold’ others, create safe spaces in turbulent environments and offer care and support to allow continued growth. If leaders don’t do this, who will?
This is about redesigning how leadership is understood, developed, and valued in organisations. And how leaders transform and adapt. The discomfort many leaders feel in this space may, in fact, be where their answers lie, or at least the GPS coordinates to help their flow. The future, it seems, will be less about clear-cut paths and more about recognising patterns, experimenting, learning in motion, and redefining progress as we go along. Leadership is demanding new capabilities, an increasing need for deep collaboration, deep thinking and deeper connection, to make meaning in things and see emerging patterns[6].
A Final Reflection for the C-Suite
In a BANI world, the ultimate competitive advantage is not just speed or scale - it is leadership consciousness. The organisations that will endure are likely to be led by CEOs and CHROs who recognise that the future of performance depends on the inner evolution of those entrusted with power and that this needs constant attention and support, along with the systems and mechanisms that nourish this new emerging mindset.
Transformational leadership is no longer optional.
It is the price of admission to sustainable success.
Liam Donnelly
January 2026
[1] Brené Brown, ‘Strong Ground’ 2025
[2] Robert Anderson, Leadership Circle
[3] Richard Barratt
[4] Otto Scharmer
[5] Otto Scharmer and Eckhart Tolle
[6] Brené Brown, ‘Strong Ground’ 2025