What distinguishes transformational change from transactional change?

Transformational change is characterized by substantial and fundamental shifts within an organization that significantly alter its operations, strategies, culture, or overall direction. This type of change often involves a comprehensive overhaul of systems and processes to achieve long-term objectives and can impact the entire organization rather than just isolated areas. It is typically initiated in response to profound external pressures or to leverage emerging opportunities in a way that enhances competitive advantage.

In contrast, transactional change tends to be more incremental and focused on specific processes or practices. While it can also lead to improved performance, it typically involves adjustments that do not alter the core of the organization or its overall direction. Transformational change, therefore, is a deeper, more comprehensive process aimed at radically improving or reimagining how an organization operates.

Thus, the distinction lies in the level of impact and the breadth of change: transformational change signifies profound changes that can redefine the very nature of an organization, whereas transactional change is more about making smaller scale adjustments.