In Their Own Words
Why Strategic Plans Fail (And What Actually Works Instead)
Why do good strategic plans so often fail to produce different results? John Dues joins Andrew Stotz to explore a simple idea: organizations do not run on strategic plans. They run on the routines leaders and teams follow every day. From meetings and priorities to problem solving and learning, those routines form the management system that shapes results. Listen to a practical conversation about strategy, leadership, Deming, and designing an organization that can continually learn. TRANSCRIPT 0:00:00.0 Andrew Stotz: My name is Andrew Stotz and I'll be your host as we dive deeper into the teachings of Dr. W. Edwards Deming. Today I'm continuing my discussion with John Dues, who is part of the new generation of educators striving to apply Dr. Deming's principles to unleash student joy in learning. Well, John, your most recent blog post, you titled it "The System Your Organization Actually Runs." Interesting title. And it starts with a question that I think every leader has probably asked at some point, which is, how does this strategic plan actually change what leaders do on Monday morning? Why did you start at that point? 0:00:50.1 John Dues: Yeah, thanks for having me back, Andrew. I think the article kind of gets at a question that I've found myself asking over the years as I've led school systems. And I've seen a lot of different strategic plans, and I've seen a lot of different strategic plans at my own organization. And most of them contain worthwhile goals. Most of them are written by leaders that want to genuinely improve their organization. I think the problem is, it wasn't the quality of the goals. It was... After reading the plan, I often couldn't tell how the leadership of that particular organization was actually going to operate once the plan was finished, or how at least how it was going to operate differently. And this is true of my own organization. The plan would tell me or those leaders where the organization wanted to go but it rarely said like how that was going to happen, what was going to happen differently every day in order to get there. And what I eventually basically came to the realization that this wasn't just a minor oversight or omission, it was like the central issue. And so that realization really changed how I started to think about strategic planning, 'cause I do think that's an important component of running an organization, but it's not the management system itself. It's just the starting point basically. 0:02:22.7 Andrew Stotz: There's a great book on strategy that I like called Good Strategy Bad Strategy by Richard Rumelt and he basically focuses in on how bad most strategy is, and it's just lofty statements and generalizations with very little action and trade-offs that the senior management or the leaders are really making. And so it just plops in people's lap like, "Here's a good-feeling thing." So was there a specific moment when that clicked for you? 0:02:59.4 John Dues: Yeah, that's a good question. I mean, I think what I think of when you mentioned that book, which I haven't read, "Good Strategy Bad Strategy," I think there certainly is good strategy and there is certainly bad strategy. But what I most often was seeing is like pretty good strategy that maybe a consultant would write. Like we did a strategic plan with a consultant, a great consultant about a decade ago and the strategic plan that that work resulted in was great and useful in some ways. But by and large, it did end up in the sort of stereotypical fancy binding and all kinds of colors and graphs and stuff like that, but it was mostly sitting on shelves and closets. It really wasn't formatted like literally and figuratively, it wasn't formatted in a way that was going to guide our work on a daily or a weekly or a monthly basis. So that experience, and I went through a couple of those types of strategic planning sessions with consultants over the years. So then I was thinking about what's actually happening is that, well, if the strategic plan mostly gets shelved, what is it exactly that is guiding and running the organization on that day-to-day basis? 0:04:30.4 Andrew Stotz: Interesting kind of distinction between the plan and the day-to-day running. So let's answer that question. If the strategic plan isn't the management system, what is it? 0:04:45.9 John Dues: Well, I think one thing is some people might be familiar with the management system terminology and some people may not. It probably has a technical meaning for a lot of people that are doing this type of work. But whether you use that terminology, "management system," in your organization or not, every organization has one. And so when a lot of people hear management system, they may picture some type of software system or some more formal operating manual. But that's not what I mean when I say there is a management system whether you realize it or not. I don't mean something formal necessarily. I'm just talking about a management system as a simple collection of like recurring leadership routines that determine how the organization actually functions. So it's things like how are priorities established? When you have meetings, how are they run? How frequently do the meetings occur? What measures are the leaders reviewing on a regular basis? How are problems surfaced in the organization? How do decisions get made? How the information flows? How leaders learn whether the organization is improving. So there's all kinds of these routines, and in some places they are not intentionally designed at all. But some version of those things are happening in every single organization. And in a lot of places they sort of just simply kind of evolve naturally on their own over time. But the thing that's similar, and it's pretty remarkable, is that whether you're doing this deliberately or not, these become like powerful behavior shapers in the day-to-day of an organization. So I think the key thing is that people respond much more to that daily management system, those leadership routines, and those things reinforce more so like the behavior of people that work in an organization more than what leaders say is important or more than what is written in a strategic plan that people often sort of shelve after the initial rollout and don't reference back very often. 0:07:16.7 Andrew Stotz: This makes me think of a quote by a guy named Stafford Beer, who is a systems thinker, and he said, "The purpose of a system is what it does." 0:07:23.8 John Dues: That's it, yes. That is it in essence, yeah. 0:07:31.0 Andrew Stotz: And the meaning of this is like never judge a system by its stated goals. This is also what Rumelt is talking about in "Good Strategy Bad Strategy." Don't judge it by its stated goals or its mission statement or what its designers have intended it to do. Really, we've gotta judge it by what it does. So you're saying every organization already has a management system then? 0:07:57.6 John Dues: Yeah, that's exactly right. I mean, I think that's probably the biggest idea I was trying to get through in that most recent blog post, this idea that every organization has a management system whether they call it that or not. So the question is not its existence. The real question is, is there any intentionality behind the design of that system? 0:08:22.2 Andrew Stotz: So to follow that up, if every organization already has a management system, why do so many strategic plans fail to produce different results? 0:08:33.7 John Dues: Yeah, I mean, I think from what I've seen is that the goals and maybe the tactics and the strategic plans change every three years or every five years depending on how your organization does it but those management routines don't. So you spend all this time creating a new strategic plan and you may even do some things differently for a short time period, kind of like when you make a New Year's resolution, but you kind of settle back into those natural patterns if any changes were made in the first place at all. And so if you're a leader, you kind of just keep holding those same meetings, you kind of keep looking at the same reports, looking at the same data, you make decisions in the same way, you respond to problems in the same way. New initiatives sort of get absorbed up into that old existing management system. And so these initiatives come and they go but the system really doesn't change, kind of just like what you were saying with that quote. And then because the system doesn't change, the results usually don't change very much either. I think one follows from the other. So I think this is why two organizations, like two school systems can have pretty identical strategies and then produce completely different outcomes. And the difference usually isn't the plan, it's that management system that sort of lives underneath the plan. That's kind of how I think about it. 0:10:06.8 Andrew Stotz: It kind of makes me think of like a military. An army is told by their leader, "We're gonna take that hill," and then a new guy comes in and he goes, "I'm gonna change the plan. We're gonna take that hill and that hill." And then a new guy comes in and he goes, "We're gonna take that hill and that hill and that hill." And all of a sudden there's no tradeoff, there's no letting go, there's no sacrifice. And when you don't have a clear tradeoff, you're basically saying that we've got all these resources and we can do all this stuff. So it's interesting because most people would probably say that the problem is execution. 0:10:44.7 John Dues: Yeah. And I think... I mean, you run a business. I mean, execution, obviously... 0:11:01.7 Andrew Stotz: That's hard. 0:11:02.7 John Dues: It's critical. It's very critical. But the execution, how that goes, the execution itself is shaped by that management system. And so I think if you want different execution, you have to design a different set of management routines that people are gonna then follow to implement that plan. 0:11:22.6 Andrew Stotz: Well, it's not only me working in a real business. Of course you are too. So how did this change the way you approach strategic planning at United Schools? What are you doing differently? 0:11:34.3 John Dues: Yeah, I think the last couple rounds of strategic planning, so kind of in the middle of the pandemic, we decided that we were gonna take a stab at creating our own plan internally. And by that, I just mean that we were gonna do it ourselves and not utilize a consultant. And I think there can be times when utilizing someone from the outside, a consultant, there's lots of good ones out there, we've worked with a couple different ones over the years that I'd recommend, but I think there is something to be said for writing the strategic plan yourself if you have that capability. I mean... So we have a very stable senior leadership team, and so because of that cohesiveness, I think that's one sort of condition that allowed us to write it ourselves. And so I think one of the things then that happens when you write it yourself is you internalize it in a different way than if someone else wrote it for you. Even if you're studying it and reading it carefully, there's just something about writing it yourself and workshopping different goals and tactics and things like that that really make you deeply internalize. And that just doesn't happen when you use a consultant for something, in my opinion. And then one other, I think some people might see this as a small thing, but the strategic plan actually is in a Google Document. And the great thing about Google Documents, of course, is that they are dynamic and easy to collaborate in. And so this may seem like a small thing, but when a consultant hands off a finished product, it's often in a slide deck or a PDF. And that's actually kind of hard to change. There are programs where you can obviously change a PDF fairly simply, but there's something about it living in a PDF versus living in a Google Document. Now, it's not something that we're just changing all the time. However, we're regularly in that Google Document and adjusting things, let's say on a quarterly basis as we adjust and as we learn as conditions change and stuff like that. So I think it's sort of like a two-part thing. More internalization happens when you do it yourself, and then we made this decision to put it in a Google Doc and let it live there. And it's sort of a working document that gets continually updated across the life of that particular strategic plan. 0:14:03.5 Andrew Stotz: I've just spent probably 500 hours developing a corporate strategy module for my Profit Bootcamp and I also have been teaching it and developing it with executive education here in Bangkok. And I have 12 activities that, I basically look at the best books on this topic, break it down, and then it's a series of activities. And I just couldn't imagine a consultant, and even myself, what I'm trying to do is guide people through it, but ultimately you gotta think about it and you gotta really... And it starts, in my case it starts with why. Why are you doing what you're doing? And for me, a lot of what I try to do is inspire learning that leads to lasting change. And lasting change is because I had some people in my life that delivered lasting change to me. They provided an environment and the knowledge that allowed me to absorb it and make a lasting change in my life. In my case, it was stop using drugs and alcohol, which has worked for more than 40 years. And so it starts with why and then it goes through a lot of things. But one of the questions is like, what trade-offs are you making? If somebody's not upset with your strategy, you got it wrong because you must... You have limited resources and you're gonna have to pull it from one place to another. And I think that's part of what people miss and what they avoid a lot of times. So I love the idea of developing it yourself and going through it. But the document, of course, itself isn't really the point, is it? 0:15:53.5 John Dues: Yeah, I think the fact that it lives in a Google Document is just kind of one component of it that works for us. But yeah, I think you're exactly right. I mean, I think ultimately what we're looking for the strategic plan to do is kind of reaffirm or reassess what our long-term purpose is. For us, that's a time for us to look at our purpose and our mission, our values, and kind of reaffirm those things or make adjustments if we need to. But I think the key is, and this is where the management system comes, is that the plan then immediately flows into things like annual goals, quarterly priorities. Our senior leaders have management plans that sort of guide their work and outline their work for the year. It's gonna inform what's happening. All of our schools start with a daily huddle amongst the staff team, much like you'll see on the floor of a hospital or something like that. Our biweekly leadership team meetings, the quarterly strategic reviews that we do with our leadership team, and then the annual planning, all that, all of those routines are flowing from the strategic plan, but they're like the management system that sort of brings it alive. And these routines that I just mentioned really create these learning cycles that then feed back into the strategic plan, and that's the sort of updates that it gets over the course of its lifespan. And so if I had to boil it down, it's like the strategic plan provides the constancy of purpose, to kind speak in Deming's terms, and then the management system helps us continually learn and how to achieve that particular purpose. 0:17:35.5 Andrew Stotz: I like your distinction of the routines because that helps us understand like these are cycles that we're going through and routines that we're doing and as long as that routine is serving the ultimate aim of the system, then fantastic. So towards the end of the blog, you say something that really stood out to me, and that is you said, "The real work of leadership is designing an organization that can learn." What do you mean by that? 0:18:08.0 John Dues: Yeah, I think what I was trying to get at is that early in my career, I really thought leadership was mostly about developing better strategy. If you just had better strategy, you'd be on the right course. And today I have a more nuanced view that's only one part of the job. I think the larger responsibility is designing an organization that continually improves its own thinking. And that requires those intentional routines that you were just talking about. And I think, of course, you're gonna review performance over time. If you have a Deming lens, you're gonna study variation. You gotta have some collaborative ways that you're solving problems. For us, that includes running PDSA cycles to refine our methods. And then through it all, you're keeping everyone connected around this common purpose. And I think that when those routines become a part of the everyday work, improvement then becomes much less dependent on a single leader, or sometimes it's a heroic leader that drives the organization. It's the organization itself that's capable of learning then because these various routines have become a part of the behavior pattern of the organization itself. 0:19:24.5 Andrew Stotz: Yeah, that sounds very Deming. 0:19:26.2 John Dues: It's very Deming, very Deming. Yeah, I think I kind of think of one of Deming's greatest insights is that organizations don't improve because people simply work harder. They improve because leaders improve the system deliberately. And this, the article and then this podcast is one particular part of that system, about one particular part of that system, the management system itself. 0:19:54.6 Andrew Stotz: In the strategy course that I do, I talk about identifying strengths. And then I looked at 8,500 companies globally, and I do a measure where I look at each company relative to its global peers each year. And then I say, where is its ranking on two things: how profitable it is and how fast it's growing earnings. Both of these are opposing forces, so it's very hard to have both of them at a high level. But that's what I do as a score I call the profitable growth score. And then I ask the question, how many companies out of 8,500 sustain a number one or number two ranking out of one to 10 over five years? And out of 8,500 companies, it's 400. 0:20:36.7 John Dues: Wow. 0:20:48.2 Andrew Stotz: And I would say that these have a clear competitive advantage that's illustrated in their numbers. Where it's coming from, how they're getting it, okay, those are deeper questions. But this is where I talk with the executives that I work with, the companies I work with, and I ask them, how do we look for a strength in your business that we can convert to a competitive advantage? Because right now, looking at the financial performance of almost everybody, we just have a lot of strengths, which is great. But strategy really is about how do we do that? And the second component of that, which kind of relates back to this learning, is that if you have an all-star in your company and they leave and the sales go down or the business goes down, then you didn't have a real competitive advantage. And so the concept of building learning into a company where everybody's learning creates what I call a hard to copy strength or competitive advantage and that ultimately leads to a long-term performance that is reflected. And it's a little bit like, some people listening may think, "Oh, I'm not into the numbers and all that stuff, Andrew." Well, just imagine that your kid comes to you and says, "Hey, Dad," or "Mom, I'm gonna get A's next semester." And you go, "Right, great. How are you gonna do it?" And they go, "Well, I'm gonna do this, I'm gonna do that, and I'm gonna change this and I'm gonna change that." "That sounds like a good plan. Go for it." And then at the en
