Hoshin Kanri

What is Hoshin Kanri?

Hoshin Kanri is a tool for accomplishing a company's long-term objectives by aligning tasks across strategic, tactical, and operational levels within the organisation.

At the strategic level, goals, decisions, and actions focus on the entire company and determine its development paths. At the tactical level, managers and middle managers implement the strategic plan by taking exact steps and primarily achieving shorter-term goals. The operational level ensures the completion of repetitive tasks. The Hoshin Kanri approach ensures that professionals at all levels work in a coordinated manner and move in the same direction. Employees who know and share the company's mission and goals tend to work better and have higher work productivity.

The origins of the Hoshin Kanri method

Hoshin Kanri, also known as policy deployment or policy-based management, involves aligning the efforts and activities of normal employees with the company's strategic plans.

This approach emerged in post-war Japan to restore and sustain the economy. Developed by planner Yoji Akao in the 1950s, the method's name comes from three words: "hoshin", meaning compass, "kan", meaning management, and "ri", meaning reason or logic. Together, they translate to "guidance that sets the direction of work."

The Japanese branch of the technological company Hewlett-Packard was among the first to adopt the Hoshin Kanri method. They used it as a set of rules and management principles to motivate employees, direct their efforts, and coordinate their daily activities.

7 steps to employing Hoshin Kanri

The Hoshin Kanri method comprises seven stages that align the efforts of all company levels with strategic priorities. The process starts with long-term planning and concludes with setting local optimisation tasks and monitoring their execution. Let's dive into each step in more detail:

1. Setting goals and strategies

In the first stage, managers must define long-term goals and strategic directions as accurately and precisely as possible. They must begin with the organisation's mission while keeping the target audience in mind. They must ensure the direction aligns with potential customers' needs and stick to it. This approach helps them focus on the most crucial goals.

2. Detailing goals by areas

Each goal established in the previous stage should be divided into more specific tactical tasks that will gradually achieve the overarching strategic plan. At this stage, it is crucial to set measurable and assessable goals, identify acceptable results, and outline how to improve them.

3. Developing an action plan

A list of essential actions and guidelines is developed based on particular goals and objectives, detailing the resources and tools required for the Hoshin Kanri process. These actions can include running a marketing campaign, training employees to enhance their skills, improving service, and more.

4. Setting performance indicators and metrics

For each goal and objective, specific indicators-KPIs-are established to clearly show how the company's performance over a certain period aligns with the planned results. For instance, these indicators might include the influx of new customers, the number of repeat sales, and other metrics.

5. Communication and coordination

Maintaining a balance between the organisation's goals and operational capabilities is crucial. This balance is achieved by actively communicating with professionals at various levels, regularly obtaining feedback on decisions, and coordinating the details during strategic plan implementation. This approach allows you to bridge gaps between desired and actual circumstances, adjust goals effectively, and achieve them within a set timeframe, ensuring the entire team works in harmony.

6. Executing the plan

This could involve launching an advertising campaign, enhancing customer service, actively managing the company's social networks, or rebranding. In other words, it's about implementing the planned strategy with attention to all the previously mentioned details. It's crucial to consistently execute the plan, monitor KPIs, and ensure coordination of all actions among all employees.

7. Evaluating the interim results and improving procedures

Monitoring all employees' actions to achieve goals and comparing them to set KPIs is crucial. It's essential to track progress to promptly adjust plans, correct mistakes, and minimise risks and losses. Normally, specific details emerge during plan implementation that need revision and improvement.

Implementing the Hoshin Kanri method demands thorough preparation, continuous communication among all specialists executing the plan, and regular monitoring of results. This step-by-step approach fosters a clear understanding of goals and objectives at every company level, significantly boosting the chances of near-term success.

Tips for implementing Hoshin Kanri

Tip 1. Focus on no more than five goals

Avoid proposing numerous hypotheses or formulating a dozen global goals initially. Ambitious plans don't ensure that everything will be implemented, and every company has limited resources and funds. Focusing on a few key, realistic goals enhances your chances of success. Ideally, set no more than five goals for the Hoshin Kanri process-better yet, concentrate on two or three.

Tip 2. When setting goals, use the SMART technique

This goal-setting technique aims to turn abstract tasks into clear, specific, and achievable ones. SMART is an acronym representing five criteria that a decent goal must meet:

• S - Specific. This means the goal should be articulated as precisely as possible, eliminating any need for clarification.

• M - Measurable. This means the goal should be discernible and clearly indicate whether it has been achieved. Typically, this can be determined through precise data, such as the number of new clients, repeat sales, or the percentage of users completing a target action on the website.

• A - Achievable. This criterion means setting realistic goals that can be achieved with the resources at hand.

• R - Relevant. In other words, the goals set in the Hoshin Kanri process must align with the company's overarching objective and support the achievement of more significant tasks.

• T - Time-bound, meaning it should have a time limit or deadline. A well-set goal must have a clear timeframe.

Using the SMART method, your goals will be clear, easy to manage, straightforward for everyone, and quickly attainable. This approach doesn't require extra time or money-just analyse and refine your goal to meet all five criteria.

Tip 3. Use the Catchball method when developing an action plan

The Catchball method is the most effective way to achieve consensus between senior management and regular employees. Actively used in developing tactics and preceding plan implementation, this technique involves "tossing" an imaginary ball (i.e., a formulated goal or task) between professionals at different company levels. This exchange continues until each employee engaged in the Hoshin Kanri process agrees upon the task and its execution method. The Catchball method was designed to simplify communication across all levels of an organisation, leading to a shared understanding and sense of responsibility for the company's global goals and increasing employee engagement in work processes.

Tip 4. Utilise the PDCA model to enhance development processes

PDCA, also known as the Deming cycle, is named after American researcher William Deming, who developed this method. It's considered a model for improving business practices and product quality control. PDCA stands for Plan-Do-Check-Act, representing the four critical stages of the Deming cycle:

• Plan - Grasp what steps are needed and how to execute the plan.

• Do - Execute all required actions precisely according to the plan.

• Check - Evaluate the outcome and measure the results.

• Act - Fix errors and adjust the plan.

• Repeat the cycle, incorporating the practical experience gained.

The advantage of this method lies in its efficiency and versatility. PDCA can be applied across various areas to test theories, achieve goals, and swiftly address issues in all types of production areas.

Tip 5. Apply 'management by wandering around' during the plan execution phase

This is a mobile management style in which senior managers periodically walk around their employees' workspaces, engage in conversations, inquire about their progress, and observe office activities. The main goal here is to enhance communication, build employee trust, boost productivity, and increase their interest in the work.

Like Hoshin Kanri, the MBWA method was initially used by Hewlett-Packard managers. They believed that spending 10 to 15% of their time talking with employees at different company levels helped identify and promptly resolve problems, examine the company's work objectively, and improve management's image in employees' eyes. However, managers practising MBWA should avoid excessive involvement in their employees' work to maintain an open communication channel for formal and informal control.

Advantages and disadvantages of the Hoshin Kanri method

Let's delve deeper into the benefits of using Hoshin Kanri. This technique guarantees:

• Consistency of actions between strategic plans and operational actions.

• Employees clearly understanding goals and feeling involved in a shared mission.

• Heightened motivation of ordinary employees.

• Enhanced flexibility and adaptability.

• The focus on achieving results and enhancing product quality.

• A systematic approach, simplifying information exchange practices and increasing transparency in business operations.

However, Hoshin Kanri also has disadvantages, including:

• Implementation complexity-consistent use of Hoshin Kanri can be a demanding process requiring considerable effort.

• Ongoing employee training needs-the Hoshin Kanri system demands regular advanced training, consuming time and additional resources.

• Extensive documentation-this tool requires reporting, adding extra workload for employees

• Formalisation-adhering strictly to pre-established plans and guidelines.

Organisations need to take into account in advance the possible difficulties associated with applying Hoshin Kanri and the disadvantages of the method to level them out and, as a result, face only the positive consequences of using this tool.

Hoshin Kanri X matrix

A matrix is used to visualise the Hoshin Kanri process. The X matrix is a strategic planning tool that clearly outlines the company's goals, priorities, strategies, metrics, and actions needed to implement the plan and the list of responsible individuals involved.

The traditional template divides the matrix into four main sectors:

• Long-term strategic goals define the company's development direction or a specific department. They are typically formulated at the management level.

• Annual or tactical goals are developed from long-term goals and directly linked to their implementation. These are broken down into particular tasks to be achieved over a certain period-not necessarily a year. In the matrix, you must note the connection between long-term and annual goals, clarifying which long-term goal is achieved through each yearly goal.

• High-level priorities encompass the essential actions, events, tools, and resources needed to achieve annual goals. The matrix should also highlight the connection between these actions and their corresponding yearly goals.

• Goal achievement indicators and metrics are used to evaluate performance results.

The corners of the matrix should depict the dependencies between all types of company activities within each of the four sectors. The employees responsible for each area can be listed in an appendix to the matrix or alongside the relevant activity.

In essence, the X-matrix serves the same purpose as Hoshin Kanri, but it excels in data clarity and visualisation. Therefore, seasoned managers recommend using Hoshin Kanri and the X-matrix together to fully capture the current situation, choose a long-term strategy, and execute a plan. This combined approach maximises the effectiveness of both methods.

Hoshin Kanri Examples

As we've established, the Hoshin Kanri method can be utilised to achieve various goals across different fields. For instance, it applies to a strategic goal like increasing market share by 20% over the next three years. This goal adheres to the SMART criteria, making it specific, measurable, realistic, aligned with the company's global mission, and time-bound. For example, we derive an annual or tactical goal from this strategic aim: increasing goods production by 15% this year. Then, an action plan must be developed to accomplish this task. This could include introducing new technologies to boost productivity, training and upskilling employees, launching a marketing campaign to attract new customers, etc. Once the plan is developed, implementation should begin, accompanied by monitoring and tracking interim results. Based on these results, actions are adjusted, and business processes are improved. Remember, at every stage-from setting goals to planning implementation and monitoring-aligning all actions and decisions between management and the employees tasked with carrying out the high-level plans is crucial.

The Hoshin Kanri technique can boost customer satisfaction, position you as a leader in your field, help you enter foreign markets, and help you achieve various other goals. To accomplish this, use the Hoshin Kanri tool accurately, follow the seven steps outlined above, heed advice from Lectera experts, and deeply understand the industry your business is developing.

Conclusion

Hoshin Kanri is an excellent goal-setting technique and a tool that helps a company quickly adapt to market changes, implement plans faster, and achieve success. Hoshin Kanri and the X-matrix make it easier to measure results using clear KPIs, making the management process purposeful and competent. Likewise, Hoshin Kanri ensures consistency in team roles and responsibilities, effective communication, and increased productivity. The technique is also cost-effective and easy to use. So, even if your business is thriving, using the Hoshin Kanri technique will still be beneficial!