Hoshin Kanri is a powerful strategic planning tool because it helps align the organization top to bottom around breakthrough objectives. It lets leaders take the long view with a three to five-year plan, but addresses the need to have short-term goals as well. Our clients that use the approach find that it makes decision making easier and speeds the way to consensus. Here are a few best practices that they have uncovered along the way.
Think Long and Hard About “True North”
Hoshin Kanri is loosely translated from Japanese as "direction setting" and "management." It is a wonderfully simple concept of deciding where you want to be and then making the tactical decisions that get you there. People who use the approach often refer to this is managing toward True North. Because Hoshin planning involves goals that are several years away, it is essential to make the right decision about what True North represents. If you end up changing it every year, the benefits of Hoshin Kanri (also known as Policy Deployment) are lost.
Select Breakthrough Goals that Will Change the Game
If your goal is to stay steady with only incrementally better results than last year, you might not need Hoshin planning. If, however, you want to make significant changes that will widely impact the organization, the approach will most certainly help. Examples of breakthrough objectives include entering new markets, launching new products, making an acquisition, dramatically growing revenue through increased investment, and the like. Your objectives should require the organization to stretch but should be realistic enough to be achieved with an outstanding execution of the plan.
Involve Everyone in Hoshin Planning
The strategic goals may be determined by management, but as many people as possible, at every level, should be involved in crafting the plan to achieve them. This is important for several reasons. For one thing, people at the ground level may have useful insight into what will be required to achieve the goals. They may see obstacles or opportunities that management has overlooked. In addition, when people are involved in creating the plan, they become emotionally invested in the outcome. They will be more likely to take ownership of their potential to contribute to success.
Cascade Goals Down the Organization
Once the breakthrough objectives are determined, the next step is to break down what needs to happen to the department, team, and individual level. For example, if ACME Corp is going to introduce product X in 2021, what does the R & D team need to accomplish by the end of 2018? How will Bob’s performance toward that goal be measured? This level of detail isn’t easy to come up with, but the effort will pay off in spades because everyone will be aligned and working toward the same end. Ambiguity is the deadly enemy of strategy so it pays to be specific and define the key performance indicators that will be used to measure success.
Check in Often
Hoshin Kanri isn’t like a slow cooker. You can’t set it and forget it. Instead, set up checkpoints at regular intervals to measure how the organization and each component, down to the individual contributor, is tracking related to the goals. Take the opportunity to identify any roadblocks or changing conditions that need to be addressed. Changes in market conditions, the competitive landscape, economics, or technology may all impact your plan. Regular checkpoints give you the opportunity to make necessary adjustments.
One of the biggest problems with traditional strategic planning is that the product of the planning effort was a document that may or may not have been read and may or may not be referred to from time to time. It’s no wonder that so often the long-term strategy was regularly ignored. Implementing strategic planning software that supports continuous improvement helps avoid the problem by creating a platform where people interact with the strategy every day. It provides a unified view of the health of the organization in terms of achieving the organization’s objectives. You might think of it as a GPS on your trip to True North. The best solutions provide for visual management, allowing leaders to gain instant insight into how each part of the organization is progressing and immediately recognize any roadblocks.
If you’ve decided to make 2018 the year you embrace Hoshin Kanri, we think you’ve made an excellent decision. Hopefully, these tips will help you get off to a fabulous start.