The practice of Hoshin Kanri, also called Policy Deployment or Strategy deployment, is about the alignment of individual goals and performance measurement with the company goals and mission. It is rare to find a management practice that has the potential for so much impact at the strategic, tactical, and operational levels of an organization, but Hoshin Kanri does. In fact, some experts believe that Hoshin Kanri is the single most important responsibility of senior management.
Every organization needs to determine and communicate its mission. The mission is a description of what the organization is working toward. For example, Google’s mission is, “To organize the world’s information and make it universally accessible and useful.” A mission statement is intended to clarify the 'what' and 'who' of a company. It is supported by a vision which adds the 'why' and 'how' as well. In Google’s case, “to provide access to the world’s information in one click.”
Crafting, agreeing upon, and sharing the company vision is one of the foundations of structured improvement. The vision forms the basis for the strategy which maps out how the organization will achieve the desired state of the vision. For example, Google might have a strategy of improving its algorithm to better match results with the searcher’s intent.
To assess the organization’s advancement toward the strategy, goals are defined. They maybe goals for cost reduction, revenue, patient satisfaction, or any other indicator that is relevant to the business. Google might set a goal of increasing the number of times the first organic result is selected by the user by 15%.
Once the company goals are established, they are cascaded into department-specific key performance indicators. These KPIs measure whether or not the goals are active, and therefore represent the progress of continuous improvement toward the vision and mission.
When the strategy is shared, and ideally institutionalized using strategy management software, it should include the company vision (ideal future state), the current state (highlighting the potential for improvement), the KPIs that will be used to measure progress, and performance target goals.
When you get to the tactical level of Hoshin Kanri, the KPIs become control indicators for every department and person, all of which roll up to the overall company goals. It is typical for these control indicators to fall into the categories of quality, delivery, and reliability. What those terms mean vary by industry, but most KPIs fall into one of those buckets. The best practice is to visualize these KPIs in your improvement management system and discuss them on a frequent basis, as often as daily.
The legacy way of measuring performance was to inspect the end result of a process. It might be a widget off the assembly line or a piece of code, but a more effective approach is to focus on process behavior, rather than outputs alone. Doing so means bringing the KPIs down to even another level, with behavioral indicators. The theory is that employee performance is the direct result of employee behavior. Assessing performance against Standard Work gives you a great deal of insight into the expected results of the process and allows for process improvement before a sub-standard output is produced. It is critical, therefore that the Standard Work describes not only what should be done as steps in the process, but also how those steps should be performed.
Operational management is a two-way street. It is important for leaders using the Hoshin Kanri approach to check in with employees and make sure that they understand the strategy and vision and their role in achieving it. It is also helpful to get a sense of whether employees feel supported by asking whether they feel empowered and encouraged to make the improvements necessary to achieve their individual and team goals.
We hear many leaders talk about Hoshin Kanri as defining and driving the organization toward “true north.” We think that’s a pretty good analogy. When Hoshin Kanri is successfully implemented, all improvement work within the organization is aligned to contribute to the goals, strategy, vision, and mission. Indicators are used to constantly monitor progress and keep the results of each process constantly under control. It’s hard to think of a management practice that could be more important than that.