Policy deployment, known in Lean circles as Hoshin Kanri or Strategy Deployment, is a technique for ensuring that an organization's strategic goals and objectives drive activities at every level. The goal is to provide consistent direction and clear communications so that every employee pulls in the same direction (toward "True North") simultaneously. The strategic planning process aims to ensure that the corporate objectives (Strategy), management plans (Tactics), and the tasks accomplished by all employees (Operations) are in sync with each other.
There are four phases of strategy deployment.
Phase 1 – Create the Strategic Plan
Strategy deployment begins with the creation of the plan. It is crafted to address several critical long-range goals of the organization. Many teams focus on game-changing, breakthrough objectives that the organization can achieve in three to five years. It also includes the annual goals that must be completed in the current or upcoming year to set the stage for long-term success.
Some things to keep in mind when crafting the strategy are:
The strategy shouldn't be a laundry list of goals. Instead, it should call out three to five breakthrough objectives. Every company has a limited number of resources and energy. By picking just the most important goals, that energy can be focused to ensure that work gets done to address your most pressing concerns, rather than spreading effort across too many goals, thereby making little progress on each. Of course, you can gradually add more goals over time as your improvement culture grows and develops new skills, but getting started at a small and reasonable scale is crucial.
Set Incremental vs. Disruptive Goals
Goals can be incremental and evolutionary, achieved through a series of minor but continuous improvements, or they can be disruptive, dramatic, and revolutionary. Both are valid forms of progress to include in strategy deployment. However, it's important to remember that you must carefully document the steps and the results for both types of change. For incremental improvement, in particular, it can be challenging to see the long-term impact of the work without intentional, thorough documentation.
Seek Broad Input
One of top-level management's most important jobs is to develop a strategic plan. But leadership teams are more likely to achieve the change they seek if they take the time to get consensus on the strategic plan from middle management. By discussing the plan broadly, leaders may obtain helpful information and additional perspectives that result in a better plan. In addition, the opportunity to be part of the planning process helps develop a feeling of ownership and accountability within everyone involved. The Lean technique of Catchball is an excellent addition to the strategy deployment process.
Decide How Progress Will Be Measured
There should be Key Performance Indicators (KPIs) that will allow everyone to track progress for each objective. KPIs can (and should) scale down across the organization so that managers at all levels are tracking and reporting on the metrics that tie their improvements to the organization's strategic goals. Standardizing how you measure and report on KPIs across functions is critical to achieving proper organizational alignment.
Each goal should have someone responsible for it. Of course, they won't do all the work, but they will serve to eliminate roadblocks, communicate progress, and organize the team. Strategy deployment software like KaiNexus makes it possible to track who is doing what, send notifications to keep each team moving forward, and drill down on areas that need extra coaching.
Consider the X-Matrix
An X-Matrix is a visualization of the strategy made up of five sections that map to the strategic plan. The layout of the matrix helps define the relationships between each element. While the strategic initiatives of every organization are different, the structure of the X-matrix is a valuable policy deployment tool regardless of the size or industry of the organization.
The quadrants are:
Breakthrough Objectives (Bottom Quadrant)
The bottom quadrant forms the basis of the strategy. It consists of the critical strategic goals to be achieved in three to five years.
Annual Objectives (Left Quadrant)
Annual objectives are the shorter-term goals necessary to reach the breakthrough objectives. The design of the X-matrix lets leaders connect each annual goal to the breakthrough objective that it supports.
Annual Improvement Opportunities and Priorities (Top Quadrant)
The top quadrant of the matrix contains known opportunities for improvement. These improvement opportunities connect to one of the annual objectives.
Metrics to Measure (Right Quadrant)
After leaders have documented the goals and opportunities for improvement, they then decide how success will be measured. Finally, the key performance indicators (KPIs) that will give everyone insight into progress toward annual goals are defined in the right quadrant.
Teams and Ownership (Far Right Side)
Ownership is an essential component of policy deployment. The far-right section of the X-matrix is used to assign an owner to each measurement, improvement opportunity, and annual objective.
Phase 2 - Develop Tactics
The strategic plan includes the most important policy objectives of the company over the next three to five years. It is up to mid-level managers at a departmental level to determine which tactics will be needed to achieve the objectives laid out by leadership. Here again, Catchball is a continuous improvement technique that helps ensure that there is perfect alignment between all levels of management when it comes to the goals. The approach, in which ideas are "tossed" back and forth between mid-level managers and executives, is an effective way to perfect the KPIs and test assumptions.
Tactics may change as new information is available or conditions change. That's why it is necessary to have progress reviews regularly, at least quarterly, if not monthly, during which results are assessed, and plans are adjusted if necessary. Policy deployment software like KaiNexus makes it possible to keep track of progress toward KPIs across the organization in real-time and measure the impact of change.
Phase 3 – Empower Action
At this stage, team leaders and supervisors work through the operational details and process improvements needed to implement the tactics that have been selected. Each employee should have personal goals aligned with the department and organization-wide goals. Many improvement techniques can be used during this phase, including Kaizen events, Gemba walks, PDSA, and the 5 whys.
Improvement management software is helpful for strategy deployment, particularly during the empowerment phase. Each improvement project is managed, recorded, and easily tracked by all levels of leadership.
Phase 4 – React and Respond to the Unexpected
After the strategic plan is deployed, when goals are aligned, tactics are developed, and work begins, it is essential for leaders to stay tuned in to what is happening on the front lines and to make adjustments to them as needed. New opportunities or threats may arise that require additional goals or new tactics. Often the timeline will need to be adjusted based on unexpected conditions. The policy is not an artifact that should be considered final and filed away. At the same time, it shouldn't change on a whim. If adjustment is needed, careful consideration should be given to the implications.
Policy deployment is the most critical thing that executive leadership executes. It is how the organization determines where it wants to go and draws the map to get there.