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.

Hoshin Kanri is a management technique designed to steer an organization towards its most important long-term goals without sacrificing the need to practice continuous improvement. If you are unfamiliar with the approach, we have some detailed information that will be useful. (Click here, here, and here.)

In short, the words "Hoshin Kanri" are usually interpreted as direction (setting) management. Much like a compass pointed toward true north, the Hoshin approach to strategic planning defines where the organization is headed. The core idea is that the best way to obtain the desired result is to make sure every person in the organization knows the long-term vision and that they are all working a defined plan to make it happen. Key processes must be monitored to ensure that the day-to-day operation of the organization continues to improve, so it must be noted that Hoshin planning is about both direction and control.

If you are wondering exactly how Hoshin Kanri can help, this blog is for you. We’ve been lucky enough to work with organizations of all types that use the Hoshin way of strategy deployment to successfully overcome some of the most difficult (and common) barriers to operational alignment and daily improvement. Here are the ones we run into most often.

If you have implemented - or are planning to implement - strategy deployment software, let me take a minute to congratulate you. Too many organizations leave what is arguably the most important function of the organization without support. Pat yourself on the back for recognizing that if software helps you manage everything from your finances to your customer relationships, it can help manage the strategic direction of the company as well. That said, not all strategy deployment software implementations are equally effective. We’ve seen leaders with their hearts in the right place make tactical mistakes that diminish - or even eliminate - the value of strategy deployment software. Don’t let these missteps happen to you.

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.

We are fortunate enough to get to spend a lot of time chatting with customers and other organizations that are interested in continuous improvement about how they approach the need for constant positive change.

Many techniques that are used in the Lean and Six Sigma management approaches come up during these conversations, but one which seems to be less understood than many others is Hoshin Kanri.

Hoshin Kanri, also known as "strategy deployment," is a formal Lean technique used to identify an organization’s breakthrough objectives and create a defined three to five-year plan for achieving them. The process is associated with identifying the organization’s true north and aligning the goals and objectives of each employee with the strategic plan.

The typical process involves 6 steps:

• Define "true north" that will stay fairly consistent over time
• Identify significant business issues that need to be solved over a 3 to 5-year timeline
• Establish specific measurable objectives to resolve these issues
• Define key performance indicators (KPIs) for every level of the organization
• Develop strategies, projects, and tactics to support the achievement of these goals
• Review progress on a monthly and annual basis
  
  

Unlike other approaches to planning, Hoshin Kanri is not done from the top-down. People at every level of the organization are involved in setting the priorities and laying out the plan for success. A technique called Catchball, where ideas are passed from one level of the hierarchy to another is commonly used during Hoshin planning.

Hoshin Kanri has a number of advantages over other strategic planning methodologies. Here are the chief reasons it is so popular.

If you’ve never heard of an “obeya,” you’ll want to check out our VP of Improvement & Innovation Mark Graban interviewing Dr. Michael Johnston, Vice President Corporate Operations at Carolinas Healthcare System on the KaiNexus podcast.

As Johnston explained, Carolinas HealthCare System has been on an improvement journey for about eight to nine years, beginning with hiring consultants for some traditional project work before deciding to create its own internal continuous improvement department.

Johnston came to Carolinas HealthCare System about four and a half years ago, and soon after was asked to take over that continuous improvement department, which is called the Performance Excellence Center (PEC). At that time he noticed the department was divided into separate functions - including projects, six-sigma type work, traditional Rapid Improvement Events (RIE's), and Kaizen events.

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I like to think about Hoshin Kanri, also known as strategy deployment, as the ability of an organization to walk and chew gum at the same time. By that, I mean that organizations need to focus on strategic, long-term, breakthrough objectives while executing the day-to-day activities that keep the business running. Incremental process improvement needs to occur within the broader context of game changing transformation. That’s not easy.

The practice of Hoshin Kanri arose when Japanese auto makers needed to do exactly that. Hoshin means "compass needle" or "direction," and Kanri means "management" or "control." It’s a brilliantly simple idea. Management needs to keep constant control over the direction in which the organization is moving. It is often described as defining and moving toward “true north.”

But how?

Here are the five guiding principles.

Hoshin Kanri is a Lean management technique for getting strategy, tactics, and improvement efforts in sync across the entire organization. It is translated as “strategy deployment” or “management compass.” The goal is to ensure that every individual from the front-line team to the C-suite understands the organization’s most important goals and works to achieve them through continuous improvement work on small projects and major priorities alike. The Hoshin Kanri methodology helps everyone keep their eye on the long-term strategic objectives, while still reaching short-term goals and tactically managing the day-to-day needs of the organization.

Communication and organization are the keys to the success of Hoshin Kanri because managing long-term strategy, short-term goals, and daily improvement activities can be a huge challenge, especially if you have many people involved in the effort. For years, organizations have relied on tools such as complicated spreadsheets, email threads, file sharing systems, and even paper boards to track and manage the strategy, but these passive systems often fail to provide the support necessary to make lasting progress. They are time-consuming, rarely kept up-to-date, and ineffective at driving activity.

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Organizations that have been successful in their Hoshin Kanri efforts have realized that purpose built improvement software can make all the difference.

Speculative fiction and horror writer, Ray Bradbury, was one of the most celebrated 20^th and 21 ^st century American writers. He is best known for works such as Fahrenheit 451, The Martian Chronicles, The Illustrated Man, and I Sing the Body Electric. As someone in the business of conjuring up visions of what’s to come, he had an interesting take on how to accurately foretell the future.

“People ask me to predict the future, when all I want to do is prevent it…. Predicting the future is much too easy anyway. You look at the people around you, the street you stand on, the visible air you breathe, and predict more of the same.”  

In other words, keep doing what you’re doing and you’re going to get what you are getting. Few would argue that logic, but unfortunately, this idea is often ignored when it comes to strategic business planning. Executives huddle in a room, analyze budgets, set revenue goals, and predict great success without fundamentally changing the conditions that led to the business results they are experiencing today. A year later, or a quarter later, everyone wonders why nothing has changed.

Bradbury finished his quote about predicting the future with, “To hell with more, I want better.” Businesses should too and Hoshin Kanri is one way to change the future by building it.

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