Guide: Hoshin Kanri
Hoshin Kanri, a cornerstone of Japanese management philosophy, is a strategic planning process integral to aligning an organization’s long-term goals with actionable strategies and daily activities. Developed in post-World War II Japan by innovative companies like Toyota, it combines the concepts of direction setting (Hoshin) and management (Kanri).
This method is not merely about setting goals but ensuring cohesive movement towards these objectives across the organization. It involves everyone, from top-level management to front-line employees, in the planning and execution process, making it a unique and inclusive approach to achieving strategic success.
Table of Contents
What is Hoshin Kanri?
Hoshin Kanri is a key part of Japanese management philosophy and is a strategic planning process that helps organizations align long-term objectives with actionable execution of strategies and day-to-day activities. The Hoshin Kanri Method was developed in Japan during the post-World War II period by companies such as Toyota known for their innovative management practices (including the Toyota Production System).
The Term Hoshin Kanri is quite telling of its intention. Hoshin means setting a direction or objective, whereas Kanri refers to managing or controlling this direction. Hoshin Kanri is about determining the right path (strategic objectives) and ensuring that the entire organization moves cohesively towards these goals.
What are the Core Principles of Hoshin Kanri?
Hoshin Kanri begins with the top-level management, establishing clear, long-term objectives for the organization. These are usually ambitious objectives aiming to position the company for significant growth or change.
These broad objectives are then broken down into more specific, achievable goals (SMART Goals). This step involves translating the high-level vision into actionable items that can be understood and implemented at every level of the organization.
The next step is breaking this down further, integrating these objectives into daily operations, and having daily activities move towards the goals and strategic vision.
All of this makes the Hoshin Kanri a strategic actionable plan that is actively driving day-to-day activities and not just a theoretical document.
Another key principle of Hoshin Kanri is participative management. Unlike typical top-down management approaches, Hoshin Kanri actively involves people at all levels of the organization. This participative approach ensures that employees have a full understanding of the strategic objectives and their role in achieving them. By involving employees in the planning process, the Hoshin Kanri fosters a sense of ownership over the goals and strategies. This approach increases engagement and leads to higher motivation and commitment to achieving the goals and objectives.
Effective communication channels are established to allow ideas and feedback to flow both upwards and downward within the organization. This ensures strategies are grounded in practical reality and benefit from the insights of those at the operational level.
Due to this core principle, we tend to publish these documents clearly and in full view of the business so that they can be seen by all employees and understand how what they are doing contributes towards the overall business vision.
Regular Review and Adaption
The Hoshin Kanri emphasizes regular reviews and monitoring of progress towards strategic goals. Hoshin Kanris are not a one-time annual review but an ongoing review process (usually at least monthly).
The process is designed to be flexible, allowing for adjustments in response to changing internal and external conditions. This adaptability is important to maintaining a dynamic business environment. Regular reviews are also opportunities for organizations to learn and gain insights from successes and failures, which can be used to improve future planning and execution.
The Hoshin Kanri Process
Step 1: Establishing Vision and Strategic Objectives
The first step in the Hoshin Kanri process requires the top management team to establish a clear vision and strategic objectives for the organization. This vision sets the direction for the business and defines what the long-term goals are. The process of setting these objectives should involve conducting a thorough analysis of market strengths, opportunities, and threats. A method often used for this is called a SWOT which requires identifying the business’s strengths, weaknesses, opportunities, and threats.
This first step is key, as it sets the foundation and direction for all the steps to follow and will be the guide that all day-to-day activities ultimately work towards.
Step 2: Developing Breakthrough Objectives
Following setting the vision and the strategic objectives of the business, the next step is to set the objectives for the next year, often referred to as breakthrough objectives. Breakthrough objectives are significant goals that will have a considerable impact on the organization’s progress towards its long-term vision.
Breakthrough objectives should be challenging yet achievable, pushing the organization to make significant leaps in development towards its long-term goals.
Step 3: Cascading Goals
Once the breakthrough objectives have been set, these goals are cascaded down through various levels within the organization. This step involves turning high-level objectives into specific and actionable goals for each department and team. The aim is to break the overall goals into departmental activities towards the goals and align the efforts and goals of each part of the organization with the overall strategic direction.
This cascading process ensures that each department and team understands how their work will contribute to the overall vision and strategy of the business.
Step 4: Implementation
Following this the next step is implementation. This involves the creation of detailed action plans for each of the goals. These action plans set out the specific steps that need to be taken, the resources required, timelines for completion, and the responsibilities of each team and individual.
We suggest mapping out on a document similar to an A3, the current state, the target state, and the actions to get there. These are useful, concise documents for reviewing progress and keeping track of actions.
Step 5: Regular Review and Adjustment
Step 6: Annual Review and Adjustment
The final step in the Hoshin Kanri process is to have a full annual review. At the end of each year, a comprehensive review is conducted to assess how well the goals were achieved and to understand the reasons behind the successes and failures of the year’s objectives.
This review meeting is a learning opportunity, providing insight that inputs into the planning cycle for the next year. This ensures the business is continuously improving its planning and execution capabilities.
Tools Used in Hoshin Kanri
The X-Matrix is a central tool in the Hoshin Kanri process, functioning as a visual and strategic planning document. Its primary function is to align the organization’s strategic objectives with specific tactics, metrics, and responsible parties. This tool is key in illustrating how different components of an organization contribute towards achieving strategic goals. The X-Matrix is structured to provide a clear view of the relationships between long-term goals, annual objectives, improvement priorities, and the roles of responsible individuals or teams. It ensures that every level of the organization can see how their activities and targets fit into the broader strategic picture, enhancing coherence and focus.
The Catchball Process is a dynamic, iterative dialogue that occurs across various levels of an organization. It is similar to a game of catch, where ideas and feedback are ‘thrown’ back and forth between employees, managers, and leaders. This process is important for fostering alignment and commitment to the organizational goals and strategies.
It encourages open communication and collaboration, ensuring that strategies are not only top-down directives but are shaped and refined by input from all levels of the organization. The Catchball Process also helps in identifying potential issues, generating buy-in, and ensuring that strategies are practical and grounded in the reality of day-to-day operations.
Hoshin Kanri, with its structured approach and inclusive methodology, represents a comprehensive system for strategic management and execution. It transcends traditional planning by integrating long-term visions with day-to-day operations, ensuring that every part of the organization works in harmony towards common goals.
The use of tools like the X-Matrix and the Catchball Process, coupled with regular reviews and adaptations, allows for a dynamic and responsive strategy execution. Hoshin Kanri not only ensures organizational alignment and focus but also fosters a culture of continuous improvement, adaptability, and employee engagement. In essence, it provides a roadmap for organizations to navigate the complexities of modern business landscapes while staying true to their long-term visions.
- Jolayemi, J.K., 2008. Hoshin kanri and hoshin process: A review and literature survey. Total Quality Management, 19(3), pp.295-320.
- Tennant, C. and Roberts, P., 2001. Hoshin Kanri: implementing the catchball process. Long Range Planning, 34(3), pp.287-308.
A: Hoshin Kanri is a strategic planning and management methodology originally developed in Japan. It focuses on aligning an organization’s strategic goals with the actions and projects carried out at all levels of the organization.
A: Hoshin Kanri works by first establishing the long-term vision and strategic goals of an organization. These goals are then broken down into annual objectives, which are further cascaded down to departments and individuals. Hoshin Kanri involves a process of communication, goal deployment, performance tracking, and continuous improvement.
A: Implementing Hoshin Kanri can bring several benefits to an organization, including:
- Alignment: Hoshin Kanri helps align the entire organization towards a common set of goals and objectives.
- Focus: It enables organizations to prioritize and focus their efforts on key strategic initiatives.
- Accountability: Hoshin Kanri promotes individual and departmental accountability for achieving goals.
- Cross-functional collaboration: It encourages collaboration and coordination across different departments and teams.
- Continuous improvement: Hoshin Kanri provides a structured approach to ongoing learning, reflection, and improvement.
- Performance measurement: It establishes a system for monitoring and measuring progress towards strategic goals.
A: The main components of Hoshin Kanri include:
- Vision and strategic goals: The organization’s long-term vision and strategic goals are established.
- Policy deployment: The strategic goals are cascaded down to different levels of the organization, ensuring alignment and clarity.
- Annual objectives: Annual objectives are set to support the achievement of strategic goals.
- Action plans: Action plans are developed to outline the specific initiatives and projects required to achieve the objectives.
- Performance measurement: A system for measuring and tracking progress is established to monitor performance against targets.
- Review and improvement: Regular reviews are conducted to evaluate progress, identify issues, and make adjustments for continuous improvement.
A: Hoshin Kanri differs from traditional strategic planning methods in several ways:
- Bottom-up approach: Hoshin Kanri involves a cascading process, where goals and objectives are developed collaboratively at all levels of the organization, ensuring alignment and buy-in.
- Continuous improvement: Hoshin Kanri emphasizes continuous learning, reflection, and improvement, rather than a one-time planning exercise.
- Action-oriented: It focuses on actionable plans and initiatives to drive progress towards strategic goals, rather than solely relying on high-level strategies.
- Performance measurement: Hoshin Kanri establishes a system for measuring and monitoring performance against targets, providing feedback for adjustment and improvement.
- Cross-functional collaboration: Hoshin Kanri promotes collaboration and coordination across different departments and teams to achieve common objectives.
A: The duration of implementing Hoshin Kanri can vary depending on the size and complexity of the organization, as well as the readiness of its employees to embrace the methodology. Generally, it can take several months to a year or more to fully implement Hoshin Kanri, including the initial training, goal setting, deployment, and refinement phases.
A: Yes, Hoshin Kanri can be applied in a wide range of industries and organizations, including manufacturing, healthcare, education, government, and service sectors. It is a versatile methodology that can be adapted to suit the specific needs and context of different organizations.
A: Yes, implementing Hoshin Kanri can come with certain challenges, including:
- Cultural shift: Adopting Hoshin Kanri may require a cultural shift within the organization, as it emphasizes collaboration, accountability, and continuous improvement. Resistance to change can pose a challenge.
- Goal alignment: Ensuring alignment of goals and objectives across different levels and departments can be complex, requiring effective communication and coordination.
- Performance measurement: Establishing a robust performance measurement system and collecting relevant data for tracking progress can be a challenge for some organizations.
- Sustaining momentum: Maintaining focus and momentum on strategic goals over time may require ongoing effort and reinforcement to avoid drifting back into old habits and routines.
A: Yes, there are training programs and certifications available for Hoshin Kanri. Many consulting firms and professional organizations offer Hoshin Kanri training workshops and courses. These programs aim to provide participants with the knowledge and skills to effectively implement and manage Hoshin Kanri within their organizations.
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