Hoshin Kanri or Hoshin Planning

Business growth is fueled by a vision. There must be a definition of success for any business and that will depend on what their vision for the company is. In pursuit of the company’s vision, companies lay out goals and objectives in regular intervals across different organizational levels. Senior management would outline the high-level and long-term goals. These goals become the compass of the different departments in their own goals and objectives planning to. Their objectives and activities should roll up to and support the company’s overall goals. For this, Hoshin Kanri can come in handy.

Having high-level and long-term goals provide direction and organization for any company. Without this, teams would not know whether they are working towards the right targets based on management’s expectation, strategies, and goals. Hoshin Kanri or Hoshin Planning is a popular Lean management method that can help businesses organize their vision, goals, and objectives planning and bring their teams right on track. 

What is the Hoshin Kanri Method?

Dr. Yoki Akao was a renowned Japanese planning specialist who developed the Hoshin Kanri method. The term hoshin means “direction” or “compass needle” while kanri means “control” or “management.” The Hoshin Kanri method aims to provide direction for organizations to control and manage their business. With this, management and employees stay aligned and work towards the same goals and objectives.This method is also called as strategy deployment or policy deployment in some organizations. 

The 7 Steps of Hoshin Planning

While doing Hoshin Planning is not exactly a walk in the park, the steps are pretty straightforward. Here we outline the 7 steps to implement Hoshin Planning.

7 steps of Hoshin Planning | Kanban Zone

Step 1: Establish the Organization’s Vision

You must establish your organization’s mission, vision, and values before conducting a Hoshin Planning session as this will guide you in assessing where your business currently stands and how it matches up against your desired breakthrough goals. Changes to your company’s desired future state should be reflected in your company vision.

Step 2: Develop the Breakthrough Objectives

Breakthrough objectives are big, long-term goals that the company wants to achieve to push for positive business growth. These breakthrough objectives typically require a period of 3 to 5 years to complete. Some breakthrough objectives include new business models and ventures, new product development initiatives, and long-term revenue growth targets. These objectives need to be specific, measurable, and time-bound. These breakthrough objectives represent what and where you want your business to be in the next 3 to 5 years. This step is usually done by the C-level and senior management team members.

Step 3: Define Annual Objectives

Knowing your breakthrough objectives, it’s now time to plan towards achieving them. Defining your annual objectives allow you to break down the work that will go into achieving your 3 to 5-year business goals. This step in Hoshin Planning is done between senior management and managers who work more closely with the operational or functional groups. In this step, it’s crucial to establish buy-in, clarity, and alignment with operations and functional managers. This is because they are the ones who will work with their teams on the activities that need to be implemented to achieve your annual goals and objectives. 

A Lean technique called catchball can be used for this step. The idea is that senior leaders and managers toss the objectives to lower-level managers who report to them for review and assessment. The lower-level managers then toss it back along with their insights and inputs. The goal is to build consensus and buy-in on the objectives. The catchball process continues until a consensus is reached. It can also occur at different levels in the organization as the objectives cascade from top-management to its employees. 

Step 4: Deploy Annual Objectives

Deploying your annual objectives requires identifying your top-level improvement priorities and projects and assigning KPIs and metrics to improve and measure. Similar to defining actual objectives, deploying annual objectives should be done with the team who will execute it. Hoshin Planning ensures that everyone is aligned and are constantly working towards the same objectives at all levels in the organization. The top-level improvement priorities can be further broken down to lower-level projects and activities until you come to a point where the initiative covers the actual development of the product or service. Hoshin planning allows you to align your objectives, projects, and metrics as you cascade them across the organization. 

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Step 5: Execute Annual Objectives

It’s time to execute your annual objectives using your company’s choice of problem-solving and project management approach. There are various methodologies to choose from. You can do the PDCA (Plan-Do-Check-Act) cycle, DMAIC, Portfolio Kanban, A3, Kaizen bursts and other problem-solving techniques. The important thing here is to gain insight as to the progress accomplished by the specific teams towards achieving the objectives. The good thing about Hoshin Planning is it can support any execution approach you choose.

Step 6: Conduct Monthly Reviews

Monthly reviews serve as a pit stop for teams, departments, and the company as a whole reflect and assess whether the past month’s work is aligned towards meeting your target goals and objectives. This can also be used for teams to course-correct and adjust their activities and plans should the review find something lacking or needs updating. Bottlenecks should also be discussed here although I would recommend teams not to wait for a monthly review to discuss important issues. Constant collaboration among team members and managers should be established to ensure no time is wasted on waiting and that necessary changes are implemented as soon as possible. 

Step 7: Perform Annual Reviews

After a year of hard work, it’s time for the company to reflect and assess its progress. While the monthly reviews serve as checkpoints for annual objectives, the annual reviews serve as checkpoints for your breakthrough objectives. In this step, you need to assess whether the work done in the previous year is aligned towards meeting your targets. If there are necessary adjustments, take note of them and factor them in on the next round of Hoshin Planning. 

How to Use the Hoshin Planning Matrix or X Matrix

The Hoshin Planning Matrix serves as a guide for those who would like to do the Hoshin Kanri strategy. It’s called the X Matrix because of the 4 quadrants that make up the planning process. This X Matrix is what teams will use when implementing the 7 steps in Hoshin Planning. 

Here is a sample Hoshin Planning Matrix from this LinkedIn article.

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