Hoshin Kanri
Direction Management is Hoshin Kanri
Hoshin Kanri is a Japanese word, that means ‘direction management’.
It is also called ‘policy deployment’, though it does not do good justice with the true spirit of Hoshin Kanri. It is interesting to note that there are several Quality related tools and techniques that have originated from Japan.
Hoshin Kanri in its most simplest form is a 'strategic planning' tool.
Interestingly, most of the medium and big companies around the world are already doing some kind of strategic planning, but they may not be using the word Hoshin Kanri. But as long as they serve the same purpose, it is equally fine.
On the other hand, as we know that in our world the new fads, concepts and styles catch on more easily as they provide new tastes and new stylistic terms to use.
Besides the point, I think Hoshin Kanri is one of the most simplest and one of the most effective methods that every company; small, medium and large should use it and apply it to get the best results.
Background of Hoshin Kanri
It is normally understood that Hoshin Kanri was evolved in Bridgestone Tyre company sometimes back in 1965. They actually published one report which listed the names of the Deming Quality Award Prize winners during that year.
That report also analyzed about what kind of planning techniques those winner companies used. And the report mentioned the term ‘Hoshin Kanri’ for such management planning techniques, which were no more than just good strategic planning habits and the company’s commitment and clear focus to meet those defined goals.
That was considered the start of the term ‘Hoshin Kanri’ in the corporate sector, then onwards.
Sometimes, the catchy words get picked up fast, though the winners of those companies may not have used that word but still had applied the Hoshin Kanri or strategic planning techniques.
How To Apply Hoshin Kanri
There are 7 steps or stages:
1. Develop an Organizational Vision
2. Develop Breakthrough Objectives (3-5 years)
3. Develop Annual Objectives
4. Deploy Annual Objectives (in all departments)
5. Implement Annual Objectives
6. Conduct a regular Monthly Review
7. Conduct an Annual Review
As you may observe, all the 7 steps are mostly based on common sense approach, but since common sense is quite uncommon, that is the reason, still most of the business sectors are still unaware of it and don’t use it to their advantage.
We will now go further in detail to understand the 7 steps of the Hoshin Kanri process…
1 - Develop an Organization Vision
Normally, there are two kinds of visions i.e. personal vision about your life, and the organizational vision, where you see the end goal of the organization in the long run.
Sometimes, it may also happen that in few small companies, where the founder starts the company with his or her own passion and the personal and organizational vision may overlap at times.
But largely, there remains some difference between the personal and organizational visions. As an example, you may define your personal vision as to earn 10 million dollars in 5 years and buy a country side ranch to live in peace and harmony.
On the other hand, you may have a company’s vision to make the company as the market leader in printing services in 5 years’ time.
However, the owner of the printing press may make the company successful that eventually can lead to achieving the personal vision as well.
But for the Hoshin Kanri, we will stick to the company’s vision first here.
Working with a goal of making the company as the market leader in printing services in 5 years may appear to be lofty goal if there are already hundreds of leading printing companies in the region or it may depend. Anyways, you have to start from the company’s vision, no matter what.
2 - Develop Breakthrough Objectives (3-5 years)
As we get clear what the company vision is where it wants to reach in 5 years, it is now easier to formulate some tangible objectives for 3 – 5 years’ period, that will provide us the direction. In this example, let’s assume that there are 3 tangible breakthrough objectives...
1. Increase the client base by 100% (double the clients) – 5 years’ time
2. Reduce the costs by 50% (make if half) in 5 years
3. Increase the customer satisfaction by another 50%
Normally, there are two kinds of goals, the ‘end goals’ and the ‘performance goals’.
At this stage, we are only talking about the ‘end goals’ what we want to see in the long term- at the end of 5 years’ time. The vision is defined as where you want to reach after 5 years, you should be able to envision it mentally and also to put it on paper. And then you should have the system to remind you every day about your end goals as well. This is where Hoshin Kanri comes to your help not only to remind you but to implement and achieve the stated vision.
Now let’s move further down to the 3rd step
3 - Develop Annual Objectives (1 year)
Now we know what company wants to achieve, lets further break it up in smaller but related objectives:
1. Develop the aggressive marketing and promotion to target the country wide prospects to acquire 30% more clients by December.
2. Analyze business processes to remove the non-value added steps (wastes) from the processes to reduce process cost by 20% by December.
3. Engage with clients more and obtain regular feedback to assess the increase of 20% by December.
These annual objectives as you may observe basically address the overall big strategic objectives.
These annual objectives are springing out from the long term (5 years) end goals and vision. These annual objectives have become a bit more specific to address and execute.
At this stage, you can also take the help of SMART objectives. The acronym SMART stands for Specific, Measurable, Attainable, Relevant and Time Bound.
It means that you don’t have to get into something which may sound great and charismatic but at the same time, may not be practical and realistic to achieve it. That is the philosophy behind the SMART objectives.
The moment you start thinking in SMART way, you become cautious and practical simultaneously. Because you will only select those objectives which you truly and objectively feel can be achieved. It will also depend upon the available resources at your disposal, in terms of budgets, human resources, machines, material and management support. If you are lacking in any of the resources, you cannot commit to big objectives. That is the bottom line of SMART objectives.
Therefore, formulate the annual objectives carefully, since you need to achieve them, otherwise it will become counterproductive for you and the whole department.
4 - Deploy the Annual Objectives
It is not only about developing the annual objectives, now these objectives have to be deployed effectively. That means these objectives have to be transferred to the respective departments and process owners to own it and be accountable for it.
The proper communications plan has to be developed at this stage to make them understand about the objectives properly. And if required, some training sessions should also be delivered.
‘Developing’ and ‘Deploying’ are two separate things and stages.
Most of the time, it is misunderstood and easily overlooked, that is the reason, Hoshin Kanri has made it two separate steps or stages to make others understand its importance.
When management sits in the conference room and brainstorms, they end up in developing the objectives based on the past company’s progress and metrics. Lots of past data may have been looked into to understand about the company’s performance and potential for the future. But when these sessions are over, the management comes out with a document that mentions the annual objectives. This is one part, now this ‘end objectives’ document can continue to stay in the conference room for the whole year, unless it is deployed well in the entire organization with some good planning.
Deployment stage is even more critical than the development stage. All the respective departmental heads are called in sessions to make them understand their part in the objectives, as they need to own those objectives and they need to deliver on them. Unless they don’t own it or if they find them impractical, given the resources, then how the management can expect to get the results.
That is why the deployment stage of Hoshin Planning perfectly makes good sense, in order to proceed further on a solid foundation.
5 - Implement The Annual Objectives
This stage is the tactical and operational stage, where after understanding the nature of the objectives and the given targets, the respective managers have to devise the strategies, discuss it with the bosses and seek the required approval before its execution.
At this stage of Hoshin Kanri, the rubber hits the road.
All the available resources are taken into account and if there is anything lacking, immediate approvals are required from the management to get the required resources, whether budgets, people or machinery. This is the action time, all managers have to be on their feet and get going, since they have owned their objectives and want to produce the results.
6 - Monthly Review
At this stage, Hoshin Kanri planning now enters into the bottom-up approach, where the feedback loops starts working upwards.
The objectives which were agreed upon and approved have to be reported back with its status whether achieved, lagged or unachieved.
This monthly review time apparently is quite a small window, but that is exactly the reason that the progress status has to be reported back frequently (monthly). This way, it will give enough time to the process owners as well as the management to make some course corrections if required.
7 - Annual Review
There may have been many lags or failures month by month, but the concept of having the monthly assessment is based on the reason that the yearly status and consolidated dashboard should be well prepared by the departmental heads and to be sent to the higher management.
As you may recall, this consolidated annual status will now show...
• How much new clients acquired
• How much savings through improved efficiencies achieved?
• What is the level of client satisfaction in that year?
This way, we are getting closer to what was initially devised at the strategic level and then systematically trickled down to the front line staff.
The Role of People
It is also important to note that every system, philosophy and methodology has to be implemented by the people of the organization. Hoshin Kanri recognizes this aspect very well, and aims to develop a two-way loop for the communication between the upper management and front line staff.
Top- down and bottom-up flow is a part of Hoshin Kanri. It is also depicted in the concept Catchball system. With this help, the communication is given a free reign within the company, even at the time of developing the strategic goals and annual goals, they are first floated around to bounce off ideas and get the feedback from the staff even from the front line people.
The strategic goals and annual goals also go through the stages to further fine tune. The major advantages of such catchall communication style is that everyone gets involved in the strategic planning and they feel elevated and it gives them a feeling of becoming a part of the whole planning process instead of just giving the objectives to follow and report back.
The communication feedback loop process is inbuilt in the Hoshin Kanri system. Because, it emphasizes that nothing can succeed if all the stakeholders are not involved in the process.
Summing Up
Hoshin Kanri is a very effective system if taken seriously and implemented in its true spirit. As you may have observed, it does not include any technical or statistical tools like in Six Sigma which requires specialized expertise.
On the other hand, Hoshin Kanri is a thinking system based on logic and common sense. It can provide you an enormous power if it is implemented across the entire organization. It can very easily keep the organization on the right track with commitment and focus and to achieve the desired results.
You can also read another article on Hoshin Kanri here
Without such structured approach like Hoshin Kanri, mostly the company can easily get side tracked or lose the sight of the ‘end goals’ and ‘performance objectives’. Hoshin Kanri planning works beautifully to keep everyone on the road to success.
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