Hoshin Planning: Vision-driven Leadership for Breakthrough Improvement

May 4, 2009
Recollections from IW's annual Best Plants conference.

IndustryWeek is just one week removed from its annual IW Best Plants conference, which was held April 27-29 in Nashville. With the economy -- and manufacturing -- struggling like never before, conference attendees gained valuable insights via expert presentations, plant tours, and networking with their peers in both business and social settings. During the next several issues of the Continuous Improvement newsletter, I'm going to share some of the sights and sounds of the conference, beginning with these observations:

Hoshin Planning

What is hoshin planning and how can it help manufacturers improve? It was apparent during the conference that many manufacturers wanted the answers to those questions. More than 100 attendees packed a session led by Wes Waldo of Breakthrough Management Group International, who shared his expertise on the topic of hoshin planning.

At its most basic, hoshin planning is a tool used to create business processes that result in a sustained competitive advantage in quality, delivery, cost and innovation, according to Waldo. The planning process "aligns the major strategy objectives with the specific resources and action plans needed to make them happen," his presentation notes. "Through a back and forth refinement system known as 'catchball,' the entire organization becomes involved in delivering a combination of breakthrough performance and daily management."

Waldo provided an example of a hoshin, which is a Japanese word that translates to compass, or a compass direction. His hoshin example: President John F. Kennedy's goal to put a man on the moon. That goal was a leap over the competition, not a step improvement or a simple technical improvement. Hoshin planning then, would be the process put in place to reach that goal. Waldo predicted that a modern day hoshin would center on renewable energy.

Hoshin planning should be driven by an organization's vision, not by today's problem, Waldo said. The system translates an organization's vision into real, measurable objectives for reaching breakthrough improvements, and it aligns an entire organization in pursuit of that vision via shorter-term objectives. Aligning the entire organization means cascading objectives through all levels of the organization. For example, in Waldo's example a three- to five-year breakthrough objective to gain 60% market share could be fueled by an annual objective to reduce product development cycle time to less than four months. To support that annual objective, the materials department goal may be to reduce vendor lead time by a specific percentage, while the purchasing work group goal may be to establish value-managed relationships with certain suppliers. Annual goals in support of the organization's annual objective should cascade to all levels, including a manufacturing cell group.

Waldo outlined a seven-step hoshin-planning process that began with establishing an organizational vision, followed by strategic planning, which means developing three-year to five-year breakthrough objectives. The remaining steps are: develop annual objectives; deploy annual objectives; implement annual objectives; review monthly with a focus on exceptions; and review annually.

Of course, the process is not as simple as outlined in the previous paragraph. Waldo walked through a detailed presentation, wrapping up with common issues that arise in the hoshin planning process. Those include having too many top-level objectives; failing to cascade objectives deep enough into an organization; and infrequently following up on progress.

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