Hoshin Planning: Vision-Driven Leadership For Breakthrough Improvement

March 18, 2007
Hoshin is a management system than can steer your business to achieve its goals.

What if your organization could achieve a radical improvement in one or more core competencies, like "problem solving," within the next 12 months? While speed-to-execution is always important, you still have to look before you leap, and the mistake most make is that they jump into improvement programs too deeply too fast. Just as you wouldn't jump into a murky body of water without knowing its temperature or depth, and whether there were rocks or sharks waiting for you, you shouldn't jump into an improvement program without a clear idea of what your organization is about, what it does, why it does it and where it intends to go. Hoshin Planning can be your guide in this process.

What Is Hoshin Planning?

The term "Hoshin" is Japanese and originated in the late 1960s. The original Japanese term for the process was in four characters -- Ho Shin Kan Ri. Ho Shin means "shining metal pointing direction," and Kan Ri means "management" or "policy."

Merge the two ideas and you get the picture. Hoshin Planning isn't merely a planning tool -- it's a comprehensive management system that can be used to steer the business toward its vision. A company's vision is the perfection of its business, given its purpose or reason for existence. Vision and purpose together are what I call an organization's strategic intent. Knowing your organization's strategic intent is the first, very important step. The next step is transforming strategic intent into a realistic action plan that achieves your goals.

How Does Hoshin Work?

Once clarified, the organization's vision drives everything. Hoshin uses a set of creative and logical tools to translate the vision into high-level strategies. Strategies become tactics, tactics become action plans, and those actions help companies realize breakthrough process improvement. Hoshin ensures that these strategies are tangible and measurable through the application of four key factors: focus, alignment, structure and rigor.

Focus -- While organizations have hundreds and sometimes thousands of processes to track, they need to focus, at least initially, on those that are most important in the context of the business's strategic intent. Hoshin uses the Pareto principle to narrow the focus (e.g., only 20% of the processes are responsible for 80% of what matters.)

Alignment -- Processes ought to work together, not at cross-purposes, to produce meaningful results. Hoshin uses a process called "catchball" to ensure that all efforts across a system are aligned. First the catchball process translates strategies into increasingly lower level objectives in a cause-and-effect way. Then catchball is employed to make sure all the objectives at every level are well coordinated across process and functional lines.

Structure -- Structure is, of course, related to alignment. Typically, companies have their high-level strategies, then maybe their core processes mapped, and other processes defined, mapped, measured, and monitored in different areas of the organization and to different degrees. With a full Hoshin strategy-objective-tactic hierarchy in place from the top to the bottom, a company has its template for performance improvement firmly in place. With this structure defined, it's a lot easier to see the purpose for which processes exist, and to focus process-improvement efforts.

Rigor -- One of the more important but often overlooked features of Hoshin is its review cycles. In a proper Hoshin system, performance-to-plan is reviewed regularly at all levels. Small tactical reviews on the shop floor may take place weekly. Higher-level operational reviews might take place once per month, and more strategic reviews at the top might happen quarterly. With this strong review system in place, Hoshin brings more rigor and accountability to the entire management function, including the process management aspect.

So What?

When it comes down to it, planning based on prediction is 'iffy' at best. To paraphrase computer genius Alan Kay, the only way to predict the future is to create it. Hoshin Planning lets your organization create its own future by helping you prioritize what really matters and align everyone's efforts behind a common goal. It also provides a set of decision-making tools that can enhance creative problem-solving, as well as statistical problem solving. Therefore, Hoshin Planning is not only an important first step for all performance-improvement programs, but one that should be taken over and over again to ensure programs are working, and working well together.

Mark Smith is a Master Consultant, instructor and mentor for Breakthrough Management Group (BMG), a leading Performance Excellence firm. Smith's expertise includes strategic thinking, planning, change management and quality improvement, specifically the methodologies of Lean, TRIZ and Hoshin Planning.

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