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Hoshin Kanri: Seven-Step Hoshin Planning Process

Hoshin Kanri is one of the strategic processes that companies can use to improve goal-sharing.

Communication is fundamental in any successful company. Managing any enterprise, commercial or not, requires everyone across the different sections to understand the goals.

You must be clear about what you are trying to achieve then share those objectives with the rest of the team. For that, an organisation needs to establish clear channels of communication.

Hoshin Kanri is one of the strategic processes that companies can use to improve goal-sharing. A unique aspect of Hoshin planning as a lean methodology tool is that it prioritises open communication.

Business owners, managers and other top-level management should learn more about the strategy and how to implement it in various settings.

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What Does Hoshin Kanri Mean?

Hoshin Kanri ( 方針管理) developed in Japan is Japanese for a system of management planning "policy management."

'Hoshin' translates loosely to "direction," “needle" "compass.”
'Kanri' means "management" or "control management."

Hoshin Kanri basically means "compass management" or "direction management" setting out how to manage the business direction or know that you are going in the right direction.

The Hoshin Kanri methodology is also known as the Hoshin planning, X-matrix /Hoshin Kanri Matrix, Hoshin Kanri catchball /Nemawashi process.

Hoshin Kanri Planning

Hoshin Kanri created by Professor Yoji Akao started out in the Toyota Lean Manufacturing and the Toyota Production System (TPS) in Japan in the late 1950s with a key focus on communication at all levels of a business.

Akao always taught that

“Each person is the expert in his or her job, and Japanese TQC (Total Quality Control) is designed to use the collective thinking power of all employees to make their organization the best in its field.”

Offering a very powerful tool to help and focus businesses to plan actionable goals (long term objectives and strategic goals) in a daily process using the power of shared knowledge.

It is lean management and continuous improvement process that is designed to boost efficiency and reduce wastage. The origins of Hoshin planning trace back to the period after WWII. Japan was dealing with damaged infrastructure, and there was a need to rebuild. Different teams from the Allied forces were required to work together.

One of the participants was statistician W. Edwards Deming, who helped establish quality control initiatives (Deming Cycle / PDCA). It was necessary to develop a framework that would enable the top management to be accountable for policies and procedures.

Hoshin planning champions the setting up of annual objectives from top-down. The lean methodology aligns individual and company goals. Once the organisation's objectives are clear, they are communicated to every section in the hierarchy.

Hoshin Kanri Catchball

Catchball is a term that originated from children's ball games, but instead of a ball being thrown around it's an idea passed around.

Hoshin Kanri is not a method where it is executed from the top-down but a joint effort between everyone. From the highest level to the lower level of the team an optimal goal is set and mutually agreed so everyone is working towards the same business goals.

Working as a team collecting feedback from people closest to the operation can give valuable information or identify fail points that may not have been identified by people who do activity work in this area. This can save costly errors and including everyone in the decision can reduce demotivation from the team as they are fully included in the process. This is the essence of the Catchball.

Hoshin Kanri catchball is about gathering information and data to start a discussion with everyone about business improvements and goals. Including multiple departments, many different roles and levels within the business, or business processes. Allowing everyone to provide input in the proposal.

Basic Catchball Rules

  • Everyone: Include everyone
  • Time: Time for everyone to fully investigate the proposal and provide feedback.
  • Suggestions: Ideas and suggestions submitted for consideration. Everyone is on the same team.
  • Responsibility: Accept ownership and accountability

The Seven Steps of Hoshin Planning

Executing the Hoshin planning approach means implementing each of the seven stages involved.

Step 1 - Vision: Firstly establish a vision, mission, and core values for business success. You must visualise where the company is headed. A vision statement is an effective tool for inspiring employees. Remember to factor in the existing mission statement and organisational values.

Step 2 - Develop Breakthrough Objectives: Step two identify breakthrough objectives. Breakthrough goals are revolutionary and will need a business to change how it operates. A company can take 3 to 5 years to accomplish these. They can be anything from creating new products to acquiring new business lines.

Step 3 - Develop Annual Objectives: Then you have to develop annual goals. This step requires a breakdown of the breakthrough objectives. Yearly goals can be divided between departments, teams and groups.

Step 4 - Deploy Annual Objectives: The fourth step is deploying annual objectives. Now that you have the goals, how do you achieve them? It means that you have to dissect the objectives further from the top down. At this stage, you need to divide and assign specific projects to the relevant individuals in a team with the right skills.

Step 5 - Implementation Annual Objectives: Step five works on implementing annual goals using key metrics to measure progress.

Accomplishing annual objectives is a daily task and employees should have know-how.

Step 6 - Monthly Reviews: In the sixth step, you have to conduct monthly performance reviews to monitor progress. Check how well the company is doing at meeting objectives and if any are being missed.

You can find suitable problem-solving methods to improve how teams operate. Think about using the Deming Cycle/ PDCA Cycle for problem-solving. Reviews also encourage accountability.

Step 7 - Annual Review: Finally, you need an annual review to check the overall health of the business and reflect and identify what has been learnt. You can make the necessary adjustments and begin identifying goals for the coming year.

How to Implement Hoshin Kanri

The first question always asked is, “Where to Start?” A google search for tools might return a “Hoshin Kanri X Matrix” which can be a little daunting looking.

For an organisation to attain positive outcomes with Hoshin planning, it must implement the strategy effectively. But you can start simply and start with the idea to involve every employee at every level.

Communication and collaboration are key. Talk over objectives for the improvement and then share with everyone so you can all collaborate on the solution. Let everyone offer their ideas and suggestions that will help you meet your business goals.

Identify what skills or tools are needed to carry out this improvement. If personal objectives align with company strategic goals, it sets the stage for a more wholesome decision process.

Hoshin Kanri is not a one-size-fits-all approach. Therefore, an organisation should establish what it needs then implement the strategy appropriately.

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