The Ultimate Hoshin Kanri X Matrix Guide
The History of the X Matrix
The Hoshin Kanri method was developed in Japan during the 1960s, largely driven by manufacturing leaders like Toyota. Their goal was to align strategic objectives with day-to-day operations, ensuring that every team and individual contributed to shared organizational goals.
The X Matrix emerged as a practical solution to support this alignment—helping teams visualize and manage complex strategic plans on a single page. It quickly became a core component of the Hoshin Kanri approach.
Traditionally, organizations relied on pen and paper or Excel spreadsheets to manage their X Matrices. In large organizations, where each department may create its own, coordinating multiple X Matrices can become overwhelming. As a result, some companies forgo the X Matrix altogether—missing out on a powerful tool for strategic clarity. Today, more advanced organizations are turning to solutions like Amplon, which offer interactive X Matrices and integrated execution management to boost transparency and streamline strategy deployment.
The Two Purposes of the X Matrix
Many people mistakenly assume that Hoshin Kanri and the X Matrix are used right from the start of strategy development. In reality, the X Matrix comes into play later in the process—after other tools and methods have laid the groundwork. A typical strategic process unfolds in four key steps:
Background analysis (market research, competitor analysis, etc.)
Defining strategic aspirations (vision, mission, strategic choices, and high-level goals)
Strategic planning (setting objectives and outlining key projects)
Execution and management
The X Matrix becomes relevant after steps 1 and 2. It helps document and visualize long-term and annual objectives, strategic initiatives, and performance metrics during the planning phase. This visual clarity allows everyone to see the strategic priorities and understand which actions are in place to achieve them.
If you want to learn more about the key components of strategy, don’t miss out on our article about the Elements of a Good Strategy.
The X Matrix also plays a critical role in execution management—especially when it displays real-time progress. Best practices recommend reviewing the matrix in every strategy meeting before zooming into specific focus areas.
The Component of the X Matrix
This image below illustrates the structure of the X Matrix. Below, you’ll find descriptions and guidance for each numbered section to help you understand how to read and use it effectively.
The X Matrix is divided into four quadrants, each representing a key element of strategic planning. To use it effectively, it’s important to understand what each section captures and how they connect.
Setting strong, actionable objectives can be challenging, which is why many organizations rely on the SMART framework—Specific, Measurable, Achievable, Relevant, and Time-bound. The X Matrix naturally supports this process by already incorporating two of these elements. The “Time-bound” aspect (“T”) is built into the sections for long-term and annual objectives, while “Relevant” (“R”) is addressed through the correlations that link each quadrant—ensuring that every objective ties back to the broader strategy.
1) Long-term Objectives
The bottom quadrant of the X Matrix captures the organization’s long-term objectives, typically set for a three to five-year horizon. These are often referred to as “Breakthrough Objectives” because they aim to drive transformational change—not just maintain the status quo. Most organizations define three to five high-impact goals here, often including critical financial targets like revenue growth or profitability.
When crafting long-term strategic objectives, consider the following questions:
Does this objective align with our vision?
What specific outcomes are we aiming to achieve?
Will investing resources in this area create a competitive edge?
Will this goal lead to meaningful, transformational change?
2) Annual Objectives
This quadrant of the X Matrix translates long-term objectives into clear, measurable annual objectives—milestones the organization aims to achieve within a year to move closer to its long-term vision. These annual goals serve as a crucial link between strategic direction and day-to-day execution, bridging the gap between breakthrough objectives and operational tactics like improvement projects.
Ideally, each long-term objective corresponds to one annual objective. However, it’s common to break a single long-term goal into multiple annual milestones. This section typically includes 5–8 annual objectives. For instance, a long-term goal of reaching 100 MEUR in revenue might be broken down into two annual objectives: generating 50 MEUR in revenue and launching a new product.
Key questions to guide the definition of annual objectives:
What are our top priorities for this year?
To reach our long-term objective of XYZ in three years, what milestones must we hit by year-end?
What specific outcomes or indicators will show we’ve succeeded?
What potential challenges could get in the way of achieving these goals?
3) Improvement Projects
The top quadrant of the X Matrix focuses on improvement projects—concrete, action-oriented initiatives designed to support the annual objectives. Each project should directly tie to at least one annual goal, either by solving a problem or by enhancing capabilities needed to reach the target. These projects are typically detailed in A3s, which outline the rationale, timeline, resources, and execution strategy.
A common pitfall is listing too many projects, which can stretch teams thin and derail strategic execution. Experience suggests that a business unit with around 10 MEUR in revenue can realistically manage about 10 projects at a time. In today’s fast-paced environment, planning year-long projects can be inefficient—shorter, more agile planning cycles often yield better results.
Key questions to consider when planning improvement projects:
What specific actions are needed to reach this year’s objectives?
What are the most immediate steps we can take to get started?
Which KPIs will these actions influence, and by how much?
Who is accountable for delivering this project?
What stakeholders and resources must be involved?
Who will lead and advocate for the project throughout its lifecycle?
Which departments need to collaborate on this initiative?
Who will implement the outcomes, and how can we ensure success?
What are the key risks we need to account for?
4) KPIs and Targets
The right quadrant of the X Matrix is dedicated to Key Performance Indicators (KPIs)—the metrics used to track progress and success. KPIs offer a quantitative way to evaluate whether the organization is advancing toward its long-term objectives. Ideally, KPIs should be leading indicators, which are often more challenging to define and measure but are essential for guiding future success. In contrast, lagging indicators—which reflect past performance—are easier to set but less valuable for driving continuous improvement.
While the X Matrix helps communicate strategy and key activities, not all KPIs will directly relate to improvement projects. Some may focus on broader, ongoing measures of progress that support continuous improvement efforts.
Key questions to guide the setting of performance metrics:
How do these metrics align with and help drive our long-term objectives?
What is our current status for this KPI, and what target are we aiming for?
What factors will influence these KPIs, and in what ways?
Is investing in this KPI and its related initiatives crucial to achieving our objectives?
Is this a leading KPI, or how can we make it one?
Can we track this KPI on a regular basis?
5) Owners
The far-right quadrant of the X Matrix identifies the owners for each improvement project. Best practices recommend listing only the individuals who are ultimately accountable for each project, ensuring clear ownership. These project owners should typically be senior managers within the organization represented in the X Matrix.
Key questions to consider when selecting project owners:
Who will be responsible for the outcomes of each improvement project?
Is the chosen project owner the right person for the job?
Are the roles of project owner and project manager clearly separated?
Do we have the necessary resources (skills and capacity) to successfully complete the project?
6) Correlations
The X Matrix corners visually connect quadrants, highlighting the interdependencies between objectives, projects, and KPIs. One of the strong points of the X matrix is that one can link multiple correlations, just like in the real world.
In a basic X matrix version, only one type of correlation is used. However, separating strong and weak correlations makes the X matrix even more logical.
Watch the Video Tutorial
This tutorial will guide you through the process of using the X Matrix to effectively align your organization’s strategic objectives, improvement projects, and key performance indicators. By the end, you’ll have a clear understanding of how to create and implement an X Matrix that drives alignment, accountability, and measurable progress toward your long-term goals. Let’s dive in!
Cascading Objectives with the X Matrix
Implementing the X Matrix fosters transparency, accountability, and continuous improvement, ensuring that every team works towards the defined objectives. Typically, the X Matrix is used for a single organizational unit, with objectives cascading down through each department. There are two main approaches for cascading objectives using the X Matrix:
The traditional approach involves rotating the X Matrix 90 degrees when moving to the next organizational layer (e.g., from corporate to departmental). In this method, the bottom quadrant for the next layer becomes focused on annual objectives, with projects broken down into short-term milestones. This ensures alignment at every level of the organization, making it effective for organizations with just two layers.
The emerging approach keeps the X Matrix structure consistent across all organizational levels, without rotating it. Each layer maintains the same level of detail in its X Matrix, making this model especially beneficial for larger organizations where financial responsibilities are cascaded across multiple layers.
Key Takeaways
Strategic Focus and Alignment
The X Matrix plays a critical role in ensuring that an organization’s strategic objectives are clearly defined and aligned at every level. It visually guides teams toward focused strategic planning, helping to prevent efforts from being spread too thin across multiple objectives and projects.Cascading Objectives
The X Matrix facilitates the cascading of objectives throughout the organization, ensuring alignment between corporate strategies and departmental actions. This cascading effect fosters transparency and ensures that every level of the organization contributes directly to broader strategic goals.Enhanced Communication and Collaboration
By visualizing plans on a single page, the X Matrix enhances communication and collaboration across departments. It helps team members see how their work contributes to the overall strategy, improving alignment and cooperation.Accountability and Ownership
Assigning clear ownership of strategic projects within the X Matrix strengthens accountability. Well-defined roles and responsibilities ensure the successful execution of projects and initiatives.Common Pitfalls to Avoid
To succeed with the X Matrix, it’s important to avoid common pitfalls, such as overloading the matrix with too many objectives—especially projects—and setting goals that don’t push the organization to challenge the status quo. Additionally, it’s essential to differentiate between day-to-day operations and transformative strategic initiatives.
