What is Hoshin Kanri

Compass pointing to future

Hoshin Kanri (HK) is an effective strategy execution management method that combines long-term strategic objectives with actions to be taken to achieve them (development projects), and metrics that ensure transparent follow-up of strategy implementation.  Hoshin planning method effectively aligns the organization toward common objectives. Hoshin Kanri was developed in Japan meaning ”direction” and ”management”.

Hoshin Kanri (sometimes also called Policy deployment, Strategy deployment, or Hoshin planning) is a strategic planning and execution management method. It is often associated with Lean principles and therefore often used in organizations that are already applying some parts of lean methods e.g. in their production.

Typical elements of the strategy are shown in the picture below. The areas that are covered with the hoshin kanri method are marked with green. It is a typical misunderstanding that Hoshin Kanri is a method that is used only in drafting a strategy. In fact, Hoshin Kanri is the operational part of the strategy linking strategic long-term objectives with annual objectives and strategic projects with KPIs. Strategic planning covers also the important phases of alignment within the organization. Besides the strategic planning part, Hoshin Kanri’s management process enforces transparency and continuous learning. In the execution phase, the management process and behavior focus on deviations from the plan. One of the key terms often associated with Hoshin Kanri is “Learn to plan”.

What is strategy and what hoshin kanri covers

This strategy pyramid picture shows the most important elements of strategy from vision to KPIs

Main phases of the Hoshin Kanri

  1. The concretization of the strategic plan. Every organization should have a vision, mission, and clear strategic choices. Often, however, the introduction of the Hoshin Kanri method reveals such shortcomings and weaknesses, so they need to be clarified.
  2. Definition of strategic goals, i.e. concretization of key objectives by the end of the strategy period. After that, short-term goals, i.e. more generally annual goals, are determined. Typically the strategy is visualized in the X matrix, which is a one-pager of your strategy.
  3. Dialogue about objectives among the next layer of the organization (often called as “catchball process“. In this phase, a common understanding of the strategic objectives in the organization is built and at the same time, it is ensured that the next level of the organization is committed to the goals. This is repeated at each organizational level. The purpose of this step is to ensure that everyone is working towards the common objectives. This requires dividing the goals into precise, measurable, and achievable goals and appointing responsible persons for each objective.
  4. Define key performance indicators (KPIs) that are used to track progress toward objectives. These KPIs should have an understandable connection to strategic objectives.
  5. Development of action plans: Based on the objectives and KPIs, action plans are developed, i.e. development projects, which define the tasks, schedules, and resources needed to achieve the objectives.
  6. Continuous monitoring: A jointly implemented management system is agreed upon in the organization, i.e. a process and operating method for monitoring progress and addressing deviations.

4 reasons why Hoshin Kanri enhances organization’s competitiveness

Helps to build a link between objectives, actions and KPIs

Hoshin Kanri often utilizes an X matrix that visually connects long-term objectives, activities and metrics. Organizations where staffs’ work can be directly linked to strategy are more successful and witness higher commitment of all organizational members.

Ensures the focus of operations

Hoshin Kanri is a layered management model where a each team prepares own objectives and in particular chooses small amount of activities that help them to reach objectives. Focusing on only a few breakthrough objectives at a time and ensuring that actions related to the objectives get a sharpened focus on action.

Increases organizational collaboration and transparency

In Hoshin Kanri, dialogue, or “catchball” within an organization, helps to align goals and actions in a common direction. Thru this process, potentially conflicting goals are easy to spot. Moreover, each team starts owning clear goals that are linked to the corporate strategy; everyone becomes aware of colleagues’ efforts. Such transparent management model engages and motivates staff and helps to maintain self-direction.

Lay the foundation for effective leadership

With Hoshin Kanri, effective day-to-day management principles can be easily extended to the entire organization. The method does not force a particular way of leading, but nevertheless provides a good basis for effective leadership.

What gets measured, gets done.

Who is benefiting from Hoshin Kanri?

Strategy execution with Hoshin Kanri

Hoshin Kanri is well known worldwide and is used by many successful companies: Tesla, Toyota, Caterpillar, HP and Bank of America. In addition, many hospitals, municipalities, and other public organizations are already utilizing this effective method of strategy management.

Hoshin Kanri helps large organizations reach a common direction and increase cooperation, however, even smaller organizations benefit from an easy way to visualize strategy and ensure prioritization of actions. The management system, transparency, and enhanced cooperation of the organization support the commitment of the staff.

Every organization can benefit from Hoshin Kanri even if an organization has pre-existing management structures or a strong organizational culture.

From this blog, you can study if the Hoshin Kanri method would be suitable for your organization.

A growing number of organizations have recognized the benefits of the method in implementing the strategy and therefore the use of Hoshin Kanri is increasing at an accelerating rate.

Amplon is hoshin kanri software

Amplon uses the Hoshin Kanri principles to engage all employees and to visualize the strategy. Read more about Hoshin Kanri’s 3 basic elements here. The X matrix is a powerful strategy visualization and Amplon is X matrix software that combines strategic planning, project portfolio management, and performance management.

With Amplon companies can design a bottom-up strategy and can easily adapt this software to their culture and processes. Amplon makes it easy to share common development projects and activities ensuring focus in the organization. Instant monitoring of strategy through software dashboards allows immediate reaction to any deviation. Read here why you should implement hoshin kanri with software.

Amplon - Hoshin Kanri made easy

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