Key Points

• The Hoshin Kanri system has been around since World War II. 
• This system is used by some of the best-managed companies on the planet. 
• This system has plenty of advantages, even for brands undergoing a digital transformation. 

Whenever you have to develop a strategic plan, you can use several methods to get the job done. However, one such strategic planning tool that often stands out is Hoshin Kanri, and it’s okay if you aren’t familiar with it, even though it might become your new favorite. 

Generally used by the manufacturing and technology industries, the Hoshin Kanri plan is ideal for companies looking to make a serious commitment to aligning all of their internal efforts, with a heightened level of transparency as the top priority. 

What Is Hoshin Kanri?

More commonly known as a policy deployment tool, Hoshin Kanri is best described as a 7-step planning process that can help unleash a company-wide strategy that works to make sure all strategy execution is handled correctly. 

The hope with Hoshin Kanri is that it will connect the vision of leadership, which often has a long-term eye, against that of the projects implemented in places like a manufacturing floor. Developed by Yoji Akao after World War II 2, Professor Akao wanted to have a technique that could be deployed and continuously improved as necessary. 

Today, Hoshin Kanri is used at household companies like Toyota and Hewlett-Packard. These companies and others focus heavily on ensuring everyone in the company is working toward the same goal simultaneously. 

Benefits of Hoshin Kanri

If you’re looking for benefits of the Hoshin Kanri strategy, the good news is that you will find plenty. 

Strategic Alignment

To reiterate a little from earlier, when using this strategy, you are looking to use Hoshin Kanri to make sure everyone is metaphorically rowing a boat all in the same direction at the same time. This strategy involves a cohesive direction for the company and internal stakeholders. 

Focused Execution 

When you look to prioritize only a small number of significant business objectives, it stops the company from allowing resources to be spread too thin. Instead, company resources are refocused only on any efforts they believe will most impact the company’s bottom line. 

Continuous Improvement

Suppose you think about what continuously improving means. In that case, Hoshin Kanri isn’t all that different from other strategies in that it can review processes and steps regularly to ensure progress is moving in the right direction. This benefit also allows companies to make sure any method can be refined over time. 

Clear Accountability 

In the Hoshin Kanri process, you have an assignment for everyone, which means the roles and responsibilities internally are designed to tie directly back to organizational goals. This ensures that the right people are held accountable for success and that things progress. 

Hoshin Kanri Matrix

As part of the Hoshin Kanri process, a popular matrix is often utilized to keep track of everything. The four-quadrant matrix represents the most notable aspects of your business strategy and keeps the entire organization around you focused on anything that could be considered a breakthrough objective. 

On the “North” part of the matrix, you’ll have whatever the company considers its top-level priorities. If you shift focus to the “East” part of the matrix, you will now be focused on any metrics the business needs to improve. 

Moving to the “South,” you’re now focused on Breakthrough goals, a main priority of this process, so this is one of the most critical aspects of the matrix. Lastly, you’ll have the “West” part of the matrix, which is focused on annual adjectives. 

Of course, don’t forget the corners of this matrix spreadsheet, which will offer users several boxes that can be checked to indicate how these four quadrants are linked. 

The Seven Steps of Hoshin Kanri

1. Establishing Your Organization’s Vision

As the first step in Hoshin Kanri, this one will set the stage for everything else. Of course, this means setting the organizational vision for your company, and you have to be careful with what you choose because it’s the factor against which everything else will be defined. 

Everything from the metrics and objects within your company should help influence the vision. The hope is that the goal here is transparent and will inspire employees to work hard and see this vision come to life in a successful and meaningful way. 

Once leadership decides on the organizational vision, it becomes their responsibility to communicate it to everyone. 

2. Developing Breakthrough Objectives

Any instance in which a company is considered developing breakthrough objectives will be utilized to help explain how the company hopes to achieve the vision it laid out in step one. Ideally, these are better known as “stretch targets,” which seem like they might be too difficult to achieve or at least achieve quickly, but they are things that need to be done. 

A company needs to be careful that these goals are not too unrealistic, as they might deter employees from working at their peak skill set. 

These objectives need to push any company beyond its traditional comfort zone. This could include but is not limited to, entering a new market, shifting to a different delivery mode, or introducing a new and (hopefully) innovative product. 

3. Develop Annual Objectives

This second step is critical as you must decide your objectives for the next year and potentially even in the next three to five years. In this case, “annual” doesn’t necessarily mean one year, as it means things that operate on a single-year timeline. 

To better define this step, consider this stage the opportunity to separate your breakthrough goals into annual objectives. This will be the focal point for various departments and even individual yearly strategic plans and goals. 

The best companies that execute these plans are those that likely keep their list of annual objectives to 10 items or less. For even more success, keep the list to three items or less. 

4. Cascading Goals Down Through the Organization

Now that we’ve hit steps 1-3, it’s time to start implementing these outlined and decided-upon goals throughout the organization. Some people and companies call this “cascading” everything into regional and departmental objectives. 

At this step, most teams and their members help develop their goals, identify the key performance indicators they will need to measure, and outline which projects they are taking on. 

Rest assured, this step is incredibly crucial, and if things aren’t in line at this stage, the whole process will likely fall apart. The hope is that everything surrounding cascading goals will be done in a very top-down way, with clear communication and direction to both teams and their employees. 

5. Implement Annual Objectives

Welcome to the execution stage, better known as implementing the annual objectives. With every team firmly aligned on their goals and KPIs, nothing stops teams from moving in the direction that enables them to start driving progress and, when possible, begin implementing. 

The way you execute and implement objectives is also meaningful. Companies like to look at different methodologies, including Six Sigma, Kaizen, or even the PDCA style, all of which have favorites worldwide. 

6. Implement Monthly Reviews

What’s so important about this stage, as much as execution, is that it’s also an opportunity to review results. This might happen on a weekly, monthly, or even an annual basis, but understanding progress is going to be essential. This is where the opportunity lies to figure out what’s going wrong and how to fix it before things move along any further and get too out of hand. 

This stage is pretty straightforward because it reviews everything that happened in step five. Having a project management tool makes things even easier, but even if you don’t, checking in on goals and the work done to achieve them is hugely important. 

7. Conducting Annual Reviews

Let’s assume that the team has made progress toward an objective for 12 months. This means it’s time to examine what the team has accomplished during this timeframe. Did the team successfully execute and implement the project? If not, what happened? What can be learned to make the next project implementation even more successful? 

As soon as you have answers to these questions, the clock essentially resets on goals, and they can all be established again for the new year (12-month timeline). Of course, this new 12-month period allows you to break down previous roadblocks and start the Hoshin Kanri process all over again to maximize success in the future. 

Other Useful Tools and Concepts

As you look ahead to potentially rolling out Hoshin Kanri at your next organization or are joining an organization that already has it, it’s important to be forward-thinking. This could mean that this methodology will find a deeper place within agile practices and take more of an active role during organizations undergoing digital transformation. 

It might also surprise you, but artificial intelligence will play a role in how companies use the Hoshin Kanri method. Using AI tools, there is an opportunity to help better identify how resources should best be allocated across an organization. 

Conclusion 

If you are unfamiliar with Hoshin Kanri, that’s okay, but you should know that companies like Intel, Toyota, Siemens, and others utilize this practice successfully. It’s how companies like Toyota can create a fantastic car so well known for reliability through its “zero defects” process across its manufacturing lines. This is precisely why Hoshin Kanri exists and why other companies will likely adopt it.