Key Points

• Hoshin Kanri and OKRs have very different use philosophies, making them best suited for different industries.
• OKRs focus on flexibility and agility, making them an ideal fit for organizations in rapidly changing markets.
• Hoshin Kanri is a great fit for businesses with mature cultures and structures in place, allowing for structured long-term goals.

Hoshin Kanri vs. OKRS is a debate you’ll likely come across when looking at strategic goals in your organization. Ostensibly, both of these frameworks cover a lot of the same ground, but how they let you act upon your long-term goals and strategy is a different matter altogether. It will come down to organizational needs and what is best for your business.

Still, there’s likely some confusion about which of these approaches is the best for any business. As these methodologies have very different aims, this can result in some confusion as to which is best in any given scenario. With that in mind, let’s break down the methodologies, highlight their strengths and use cases, and talk about which might be best for your business.

Hoshin Kanri

Hoshin Kanri is a strategic management system, to put it plainly, going beyond just the typical goal-setting you might expect. The intended purpose of its use is to create a holistic system so that every activity done in an organization is applied toward furthering long-term goals and strategy.

It finds its roots in the Toyota Production System, built upon a foundation of quality management, process optimization, and a deep respect for front-line workers.

How It Works

There are a few different systems in play with Hoshin Kanri, but the two we’ll focus on are the Catchball process and the X-Matrix. The Catchball Process is a cyclical process intended to pass communication from the top-down and the bottom-up, inviting communication between senior leadership and front-line employees. This isn’t just a feedback or town hall, but a crucial dialogue intended to discuss the feasibility of strategy, promoting ownership and engagement.

The X-Matrix is the visual tool at the heart of Hoshin Kanri, and arguably what the approach is most famous for. It acts as a compass of sorts, connecting long-term goals with annual objectives. Further, you can see areas where improvement might be necessary, along with some core metrics and KPIs.

When used as intended, the X-Matrix makes sure that each person in an organization is aware of who is responsible for a given task, along with sticking along with strategic aims.

Best Use Cases

While Hoshin Kanri is readily implemented at any organization, it requires a special touch. You want to have mature processes and cultures in place, and the discipline that comes with that. It isn’t an approach you can implement haphazardly, but rather one that takes deliberate thought to do properly.

Committing to Hoshin Kanri means committing to regular reviews of the work being done to make sure the strategy stays on track. For this reason, it is mostly recommended for larger organizations that have a culture built upon the principles of methodologies like Lean and Six Sigma.

OKRs

OKRs are derived from Silicon Valley, championed by the likes of Intel and Google. It finds its roots a little further back, largely attributed to Andrew Grove’s work with Intel in the 1970s. He would go on to document his findings in High Output Management.

OKRs, or objectives and key results, are a more nimble means of achieving goals. You’re seeking to drive engagement, increase focus, and align your company’s work with whatever goals you’re setting.

How It Works

OKRs have quite a bit in common with the Agile methodology, which makes sense given their genesis in the tech industry. As such, there is less focus on structured, hierarchical thinking and more on flexibility. Goals should be ambitious, not just realistic. Your goal when implementing OKRs isn’t solely to achieve your aims to the fullest, but to aim higher and push beyond comfort zones.

It creates a culture centered around “failing fast,” which can be fully at odds with the success-oriented frameworks some organizations are accustomed to. OKRs are held by everyone in an organization and are discussed transparently. Top-down OKRs can set the tempo and direction of an organization, but personal OKRs are likely to dictate how those aims are achieved.

Rather than operating over years, OKRs focus on every quarter, which is key to the success of the approach. This allows organizations to stay nimble, agile, and adapt with shifting market trends, fiercer competition, and new opportunities as they arise.

Best Use Cases

Given what we’ve discussed so far, you’ll likely find that OKRs are best suited for smaller organizations looking to set goals. That isn’t to say it will be wasted on larger organizations, but the focus of OKRs is very much centered around remaining nimble. For faster-moving industries, this can be a boon, as you can readily adapt to challenges and adjust your OKRs accordingly.

Hoshin Kanri vs. OKRs: Which Is Better?

So, now that we’ve discussed these approaches at some length, which is better for your organization? It isn’t simply a matter of Hoshin Kanri vs. OKRs, as these two are wholly different approaches toward achieving your goals. Let’s shoot them out head-to-head, and you can decide for yourself.

Core Philosophy

Befitting something that originates from Lean, Hoshin Kanri is focused on discipline, continuous improvement, and operational excellence. This reflects in how you’re setting goals as well, with long-term and annual plans being the center point of any Hoshin Kanri implementation across the board.

This is contrasted by OKRs, which are focused on ambition, stretch goals, and rapid iteration, much like the Agile methodology. Goals are far more focused, taking place over quarters at the maximum, with provisions for annual goals.

Goal Setting

When working out the feasibility of your goals in Hoshin Kanri, you’re going to make use of the Catchball process, engaging leadership and front-line workers alike. This is intended to discuss how achievable the goals are based on real-world data, building consensus and engagement along the way.

OKRs are very much focused on personal and organizational-wide deployment. You might have a top directive from the top levels of management, but front-line workers will have strategic goals of their own to work toward as well. This creates a system of autonomy, with top-level OKRs coinciding with front-line ones with ease.

Best Use Cases

Hoshin Kanri needs a stable organization to succeed, and is best focused in industries like manufacturing, logistics, or healthcare, among others. While market trends can shift quite quickly in these industries, you’re looking to mature systems and apparatuses in place to make the most of the methodology.

OKRs, by comparison, are best served in tech or industries with rapidly changing markets. The flexibility and agility emphasized with OKRs allow for rapid changes, getting companies fully aligned with customer demands.

Other Useful Tools and Concepts

Still with us? You might want to check out some of the other topics we’ve discussed in the past. Sticking with today’s topic, Hoshin Kanri makes for a fairly powerful tool when used in Agile workplaces. Given their disparate origins, this hybrid approach makes for organizations that value feedback, align long-term goals with sprints, and much more.

Additionally, you might want to check out how Lean is used to innovate in modern corporations. It is easy to think of Lean as a rather rigid means of doing work. However, when used properly, you’re opening up whole new opportunities to innovate and stand out amongst the competition.

Conclusion

When it comes down