Hoshin Kanri (HK) is a cyclic planning and management concept from Japanese origin. It is a management method devised to capture and cement strategic goals as well as flashes of insight about the future and develop the means to bring these into reality. It is a powerful, systematic Strategic Planning/Management methodology developed by Dr. Yoji Akao that uses a Plan-Do-Check-Act (PDCA) cycle to create goals, choose control measures and link daily control activities to the company’s strategy. It involves a “catchball” as the driving force of alignment, clarification and employee involvement. The methodology continues to be used by some of the world’s most successful companies such as Toyota, Hewlett-Packard, and Bank of America.
HK is applied at two levels:
- The strategic planning level. A small number of key long-range corporate objectives are planned systematically. They are called Breakthrough Objectives, and typically last 2 to 5 years with little change. They are directed at achieving significant performance improvements, or at making significant changes in the way an organization, department or key business process operates.
- The day-to-day level. Most of the time in an organization must be devoted to keeping the business running. Carrying out the value-added activities of the key business processes, which fulfill the purpose of the organization. These day-to-day Business Fundamentals must be monitored on a daily basis in all parts of the organization. This is how the process owners are able to take real-time corrective action for continuous process improvement (Kaizen).
The two-pronged Hoshin Kanri approach is considered one of the pillars of the Total Quality Management philosophy. The method can also be thought of as the application of the Deming Cycle (PDCA / PDSA) of Plan, Do, Study (Check), Act to the management process. The Hoshin Review of the plan of last year is the basis (STUDY) for the new Hoshin Annual Plan (PLAN). This plan is cascaded down the organization via Annual Planning Tables. At each level, the policy is translated and implemented (DO) into policies, targets and actions for the next level down. These APTs are then periodically (monthly) reviewed. Causes of any differences between expected and actual results are identified, discussed and agreed. Corrective action is identified (ACT).
The Japanese word Hoshin means: a course, a policy, a plan, an aim. The word Kanri means administration, management, control, charge of, care for. The HK process is often compared to calibrating compass needles. HK is sometimes also referred to as Policy Deployment, Hoshin Planning, Management by Policy, or just Hoshin.
Origin of the Hoshin Kanri philosophy
The Hoshin process developed in Japan during the 1960s from quality management practices at Bridgestone Tire Company, Toyota, Nippon Denso, Komatsu, and Matsushita. It was strongly influenced by the Plan-Do-Check-Act cycle of Deming, Management by Objectives of Peter Drucker, the new divisional concept of General Motors, and the lectures by Dr. Juran on general management. The term Hoshin Kanri became widely accepted in Japan in the mid-1970s. By the late 1970s the experience accumulated in industry had been distilled into a formalization of the principles, and the first books on the subject appeared. The first symposium on HK was held in Japan in 1981, and in 1988 the Japanese Association of Standards published a series of works dealing with HK practices. During the 1980s, the concept spread to the USA. Hewlett-Packard, Procter & Gamble, Florida Power & Light, Intel, and Xerox began to implement their own versions of HK.
Usage of Hoshin Kanri Planning
- Long-term strategic planning with the application of TQM principles and techniques.
- Developing shared strategic goals. Compare: Balanced Scorecard
- Continuous organizational improvement.
Steps in Hoshin Kanri
- Annual policy and medium- to long-term policy.
- Basic company philosophy and quality policy.
- Converting methodological policy into objective policy.
- The composition of policy.
- Two deployment styles of target Â– top-down and bottom-up.
- Target deployment and Â“catch-ballÂ”. A discussion process before policy is finally decided, wherein the policy ball (draft policy) is thrown back and forth between top and middle managers before a final decision is made. Compare: Appreciative Inquiry
- Top management internal quality control audit.
Strengths of Hoshin Kanri
- Focuses the entire organization on the vital few, rather than the trivial many.
- Communication of a shared strategic vision.
- Participative. Creates alignment and involvement towards breakthrough objectives.
- Integrates and encourages cross-functional cooperation to achieve breakthroughs.
- The progress on plans is carefully monitored. This allows for a response to non-execution and corrective action.
- Strategic planning is systematic: The format of the plans is unified via standards.
- The planning process is continuously improved.
- Emphasis on a thorough analysis and understanding of problems which occurred during the previous cycle of planning/deployment. Enables Organizational Learning.
Limitations of Hoshin Kanri
- A rigid implementation is necessary. Difficult in some cultures.
- Requires a long term commitment, patience and ongoing support and energy of senior management.
- Relatively Static. Breakthrough Objectives must be stable during a five year period.
Assumptions of the Hoshin Kanri Concept
- The best way to obtain the desired result is to ensure that all employees in the organization understand the long-range direction and that they are working according to a linked plan to make the vision a reality.
- There are fundamental process measures which must be monitored to assure the continuous improvement of the key business processes of the organization.
- Breakthrough activities can only really be carried out when the business fundamental activities are under reasonable control.
Source: Yoji Akao – Hoshin Kanri – Policy Deployment for Successful TQM.
Strategic Planning Reference Documents
Strategy Planning and Deployment
Hoshin Kanri - a strategic planning methodology
Strategic Business Planning
Success Is System, Failure Is Component Framework