7 Steps of the Hoshin Planning Process

Assume you're a member of a fleet of personal aircraft flying from one location to another. Each pilot is responsible for getting to their destination, but providing detailed directions for each pilot is impractical. There are too many starting points, as well as too many different delays, bad weather, and detours that pilots may encounter along the way.

 

So each of you has been given a sophisticated navigation device to keep you on track. This navigation device will ensure that, despite the fact that each pilot is acting independently, they all arrive at the same destination.

 

The challenge that these pilots face is similar to the challenge that organizations face. There is a strategic destination that all colleagues are expected to reach – but the route that each person takes to get there can vary significantly. And, if they are not cautious or are given incorrect instructions, they may find themselves way off course.

 

The Hoshin Planning System (also known as Hoshing Kanri) is a useful tool for keeping everyone in your organization on track to meet your organization's core strategic objectives. In this article, we'll look at what Hoshin Kanri is and how to use it effectively.

 

Also Read | MOST Analysis

 

What is Hoshin Planning?

 

Hoshin Kanri is a technique for strategic planning. Its mission is to ensure that key organizational goals are communicated and implemented. The ultimate goal of the Hoshin planning process is to improve company-wide communications and reduce waste, which is frequently the result of poor management processes and a lack of direction. 

 

Toyota, HP, and Xerox are just a few of the well-known Hoshin Kanri examples. Since the 1960s, Toyota has been the sole user of Hoshin Kanri. The company's long-term success demonstrates unequivocally that this strategy produces positive results.

 

The Hoshin Kanri methodology can be traced back to postwar Japan. Japan was in ruins at the time. The country needed to rebuild its infrastructure and re-establish itself in the global community. The Japanese also faced additional challenges. Their surrender terms required them to rebuild their economy without reviving their military presence.

 

The Japanese invented Hoshin Kanri in the 1960s and 1970s. The phrase translates to "compass management," and that's exactly what it is – coordinating the various parts of your organization so that they are all directing their efforts toward meeting the organization's strategic objectives. 

 

The Hoshin Kanri methodology originated in post-World War II Japan. Japan was in shambles at the time. The country needed to rebuild its infrastructure and re-establish itself in the international community. 

 

The Japanese were also confronted with additional difficulties. Owing to the terms of their surrender, they were forced to rebuild their economy while maintaining their military presence.
 

Also Read | Business Analytics Vs Business Intelligence

 

 

Hoshin Planning Process Steps

 

Hoshin Planning, is a seven-step process, in conjunction with business development and innovation tools. This process connects your strategic goals to the specific resources and action plans required to make them a reality.

 

The entire organization becomes involved in delivering a combination of breakthrough performance and daily management through a back-and-forth refinement system known as "catch ball." 

 

We work within these steps to incorporate a variety of innovation and business development tools that supplement the process, such as the balanced scorecard and SWOT analysis (strengths, weaknesses, opportunities, threats).

---

Hoshin Planning Process Steps

---

 

1. Define Organizational Vision

 

Hoshin Planning begins with defining your big-picture vision and purpose.

 

• What is the purpose of your business?

 

• Whom do you assist?

 

• What do you hope to achieve?

 

• How will you define success?

 

• How will you know when you've accomplished your goal?

 

Your goal here is to ensure that you have a clear direction for your strategy so that you can focus on the right objectives.

 

2. Develop Breakthrough Objectives

 

Breakthrough goals are significant improvements that will take three to five years to achieve and will necessitate your organization stretching itself. We use a variety of tools to identify growth opportunities, including the four quadrants of growth, an adaptation of the Ansoff Matrix, to develop these. 

 

Using this model, we consider consumers and non-consumers—those who are and aren't currently using your product or service—against current jobs and new jobs in order to outline stretch objectives in each area.

 

3. Set Annual Objectives

 

After you've identified your breakthrough goals, you'll want to set annual goals for achieving those goals. It's worth noting that "annual" goals aren't always based on a one-year horizon. A three-month or even 30-day turnaround is more appropriate in some cases.

 

Here, you can use a template (known as an A3 document) to provide some background information about the problem you're attempting to solve and your goals. Following that, you'll use the Plan, Do, Check, Act (PDCA) wheel to identify root causes before developing an improvement plan based on the data.

 

4. Use Catchball to deploy

 

The following step is to deploy your annual objectives using a technique known as Hoshin Kanri Catchball, which is intended to create consensus about how objectives will be met through a top-down system of two-way feedback loops between managers and their direct reports.

 

5. Monthly and Annual Analysis

 

How effective is the organization at meeting the deliverables of the action plan? What steps must be taken to catch up with those who are falling behind? By reviewing progress toward annual improvement objectives, a monthly review fosters a culture of accountability and action. 

 

You'll want to revisit the process on a regular basis to track your progress toward key breakthrough objectives. The goal here is to identify gaps between actual and desired conditions, to identify and address problems, and to set new measurable targets to help you get back on track.

 

6. Solving problems

 

In this step, you will concentrate on problem-solving. Inevitably, you'll discover some missed objectives or areas that need to be corrected in step five. The PDCA model for continuous quality improvement will be used here.

 

7. Consider and Learn

 

The final step in the Hoshin Planning process is to reflect on lessons learned in order to comprehend and grow from our daily work. You'll also be able to standardize successful strategies and share key insights across your organization from here.

 

Also Read | Porter’s Five Forces Explained

 

Benefits of Hoshin Planning

 

The Hoshin Kanri Planning method is more than just a tool for making plans. It's an effective medium for communicating organizational goals and collaborating on how to achieve those goals so that everyone can work together to achieve the goals that management has set. 

 

The following are some of the advantages of using Hoshin Kanri Planning

 

1. Aligns operational activities with the organization's vision, goals, and objectives

 

Hoshin Kanri begins with defining your organization's vision and making that vision clear. Your goals and objectives must all contribute to a unified vision. Why would your company spend time, money, and resources on something that does not support your vision? Your vision is your true north and the compass that directs every step you take.

 

2. Promotes All Levels of Commitment and Buy-In

 

The Hoshin Kanri method is well-known for one of its techniques, catch ball. When people are involved in the decision-making and design of the plan, it is easier for them to rally behind it and push for its implementation. It reaffirms the team's dedication to the plan.

 

3. Makes both strategic and tactical plans

 

When using Hoshin Kanri Planning, high-level goals and objectives are broken down into actionable tasks and activities. These are planned and assigned at each level of the organization's hierarchy. 

 

It is an effective strategic and tactical planning tool because it takes a holistic approach to plan and execution. Rather than throwing a bunch of numbers and vague targets out there, Hoshin Kanri allows businesses to be more intentional and specific about what needs to be accomplished and how to accomplish it.

 

4. Employees are empowered, and ownership is increased

 

Involving employees in the planning and decision-making process, not only encourages commitment and buy-in. It also empowers them and gives them a greater sense of ownership in the company. 

 

You can expect your employees to be more productive and perform better when they are allowed to become active contributors in charting the course for the business. They will feel more engaged and connected to their teams and the organization as a whole as a result of this.

 

5. Continuous Communication Resulted in Continuous Improvement

 

The Hoshin Kanri planning method ensures that feedback loops are established throughout the process. Teams can track their progress against the target goals and objectives with monthly, quarterly, and annual reviews. 

 

If there are gaps between where they are and where they should be, it is easier for the team to adjust and pivot as needed. The regular reviews also serve as checkpoints for teams to see how they can improve moving forward.

 

Also Read | What is EBITDA?

 

 

Disadvantages of Hoshin Planning

 

Hoshin Kanri, as useful as it can be, does not always work. We've seen some organizations achieve great success while others fail miserably.While every organization is different, here are some of the most common issues we see when  Hoshin planning fails. Below are some of the disadvantages.

 

1. Goals and Objectives are Disagreed

 

Individual objectives and organizational strategic goals must be in sync to ensure that everyone is working toward the same goals. People perform best when they feel connected to the organization's missions. 

 

When they understand how their work will contribute to the achievement of the breakthrough goals, they become emotionally invested and more engaged. Aligned goals also aid in the simplification of decision-making and the reduction of conflict.

 

2. Employees on the front lines are not involved in strategy deployment

 

In Japanese, Hoshin Kanri means "to show the way." It is not intended to be developed by senior leaders and then passed down as gospel. Rather, the entire organization participates in the strategic planning process. 

 

According to the Hoshin management philosophy, everyone's an expert at their job, so it is critical to use this expertise when working on strategic deployment. True North is defined by management, but as much responsibility as possible is delegated to associates.

 

3. Communication Gap

 

Many, if not all, organizational problems are the result of poor communication. During the Hoshin planning process, unclear or infrequent communication can lead to misunderstood expectations, poor performance, finger-pointing, departmental divisions, ownership disputes, and other issues. 

 

A company meeting to announce the plan is not enough to ensure successful strategy deployment. It must be presented in a way that is meaningful to employees and instills a sense of ownership in them. Transparency is essential as the strategy is implemented.

 

4. Makes Prioritization and Decision-Making Easier

 

By utilizing Hoshin Kanri, the organization is able to create the ultimate list of the company's priorities. Employees will struggle to understand why some projects are given more attention than others if it is unclear what the company's priorities are. 

 

This not only causes conflict or frustration, but it can also stymie quick decision-making. A clear set of goals and objectives helps leaders and their employees prioritize work and prevents indecision, which can stymie progress.

 

5. Updates are Infrequent

 

The ability to adapt is critical to Hoshin Kanri's success. Because long-term planning is based on information gathered from the business system, the planning process must also be agile and capable of responding to changes in the system. 

 

As a result, business management must include a frequent review that reveals whether or not the strategic plan is achieving its objectives or if it needs to be adjusted or changed. 

 

Management is impossible without regular reviews of the plan and its implementation. Hoshin Kanri should be a motivating factor in the organization's quest for continuous improvement.

 

Also Read | Agile Business Analyst

 

However, it has never been more difficult in human history to compel people to care about your products.  That is why businesses must ensure that they have a well-thought-out strategy and that they can execute relentlessly. It is not about having a strategy or carrying it out. It's all about both!

 

Furthermore, alignment is one of the most difficult challenges for large enterprises, where thousands of people perform thousands of jobs every day. Even in smaller companies, where work is more dynamic and the big picture is easily lost, it is frequently a challenge.

 

When Hoshin Kanri is implemented effectively, it forces the leadership team to create a vision and a list of breakthrough goals, as well as a cascade of complementary goals that ensure alignment and provides the necessary leverage.