The Hoshin Kanri Method of Strategic Management Planning
Written by MasterClass
Last updated: Apr 20, 2022 • 4 min read
Originating in Japan, the Hoshin Kanri methodology helps take the strategic direction of organizations to the next level. By defining goals in different tiers, companies can implement them with a little more definition and focus than they would otherwise. Learn more about how Hoshin Kanri can help your company achieve its goals.
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What Is Hoshin Kanri?
Hoshin Kanri is a strategic management methodology meant to expedite and improve processes for creating new products and services. The words “Hoshin Kanri” are Japanese for “compass management,” but the concept translates to something closer to “policy management” in practicality.
This process relies on a top-level, lean management staff correctly setting long-term goals, relying on middle management to implement them, and empowering operational staff to complete the necessary tasks in practice. In the Western world, many people supplement the seven steps of Hoshin Kanri with additional business strategies, including W. Edwards Deming’s Plan Do Check Act (PDCA) approach.
7 Steps to Implementing the Hoshin Kanri Method
The Hoshin Kanri method for strategic management is relatively simple. Keep these seven steps in mind as a template for setting your company’s strategic goals:
- 1. Define your overall mission. To start Hoshin planning, your company’s leadership team must decide on an overarching objective for your organization. This goal should encompass the entire mission of your company so as to focus any ideation and problem-solving in the future. Choose something specific enough to be pragmatic but broad enough to remain continually aspirational.
- 2. Develop multiyear goals. After defining your company’s mission, set out to develop a multiyear project (or projects) to more specifically define how you’ll work to reach your ultimate goal. Sometimes called “breakthrough goals,” companies generally set these objectives for around five years. At this point, senior management will set goals for realistic and holistic projects their company can complete over several years.
- 3. Establish annual goals. Break down your breakthrough objectives even further into yearly goals. These annual objectives help to make steps feel more actionable and immediate, rather than nebulous and far-off. It’s important to set these goals with both your company mission as well as your multiyear objectives in mind. As you cascade goals downward like this, they become easier to implement and less daunting in general.
- 4. Make assignments. Once you have all your goals in place, it’s time to start your policy deployment. Senior and middle management work together to break these wider initiatives into actionable, even shorter-term steps for employees throughout all departments and levels of the organization. Everyone—from those in the C-suite to those in the gemba (i.e., the company or factory floor)—should receive instructions to work toward achieving each tier of objectives.
- 5. Proceed to implementation. Throughout their daily management, middle managers work with their teams on turning strategic planning into day-to-day operations. They constantly seek out ways to improve both the speed and quality of work, recalibrating their yearly, multiyearly, and overall goals when necessary.
- 6. Review monthly. Middle-level management should meet with their team in the short term once a month to ensure everything is proceeding according to plan. These monthly reviews help keep everyone on track to meet annual targets. If necessary, managers can take corrective action to improve workflow.
- 7. Take a yearly look back. At the end of each year, every member of the company should take part in an annual review. Look at how well the company fared against its strategic objectives, from top management down through the rest of the employees. Discuss ways to improve next year. Review at the end of a multiyear cycle as well.
3 Strategies for Hoshin Kanri Planning
When taking part in the Hoshin Kanri planning process, it can be helpful to keep a few core strategies in mind. Consider these three:
- 1. Look at the big picture. In the Hoshin Kanri method, decision-making always takes the big picture into account. When it comes to strategy deployment, top-level management must look at the company’s overall mission and multiyear initiatives before deciding on any key performance indicators (KPIs) or metrics. It’s important to examine the details occasionally, too—just remember it’s advisable to keep the long-term prize in mind.
- 2. Seek and share feedback. While the Hoshin Kanri method is a top-down approach, it still relies heavily on plenty of feedback from the bottom up. Senior management must take the concerns of middle management into account when setting more abstract goals. Similarly, middle management must consider the advice and concerns of their own employees about the best way to meet objectives. This “catchball” approach empowers people at all levels of the organization to make a difference.
- 3. Test your approach. As you set goals and implement new practices, keep kaizen (Japanese for “continuous improvement”) in mind. Take part in webinars to see how other people are using this method and make adjustments to your own approach. Continually search for lean tools to expedite and improve workflow. Utilize the Hoshin Kanri X Matrix (a chart depicting the different sets of goals) to see how they’re all gelling. Ultimately, standardize what works and discard what doesn’t.
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