The Hoshin Planning System

Steering Everyone in the Right Direction

Getting people's goals aligned.

Imagine you're part of a fleet of personal aircraft traveling from various locations to one destination. Each individual pilot is responsible for getting to that destination.

Providing precise directions for each pilot isn't practical. There are too many starting points, and too many different delays, adverse weather conditions, and detours that pilots might encounter along the way. So you've all been given a sophisticated navigation device to keep you on course.

This navigation device will ensure that, even though each pilot is acting independently, they'll all arrive at the same endpoint.

The challenge faced by these pilots is much the same as the one faced by workers in many organizations. There's a strategic destination that they're all supposed to reach – however, they don't always have a convenient device like this to help them reach their objective.

Sometimes individuals, teams, and even whole departments can get so far off course that they seem not even to remember what the final destination was supposed to be!

A Systems Approach

This is where it's useful to have a system to co-ordinate different parts of your organization and keep them on course. One such system is "Hoshin Kanri."

Developed by the Japanese in the 1960s and '70s, Hoshin Kanri (also called the Hoshin Process) is a useful process for managing work towards a key strategic initiative (a hoshin). This approach aligns all parts of an organization to accomplish an important objective.

The Hoshin Process

Hoshin Kanri is a system for strategic planning that:

Selects a key objective.
Aligns implementation plans at all levels.
Implements, reviews, and improves the plan on an ongoing basis.

Note:
The process of hoshin planning follows Deming's Plan-Do-Check-Act cycle. In fact, PDCA is an influential tool that was used to create Hoshin Kanri. PDCA is a generic method for continuous improvement, which is what hoshin planning aims to be. Below, we've shown how the various steps of Hoshin Kanri align with PDCA.

Step 1: (Plan) Define What You Want to Improve

This is most often a key strategic objective that needs a significant change in how things are done.

Tip 1:
We don't cover the development of these strategic objectives in this article. See the strategy section for these tools.

Tip 2:
Typically, Hoshin Kanri is associated with planning and change at the organizational or strategic level. However, hoshin planning can also be used in a team or department to bring about important changes.

Step 2: (Plan) Establish Sub-Goals to Achieve Your Objective

What organizational (or team/functional/departmental) goals for the year are need to achieve this objective?
What checkpoints are necessary to keep the goals on track?
What controls can you put in place to ensure that the goals are successfully reached?
How will you measure progress and evaluate success?

Record these, and use them as the basis for your review process.

Step 3: (Do) Communicate the Plan

Communicate your plan throughout the organization.
Ensure that all levels of the company understand your vision and goals.
Have each department and team set its own goals to link directly to the objective and the sub-goals you've established.
Make sure that managers in these departments and teams "ripple goals down" so that everybody knows their part in the plan, and is using the Hoshin process to manage the people who report to them.
Assign clear responsibility for each item in the implementation plan.
Make sure that you have agreement on all items within the plan with all of your reports, and make sure that this agreement has rippled down as well.

Step 4: (Check) Develop a System to Collect Information on Your Control Parameters, and Then use it to Manage Change

Are your key metrics being met? If not, why?

Create a review table that shows the:

Goal.
Goal owner(s).
Time frame.
Performance metrics.
Targets.
Actual results.

Then use this table to manage movement towards these goals on an ongoing basis.

This "check" step ensures that your plan is a living document. It doesn't just sit on a shelf to collect dust once it's finished. Hoshin planning is based on the idea that to reach your strategic goals, the company needs to be in a constant state of reflection and evaluation.

Tip:
On your review table, note any differences between the target and actual performance. This information will be used for subsequent plans, because Hoshin planning builds in levels over time. The plan you create this year will be used as the basis for next year's plan.

Step 5: (Act) Analyze Results, and Take Corrective Action Where Needed

If there are any differences between expected and actual results, identify the sources of those differences. Discuss these, organize corrective action, and implement this action.

What is going right?
What is going wrong?
Do the plans meet the realities of your business and the problems you face?
Are measures appropriate?
What can be done better, or differently, to reach your destination?

This stage of the process ensures a system of continuous improvement. To keep moving the company toward its vision, review the plans not just once a year, but on an ongoing basis to determine how daily work should be done.

With this review (or act) step, you can ensure that plans continually evolve to take into account a changing environment.

Step 6: Repeat the Process as Needed

This process can be cycled over and over to maximize the quality of your efforts. It can also be used within your various business units, functions, and teams to ensure that their specific strategies have the same goal alignment and commitment to continuous improvement.

Tip 1:
A tightly controlled approach like this only suits certain situations and certain industries (see our article on Birkinshaw's Four Dimensions of Management for more on this). Use your best judgment when applying this tool to your own situation.

Tip 2:
Peter Drucker's Management by Objectives (MBO) was very influential in developing Hoshin Kanri. The idea of various levels of organizational objectives, from management down to the workers, is a fundamental part of hoshin planning.

Tip 3:
See our articles on The Pyramid of Purpose and The Balanced Scorecard for more on techniques for communicating strategy and managing its implementation.

Key Points

Hoshin planning creates a process whereby everyone in the organization knows the overall direction. It was developed to create a systematic process for aligning goals at all levels of the organization with strategic vision, so that the organization's strategy can be achieved.

Based on both Management by Objectives and the Plan-Do-Check-Act cycle, Hoshin planning is a powerful way to direct your organization's energy toward key performance outcomes.

The resulting process can keep strategic planning documents alive and ensure that differences between planned and actual results are addressed.

And Hoshin planning isn't just for executives in charge of organizational strategy – it also applies to frontline managers and team leaders, because it's a guide for developing individual and team performance plans.

Thanks to club member mboutwell for mentioning hoshin planning in one of her posts and giving us the idea to feature it.

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