Hoshin Kanri

Ihe same thing happens in companies all the time: Top management decides on a new strategy and everyone involved is enthusiastic. But then the implementation begins, and after some time the company's top management realizes with frustration: Unfortunately, the new strategy does not unfold the desired effect - not because it was bad or wrong, but because

• the executives (and their employees) only conditionally support the strategy,
• employees do not know on which goals they should focus their activities,
• they lack the necessary competence to implement the strategy in their daily work, and
• silo thinking dominates in the departments and divisions and they therefore produce "isolated solutions".

build competencies

These weaknesses in strategy planning and implementation should be avoided when working with Hoshin Kanri by

• managers are involved in the process of strategy development and implementation planning,
• So-called "breakthrough" or breakthrough targets defined

Avoid weaknesses in implementation

• on which the entire organization focuses its energy,
• there is cross-functional coordination of (detailed) goals and action plans between the divisions and departments, and
• employees are given the competence to successively improve their own performance. The overriding goal of this management system, also known as policy deployment, is to build up the (management) competencies in the organization and create the culture and structure that are necessary for the company to operate successfully in the market in the long term.

Overcoming silo thinking In Hoshin Kanri, the PDCA cycle known from Lean Management and Lean Production plays a key role. This means that the Hoshin process consists of four phases: 

• Plan (agree on objectives and measures),
• Do (empower employees and managers),
• Check (make the development visible and check it) and
• Act (institutionalize Hoshin Kanri).

Hoshin Kanri differs from other management systems in that top management develops the vision with all next-level managers. The same applies to the breakthrough goals derived from the corporate vision and strategy, on which the company will focus its activities over the next three to five years. These are also developed by top management and (senior) executives in so-called target meetings. From the breakthrough targets, top management then derives the annual hoshin targets, which are the milestones on the way to achieving the breakthrough targets, again together with the second management level.

The measures dovetail

Once the Hoshin goals have been set, they are cascaded to the next levels, as in Management by Objectives. However, a key difference between Hoshin Kanri and Management by Objectives is that once the objectives have been defined and the plans drawn up, there is cross-functional coordination between departments, groups and teams.

Target meetings among managers

This coordination takes place in a so-called catchball process. This means that in the target meetings, all participants have the opportunity, like in a ball game, to first "throw" ideas back and forth before an agreement on targets, measures and key figures is reached. Ideally, this process involves every employee.

Increase leadership competence

In many companies, planning is done diligently, but when it comes to implementation, little happens - among other things, because employees lack important competencies. Another frequent shortcoming is that the targets are not sufficiently integrated into the daily work and leadership routine. That is why Hoshin Kanri pays special attention to developing the (leadership) skills needed to achieve challenging goals. In doing so, leadership development is usually based on the Lean Leadership Development Model. It distinguishes between four levels of competence development:

Step 1: Developing yourself as a manager. This is based on the assumption that in the future, one of the core competencies of managers will be to reflect on their own behavior and actions and to systematically improve their own performance.

Level 2: Coaching and developing other people. The second level of competence consists of the ability to develop other people as a leader in such a way that they in turn acquire the competence to reflect on their behaviour and actions and to initiate their own learning processes.

Level 3: Support the daily improvement process (Kaizen). This is about aligning groups of people (teams, departments, divisions) in one direction and ensuring the continuous improvement process. Stage 4: Create a vision and align goals. The final stage of development is about overcoming "silo thinking" and aligning all activities to achieve the overall business goals.

Giving employees tools

Another feature of Hoshin Kanri is: employees are given tools to implement Breakthrough improvements alongside their daily business. One of these tools is the A3 reports. They go back to the industrial engineer Joseph M. Juran. About 60 years ago, he recommended that Japanese top managers present problem solutions and strategies on a sheet of paper.

An A3 report is intended to make the process of problem solving transparent - among other things, in order to develop the competence of employees (alone or in a team) to solve problems independently. An A3 report reflects the thought process of problem solving, so to speak.

Installing stable processes Especially in the Hoshin Kanri check phase, shop floor management plays a central role. This is because one of Hoshin Kanri's maxims is: Instead of administrative tasks, managers should concern themselves with the value-creating processes: "Go and see" instead of "meet and mail". The regular presence of managers in the value-creating areas and their focus on deviations from the standard will speed up decisions. In addition, employees are gradually developed into improvement managers who identify and solve problems on their own.

An overriding goal here is: Stable processes should be installed in the organization to ensure that the planned results are achieved regardless of chance. This means that the processes are standardized. Standardization is seen as an ongoing process. Consequently, there is also a standardized problem-solving process that is triggered in the event of (target) deviations.

Managing the development process The communication required for this largely takes place in daily management. In daily shop floor meetings, employees are repeatedly focused on the Hoshin goals by discussing the previous day's performance and the goals for the current day. The higher levels (e.g. plant and group managers) also meet regularly to monitor the status of Hoshin target achievement.

In addition to the traditional review methods, Hoshin Kanri is also familiar with the "Presidents Diagnosis". It is called this because it involves top management personally visiting the sites, plants and divisions to assess their "fitness". In the Presidents Diagnosis, the progress of the company is analyzed on the basis of eleven criteria: Management, Financial Management, Human Resources, Supply Chain Management, IT, Quality, Sales and Marketing, Engineering, Manufacturing, Maintenance, and Materials and Logistics.

Making problem solving transparent

The Presidents Diagnosis includes the following three steps:

• Self-diagnosis by the areas or Hoshin teams,
• Presidents Diagnosis by top management and
• Recognition of goal achievement by top management.

Securing what has been achieved through standardisation

At Hoshin Kanri, a strong focus is placed on securing what has been achieved through standardisation and initiating follow-up activities in the Act phase to further improve the processes. Standardization in this context means that the processes that create value for the customer can be repeated at any time - independent of people, time and place. Several levels of process standardization are distinguished - depending on whether they relate to simple activities or complex procedures and processes.

After standardization, Kaizen can be introduced. Based on the PDCA cycle, kaizen means the continuous, step-by-step improvement of standardized work. Kaizen is intended to keep the system alive, so to speak, in the company's everyday life by stimulating continuous improvement and the associated learning processes.

Institutionalizing lean thinking The ultimate institutionalization of Hoshin Kanri and lean thinking takes place in leadership development. For this reason, Hoshin Kanri also regularly reviews how the competence of the managers has developed. Based on the Lean Leadership Development Model, the key review questions are:

• How have the leaders themselves developed?
• How well did they develop others?
• Do they perform kaizen on a daily basis? And:
• Do they lead their teams towards the strategic goals?

It is also important for the institutionalization of Hoshin Kanri that succession planning is based on the lean leadership development model to ensure that all incoming leaders have internalized the lean thinking and lean leadership competencies needed to further develop the culture of continuous improvement.