Hoshin kanri

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Hoshin kanri
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Hoshin kanri is an system approach to planning, that fosters continuous improvement. It involves every employee into processes of strategic management. It's a Japanese version of management by objectives (MBO).

Hoshin kanri begins with a strategic plan developed by top management. Then mid-level managers develop tactical objectives on departmental level, that allow to achieve strategic objectives. On the floor level, team leaders an managers work out the operational objectives and details. The important method is "catchball" - extensive communication between management levels in order to keep high level of compatibility between objectives. Results are being monitored weekly or monthly and appropriate adjustments are made if necessary[1].

Hoshin principles

  1. Measure your organization. Measurement gives management a clear understanding on how the organization is performing.
  2. Get everyone focused. Setting the objectives, communicating them and setting owners improves level of goal achievement.
  3. Use organization's capacity. Full capacity of the organization towards objectives achievement is unknown until top management involves all employees into strategic planning.
  4. Set priorities. Every organization has limited resources. They should be used efficiently and effectively.
  5. Involve everyone. Including every employee into the process creates a new dynamic and enables faster growth[2].

7 steps of Hoshin kanri

Step 1. Establish the vision

Catchball (reaching consensus) method in Hoshin kanri

The vision of the organization is a preliminary step towards Hoshing kanri implementation. If the top management doesn't know the vision and mission of the organization it is unable to develop a strategic plan[3].

Step 2. Develop long-term objectives

Long-term objectives show the way to managers and employees. In 60s and 70s it wasn't unusual to create objectives for next 10, 15, 20 years. Nowadays we live in turbulent world. Planning for 3-5 years is regard as long-term. Some even say that it is impossible to plan, and they suggest emergent strategies.

Step 3. Develop annual objectives

Long-term objectives should be sliced into 1-year objectives. Depending on the type of the objective, it can be possible to achieve 1-2 long-term objectives or rather focus on achieving 20-30% of every long-term objective.

Step 4. Deploy objectives

The strategic plan should be deployed on departmental level and lower levels. The objectives should be cascaded until reaching teams or workplaces. At each level objectives are more detailed. Catchball method allows keeping compatibility.

Step 5. Implement objectives

The actions required to achieve objectives are planned and then executed. Effects are monitored.

Step 6. Review objectives

The reviews should be taken monthly. Each variation from the planned KPIs and objectives should be analysed and appropriate corrective measures should be taken. Monthly review allows to keep involvement and foster culture of accountability.

Step 7. Annual review

Each annual cycle is ended with annual review. The review enables top management to improve vision and long-term objectives. It's also important input into next year cycle of Hoshin kanri.

Hoshin methods

Visionary strategic planning

As every company has limited resources, managers shouldn't set too many objectives. Five objectives or less are a rule of thumb in Hoshin kanri. Reducing number of goals forces managers to focus on the most important ones. It is important to not only achieve goals, but also to choose goals that are important.

Consensus (catchball)

Hoshin kanri is based on consensus. Top managers are responsible for strategic planning, but the should consult plans with middle managers. The same way - middle managers consult with lower level managers and team leaders. Consultation allows:

  • additional perspective
  • feedback on capability of enterprise
  • removal of objectives that are not possible to achieve
  • create a shared responsibility
  • involve employees on every level into strategic planning

Measuring progress

Key performance indicators (KPI) are the method of monitoring progress. It is important to choose KPIs wisely, as they sometimes become ghost objectives - workers may focus on KPI value, not the goal showing larger perspective. Fulfilment of KPI should mean simultaneously fulfilment of the objective.

Goal owners

Every goal should have an owner, who is responsible for monitoring actions that lead towards the goal. He is a facilitator and a coach.

Hoshin planning matrix

Hoshin planning matrix is an important tool that allows to monitor planning and achievement of objectives. It's should be available to all employees involved in Hoshin kanri. It is important to state that plans flow from two sources: long-term planning and review of annual objectives.

Hoshin kanri planning matrix

References

  1. Lean Production
  2. Hoshin Kanri explained
  3. The seven steps of hoshin

Author: Slawomir Wawak