by Allan Ung
In today's competitive business environment, strategic planning is essential for organizations to stay ahead of the curve. However, traditional strategic planning approaches may not always lead to effective implementation, as they often lack a clear alignment between top-level strategies and on-ground actions. That's where Hoshin Kanri, also known as Hoshin planning, comes in.
Hoshin planning is a comprehensive strategic planning and deployment approach that originated in Japan. It is a continuous improvement methodology that involves the entire organization, from the top-level management to the frontline workers. The Hoshin planning approach helps to create a shared vision, align strategies, and execute them effectively, resulting in better performance and sustainable growth.
Hoshin Planning vs. Conventional Strategic Planning
The Hoshin planning approach differs significantly from conventional strategic planning in several ways. Traditional strategic planning is often a top-down approach that involves a small group of executives making decisions about the company's future direction. However, this approach can be problematic because it may not fully consider the views and insights of frontline employees who have a better understanding of the day-to-day operations.
Hoshin Planning: Vertical Alignment and Horizontal Coordination
In contrast, Hoshin planning is a participatory approach that involves everyone in the organization, from the top-level management to the frontline employees. It aims to create a shared vision and a collective understanding of the organization's goals and objectives, which helps to ensure that everyone is aligned towards the same outcomes.
Benefits of Hoshin Planning
Hoshin planning offers several benefits over conventional strategic planning, including:
• Holistic approach: Hoshin planning emphasizes involving all stakeholders in the planning process, from top-level management to frontline workers.
• Focus on a few strategic goals: Hoshin planning focuses on a small number of strategic goals to ensure everyone is clear about the organization's priorities and can remain focused on achieving them.
• Alignment: Hoshin planning emphasizes aligning an organization's long-term objectives with daily operations to ensure everyone is working towards the same goals.
• Continuous improvement: Hoshin planning involves a continuous cycle of planning, implementation, and evaluation to promote ongoing improvement.
• Data-driven decision-making: Hoshin planning uses data to identify opportunities for improvement, set objectives, and monitor progress towards achieving them.
• Clear accountability: Hoshin planning establishes clear accountability for the achievement of the strategic goals, including performance metrics and incentives.
Hoshin Planning Process
Hoshin planning involves a four-phase process: Hoshin Generation, Hoshin Deployment, Hoshin Implementation, and Hoshin Evaluation. Let's take a closer look at each of these phases.
Four Phases of Hoshin Planning
Phase 1: Hoshin Generation
The first phase of Hoshin planning involves generating ideas and developing a long-term vision for the organization. This phase aims to identify the critical issues facing the organization and to determine the most critical challenges to be addressed.
Phase 2: Hoshin Deployment
The second phase involves deploying the long-term vision and creating annual objectives that support that vision. This phase aims to develop actionable plans to achieve the organization's objectives and to establish key performance indicators (KPIs) to track progress towards those objectives.
Phase 3: Hoshin Implementation
The third phase involves implementing the Hoshin plan by cascading the annual objectives down to the functional and operational levels. This phase aims to align the organization's daily activities with its long-term objectives and to ensure that everyone is working towards the same goals.
Phase 4: Hoshin Evaluation
The final phase involves evaluating the organization's performance against its objectives and identifying areas for improvement. This phase aims to promote continuous improvement and to refine the Hoshin plan over time.
Deploying the Hoshin Plan Using the A3
The A3 methodology is a problem-solving technique that can also be used as a tool for deploying hoshin plans. In this context, the A3 can be used to summarize the hoshin plan and communicate it throughout the organization.
To use the A3 as a hoshin planning deployment tool, start by creating an A3 document that summarizes the hoshin plan, including the key objectives, strategies, metrics, and action plans. Then, use this document to facilitate discussions and ensure alignment across the organization. The A3 document can also be used to track progress and communicate updates on the implementation of the hoshin plan.
By using the A3 as a deployment tool, organizations can ensure that the hoshin plan is clearly understood and effectively executed throughout the organization.
Hoshin Management Reviews
Hoshin planning deployment involves regular management reviews to ensure that the strategy is being effectively implemented and to identify areas for improvement. These reviews involve analyzing data and progress reports, identifying issues and opportunities, and making adjustments as necessary.
There are different types of management reviews that take place at different intervals, such as monthly, half-yearly, and annual reviews. Here's a brief explanation of each:
• Monthly review: Monthly reviews are informal "self-reviews" and are conducted to monitor progress towards the annual objectives and make necessary adjustments to ensure that they are achieved. During monthly reviews, individuals and/or teams discuss the progress made on key performance indicators, identify any obstacles or challenges, and develop action plans to address them.
• Half-yearly review: Half-yearly reviews are conducted to evaluate progress towards the annual goals and make mid-course corrections as needed. During half-yearly reviews, teams assess their performance against the annual objectives, review the progress made on key initiatives, and identify any issues that need to be addressed.
• Annual review: Annual reviews are conducted to evaluate the overall performance of the organization over the past year, review progress made towards achieving the long-term strategic goals, and set new goals and objectives for the coming year. During annual reviews, senior management evaluates the performance of the organization against its strategic plan, identifies areas for improvement, and establishes priorities for the coming year.
Best Practices of Hoshin Planning
By following these best practices, organizations can effectively align their long-term objectives with daily operations, promote ongoing improvement, and achieve sustainable growth:
1. Involve all employees in the Hoshin planning process to ensure buy-in and alignment with the organization's goals.
2. Focus on a small number of strategic goals to ensure that everyone is clear about the organization's priorities and can remain focused on achieving them.
3. Develop a clear and concise strategic plan that is easy to understand and communicate to all employees.
4. Use data-driven decision-making to ensure that the organization is making informed decisions based on actual results.
5. Regularly review progress towards the strategic goals and make adjustments as necessary.
6. Ensure that everyone in the organization understands how their work contributes to the achievement of the strategic goals.
7. Provide training and support to employees to help them develop the skills and knowledge necessary to achieve the strategic goals.
8. Establish clear accountability for the achievement of the strategic goals, including performance metrics and incentives.
9. Foster a culture of continuous improvement by encouraging employees to share ideas and suggestions for how to improve processes and achieve the strategic goals.
10. Ensure that senior management is fully committed to the Hoshin planning process and provides the necessary resources and support for its successful implementation.
In conclusion, Hoshin planning offers a comprehensive and participatory approach to strategic planning that can help organizations achieve sustainable growth and better performance. By emphasizing alignment, continuous improvement, and data-driven decision-making, Hoshin planning promotes a shared vision and a collective understanding of the organization's goals and objectives.
Unlike conventional strategic planning, Hoshin planning involves everyone in the organization, from the top-level management to the frontline employees, to ensure buy-in and alignment with the organization's priorities.
Management reviews in hoshin planning serve as a critical mechanism for ensuring that the organization stays on track towards achieving its long-term strategic goals.
By following best practices such as involving all employees in the planning process, focusing on a small number of strategic goals, and fostering a culture of continuous improvement, organizations can successfully implement Hoshin planning and achieve their strategic objectives.
Article by Allan Ung, Principal Consultant at Operational Excellence Consulting, a Singapore-based management consultancy firm that assists organizations in maximizing customer value and minimizing wastes through adoption of Design Thinking and Lean Thinking practices. For more information, please visit www.oeconsulting.com.sg