The Hoshin Planning System
Steering Everyone in the Right Direction
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, but 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 organizations. There's a strategic destination that all colleagues are supposed to reach – but, the route that each person takes to get there can vary significantly. And, if they're not careful or are given incorrect instructions, they may find themselves way off course.
The Hoshin Planning System (also known as Hoshing Kanri) is a useful tool you can use to keep every one in your organization on course to meet your organization's core strategic objectives. In this article, we'll examine what Hoshin Kanri is and how to implement it effectively.
What is the Hoshin Planning?
Hoshin Kanri was first developed by the Japanese in the 1960s and 1970s. The phrase translates into English as "compass management" and that's exactly what it's all about – coordinating the different parts of your organizations so that they are all directing their efforts toward meeting its strategic objectives.
The Hoshin Process encompasses seven key stages:
- Establish the vision and assess the current state.
- Develop breakthrough objectives.
- Define annual objectives.
- Cascade goals throughout the organization.
- Execute annual objectives.
- Monthly reviews.
- Annual review.
The process provides a straightforward system that organizations can use to plan and deliver their strategic objectives, align this strategy across departments, and review progress.
How to Use the Hoshin Planning System
Hoshin Kanri was heavily influenced by Deming's Plan-Do-Check-Act (PDCA) cycle, a generic method for continuous improvement. Below, we've shown how the various steps of Hoshin Kanri align with PDCA.
Step 1: (Plan) Define What You Want to Improve
First, you need to establish your key strategic objectives and think about how these link in to your organization's mission, vision and values. This will likely involve lots of research and feedback from across your organization. To help, take a look at our article on Developing Your Strategy.
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
Once you've set your strategic goals, you'll need to start thinking about what needs to happen for you to meet them. To do this, consider the following questions:
- What organizational (or team/functional/departmental) goals for the year are needed to achieve this objective?
- What checkpoints are necessary to keep the goals on track?
- What support can you put in place to ensure that the goals are successfully reached?
- How will you measure progress and evaluate success?
Record your answers, and use them as the basis for your review process.
Step 3: (Do) Communicate the Plan
Now, it's time to communicate your plan throughout the organization. Make sure that your vision, strategy and goals are set out as simply and clearly as possible, so that everyone can understand them.
Allow each department and team to set its own goals that link directly to your key objectives. This will result in a "ripple down effect," and ensure that everybody understands their place in the "bigger picture."
People will also need to understand how exactly they should be measuring and reporting their progress. So be sure to also clarify what your key metrics are. You may like to use Key Performance Indicators or OKRs to do this.
To keep everyone on track, assign clear responsibility for each objective and sub-goal. And make sure that everyone is "on board" with this plan of action before implementing it.
Step 4: (Check) Measure and Check Your Progress Regularly
Make sure that your key metrics are being reported on and monitored regularly. If your key metrics aren't being met, ask yourself "why?"
Create a review table for each goal that shows the:
- Goal owner(s).
- Performance metrics.
- Actual results.
Then use this table to manage movement toward these goals.
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.
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
If there are any differences between expected and actual results, identify the sources of those differences. Perhaps a big deal fell through? Or market fluctuations caused unexpected results?
Discuss these and take corrective action. Ask yourself:
- 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 whether any changes need to be made to your goals and team activities.
With this review (or act) step, you can ensure that plans continually evolve, and that you are well-prepared and responsive to changes in your wider environment.
Step 6: Repeat the Process as Needed
You can cycle through this process over and over again 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 are aligned to the wider organization's strategy and that they are committed to continuous improvement.
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.
Peter Drucker's Management by Objectives (MBO) was very influential in the development of Hoshin Kanri. The idea of various levels of organizational objectives, from management down to the workers, is a fundamental part of Hoshin planning.
The Hoshing Planning System is a straightforward process organizations can use to align their strategic objectives across their entire business.
Based on Deming's Plan-Do-Check-Act cycle for continuous improvement, the Hoshin Planning System is a powerful way to direct your organization's energy toward key performance outcomes.
There are six steps you can follow to use the Hoshin Planning System. These have been aligned to the PDCA cycle:
- (Plan) Define what you want to improve.
- (Plan) Establish sub-goals to achieve your objective.
- (Do) Communicate the plan.
- (Check) Measure and check your progress regularly.
- (Act) Analyze results and take corrective action.
- (Act) Repeat the process as needed.
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