Understanding
Hoshin Kanri
If one or more of the above coincide with
the planning behaviours of your company, then implementing
Hoshin Kanri is the best solution. Developed originally
in Japan, Hoshin Kanri has been used in a few Western companies
to achieve a strategic focus to daily working. The Japanese
defined Hoshin Kanri as a planning, implementation, and
review system for managed change in addition to being a
policy deployment framework for successful Total quality
management (TQM).
The words Hoshin Kanri translate approximately
as policy management and Japanese authors have conceived
a directional essence in its meaning - that of a sailor's
compass - implying a shining light from the metal of a compass
needle to show the way forward. A compass directs the individual
ships of a fleet over a long voyage, so they all sail together
in the same direction.
In its simplest form, Hoshin Kanri can be
described as a system of forms and rules that encourage
employees to analyse situations, create plans for improvement,
conduct performance checks, and take appropriate action.
In practical application, it is a philosophy of management!
The birth and growth
of Hoshin Kanri
Many of the Japanese Deming Prize winners
have credited Hoshin as one of the key contributors to their
business success. Likewise, progressive US companies, like
Hewlett-Packard (HP) and Xerox, have also adopted Hoshin
in their strategic planning process.
In 1982, Hewlett-Packard won the Deming prize and the success
of Hoshin Kanri ultimately led other companies in the HP
Group to adopt it. A number of Western-owned companies use
Hoshin Kanri, though under names. Some of the terms include
'policy deployment' at AT&T, Rank Xerox and Rover Cars;
'goal deployment' at Exxon Chemical; 'managing for results'
at Xerox Corporation; 'hoshin planning' at Hewlett-Packard
and 'Hoshin Kanri' at Digital Equipment.
The similarity
to PDCA!
Industry experience proves that the fundamental
pre-requisite for Hoshin Kanri is a successful TQM system
with standardised business processes under control, which
makes use of cross-functional ways of managing. It applies
as daily practice, the Plan-Do-Check-Act (PDCA) cycle in
conjunction with basic quality tools.
The Hoshin framework is considered to be made
up of four phases. It begins with the Act stage where
senior company executives, along with general managers revise
the company's corporate strategy. This is termed as the
'Focus' phase of Hoshin Kanri, wherein the vital
few strategic objectives are determined for the company.
Next comes the Plan stage, termed as
the 'Alignment' when the select vital few objectives
are translated and developed cross-functionally within the
company so as to align unit priorities.
The Do stage is the 'Integration'
of these priorities into daily management and project working.
The Check stage, termed as the 'Responsive'
phase, is the management of the strategic objectives
in the processes of daily working. It involves daily and
periodic reviews of work in progress. Towards the end of
the annual cycle, an annual (quality) audit is conducted.
Here, progress is continually monitored, checked and, if
necessary, acted upon. Information from these reviews and
the audit are carried forward into the next annual cycle
as the Focus phase comes round again. The entire
process is also designated as 'F-A-I-R'.
Understanding 'FAIR'!
Focus
The corporate strategy processes associated
with Hoshin Kanri companies are considered to consist of
five elements. They are vision, mid-term objectives, voice
of the customer, external conditions, internal conditions
and progress. In the Hoshin approach, there is a corporate
vision statement, which helps to concisely establish the
values and long-term goals of company, and a mid-term plan,
which translates vision into objectives for a maximum period
of three years. These are considered along with the current
and anticipated needs of customers. This is done as directly
as possible so that the 'voice of the customer' can be translated
in terms of quality, cost, delivery and employee-related
targets. While the external conditions refer to audits of
both the trading and marketing systems, the internal conditions
refer to the internal capabilities and competencies of the
organisation. Progress refers to the feedback on the previous
Hoshin cycle.
This phase of the cycle differs from conventional
practices of re-formulating corporate strategies as emphasis
is placed on the selection of just a vital few objectives,
generally not more than four, and all vital if the corporate
mid-term objectives are to be achieved.
Alignment
It is then up to company and unit managers
to determine in the alignment phase what the selected objectives
require in terms of annual means. These objectives must
then be translated and balanced against budgets and local
priorities. This involves the iterative deployment of a
few critical objectives in the form of Hoshins or policies.
A Hoshin is a combination of a statement of a strategy (called
an objective), and a statement of the means to achieve the
strategy, along with a statement of how performance is to
be monitored (called a target). Typically, a Hoshin
is passed from one level of management to another, where
subordinates or managers in other functional areas will
translate their part as a sub-Hoshin, with its own strategy,
means and targets, and so on across the entire organisation.
Usually this deployment process takes place in about three
sub-Hoshins.
The entire process is termed catchball.
It involves discussions about the practical issues of implementation
and the reasonable strategies and means to achieve them.
These discussions do not focus much on what must be achieved
in terms of a Hoshin, but on how they can be achieved. A
crucial question that arises is: 'How to realistically achieve
Hoshins considering the competencies and capabilities of
the organisation. Thus, the 'ball' is passed back and forth
until general agreements are arrived at. The process is
cross-functional and often time-consuming. During the process,
various managers must agree on the ownership of objectives
and performance criteria, the key strategies involved and
accountability.
Integration
Upon completion of the catchball process and
agreement on the Hoshins, implementation plans are drawn
up (the overall company annual plan is sometimes referred
to as an integrated business plan). These plans give a clear
overall idea of the critical paths involved along with specifications
of the key activities and who actions them, their targets
and associated time-scales. This is then communicated to
the employees. For those Hoshins, which do not integrate
effortlessly into daily work activities, a project team
approach is taken involving special project teams.
Responsiveness
This phase involves the daily control of processes,
along with the periodic checks and problem-solving of chronic
problems, critical issues, and the resultant standardisation
of solutions. Thus, Hoshin related targets are reviewed
and, if necessary, acted upon on a continuing basis through
the general PDCA practices of daily management. Persistent
problems may require Hoshin means, targets, and even a policy
itself, to be reworked and modified.
Towards the end of this phase, information
is gathered from the periodic reviews for feedback to senior
management. This enters the next focus phase, which starts
the annual cycle all over again.
A sample Hoshin process:
Here is an example of the goals set at various
levels of an organisation through Hoshin Kanri:
| Level |
Goal |
| Corporate |
Delight the customer |
| Department |
Reduce cost of poor quality |
| Maintenance |
Reduce machine failure by 25% |
| Manufacturing |
Less than 2% defect |
| Delivery |
Less than 8% late deliveries |
How to implement
Hoshin Kanri:
