Hoshin kanri is what happened when Management by Objectives met TQC. In essence it is the thorough application of the PDCA cycle to the strategy development and execution process. There are some unique aspects to hoshin kanri due to the influence of Japanese culture and the value place on harmony, namely the consensus-building through the catch ball process and the informal decision making and discussion known as nemawashi. The insistence of hoshin kanri on placing a focus on the vital few is consistent with the kaizen culture to question value, remove waste and do more with less.
Hoshin simply means policy and kanri means management, but in English these two together sound awfully bureaucratic and dry so often “policy deployment” or even “strategy deployment” is used to give it pizazz. We prefer to retain “policy” because we believe it implies longer term thinking, values and continuity, while strategy is about what things to do towards those policy objectives. Many see hoshin kanri as another lean tool, a convenient way to track projects, or another secret of Toyota to demystify, learn and benefit from, but the truth is much simpler: hoshin kanri is daily management driven by long-term thinking.
At its best hoshin kanri can turn resistance into support, create cross-functional cooperation, engage the wider workforce in crafting executable strategies, link improvement actions with financial results, allow the team to respond to changes and setbacks simply by following the process, and generate and act on effective strategies year after year by learning and refining the policy deployment process.
The ideal place to start a company deployment of lean would be hoshin kanri. Unfortunately most leadership teams are not ready for this degree of candor, management by fact, deselection of cherished projects, and disciplined and frequent review. Getting policy deployment right takes time in leadership training, strategy development, understanding what PDCA really means, and the dos and don’ts of putting words and pictures on A3 sized paper. There is no point in doing hoshin kanri middle-up, except as a learning exercise or to prove a point. It is also definitely not just a budgeting exercise, which people sometimes mistake hoshin kanri to be.
As our small, globally distributed company prepares to make yet another serious attempt at making policy deployment part of the way we work, I reflect on some of the ways we have seen clients, friends, ourselves and our colleagues struggle with hoshin kanri. There is nothing difficult about hoshin kanri itself. There is everything difficult about its insistence that we practice the basics day after day like professionals, rather than play each day as we please, like amateurs. Specifically, here are nine ways to struggle at hoshin kanri:
1. Wrapping today’s management process in A3 paper
It’s important to allow hoshin kanri to make you better. Too many senior leaders at excellent companies have tried to take their management process, add a few X-matrices or A3 reports, insert one or more of the words “goal, policy, strategy, deployment, alignment” etc. and basically continue the same way as before. This is a good way to struggle at hoshin kanri. The only way to get out of this is to have a standardized way of learning and improving the process itself. If the hoshin kanri process doesn’t have a PDCA process built in for reflection and learning as part of every review cycle, it is not hoshin.
2. Not knowing why
If you have a strategy, objective or a policy handed down to you from your superior, do you always understand the reason for it? Most of the time we don’t challenge and ask why. Those who do are seen as either disruptive at worst and mavericks at best. If you don’t know the “objective of the objective” or the reason for the policy, enough questions have not been asked. Simply accepting the policy handed down without challenge and attempting to pass it through a hoshin kanri process is another sure way to struggle. A healthy culture of ask “why?” and the patience to pass the ball up and down until stakeholders have enough information to support, if not agree, is necessary. Catch ball with a willingness to question and be questioned is essential.
3. Setting broad, vague, shallow objectives
Mission statements can fill a plaque on the wall and say virtually nothing. To the committees who crafted them, they may seem brilliant. However to the rank and file who are being asked to act on these policies, they are nearly useless. Big does not have to mean broad and vague. In the effort to give meaning to everyone, objectives can become shallow. These qualities may be excusable for 10-year pans, but for 1-3 year plans, not. The clearer your top level objectives, the better lower level strategies you will develop. Not spending time to make the top level policy statements and hoshin kanri objectives clear and full of deep insight is another way to struggle in policy deployment. It is OK if the wording changes later on based on the catch ball. Most mission statement generation sessions come to conclusions not because everyone on the committee is happy with the product but often because time, patience and consulting budget have run out.
4. Cheating on the “therefore” test
The root cause analysis of the gaps between where you are and where you want to be should result in actions and plans to close those gaps. These in total become your strategy. Working backward from the end of your A3 back to the top, people find that you can’t always get there from here. The logical flow of cause and effect is lacking. Somewhere along the way we have all lied to ourselves and agreed it is a great idea, without passing the “therefore” test. When the plans come together very quickly, we often haven’t asked enough questions or through through the contingency plans, and this can lead to struggles and disappointments down the road as plans must be changed to meet reality. When you have a plan, stop and work backwards, saying “we will do this, therefore…” until you can demonstrate that the gaps will be closed.
5. Marking it yellow or red and moving on
Too often we raise yellow or red flags, discuss countermeasures, leave the meeting and trust that our colleagues have taken care of the issue. Yet we have seen more reds and yellows lingering on hoshin documents than the process should allow. When there is no method to safely surface these problems, ask for help, receive help, and learn as a group how to prevent the same mistake in the future, the hoshin kanri process will struggle.
6. Using the down-up-down process for negotiation, not consensus
If the policy is well-formed, there should be no negotiation. It should be customer focused, people-centered, and driven by sustainable profitability. Developing consensus on the policy may result in changes to the policy, but changes are very different than negotiated settlements. When each side gives up something, the end product is a compromise. When the catch ball process does not connect the vision at the top with the day to day realities on the front line, hoshin kanri is less than fully effective. The best way to bring about catch ball is through teams. A lack of a team culture is another great way to turn hoshin kanri into a struggle…
7. Happy planing
Happy plans are the ones where you tell yourself and your team all about your dreams, ideas, and all of the exciting things you will take on. Hoshin plans are the ones where you do this, and then ruthlessly remove the ideas that aren’t supported by resources, alignment of purpose, customers, or adequate data to say that you should be putting your money and time there. Hoshin is painful until you you have experienced the happiness of doing fewer things far more effectively. Avoiding this and pursuing happy plans leads to struggle and wasted resources while tough decisions are not made.
8. Writing your hoshin plan on the computer
We recommend doing your top level A3 by hand. Use a big whiteboard or a large piece of paper. You need to be able to walk people through the thinking process, how you wrote down, crossed out, erased, reconsidered, clarified. If you show people that it’s OK to put text in a spreadsheet you will find it much harder to get them to accept the fact that they need to make changes to it. People are more tolerant of you scribbling on a whiteboard or piece of paper but don’t like it when you mess with their electronic documents, for some reason. The hoshin plan that goes from words across a table straight onto a laptop projected on a screen lacks a certain honesty and rigor.
9. Having a strategy that is too good to be changed by hoshin kanri
Pity the management team with a brilliant plan. Unless it is the result of brilliant planning which is a process and not chance, and repeatable, hoshin kanri will struggle as “we already…” tried it, thought of it, studied it, spoke to the customers, and so on until there is only room to fit the brilliant plan onto a lonly A3 report. Just as in kaizen, we need to belive “now is the worst it will ever be” and our job is to make what we have now better. We need to be careful how much we pay consultants *cough* to give us a brilliant plan.
We will stop at nine. There are plenty more ways to struggle with it. Hoshin kanri is not for the faint of heart. But this not meant to discourage anyone. I have been guilty of at least 10 of the struggles above, but the learning itself has been worth it. The rewards of hoshin are great. It requires great humility, a willingness to engage a broad range of people in setting the strategy, the discipline to go see for yourself, ask why until the true causes are found, and never be satisfied with the process or results. It is a great way to accomplish important things. It is a great way to develop people.