I believe an organization should evolve into Hoshin Kanri versus implementing it. As a result, I purposely left this section with the least amount of content. most Hoshin Kanri books are filled with literature about the tools such as SWOT, SOAR and the previous Lean Tools mentioned. They will also fill the pages with understanding strategy, vision, benchmarking and other management tools. My thoughts are that you should take The Path of Least Resistance. Most often your existing process is not all that broken and if you want to introduce change, you need to tweak around with it rather than jump headfirst. The success of the practice of SDCA and PDCA throughout the organization will ultimately determine your success in Hoshin Kanri. Few things can be done on a Macro level that were unsuccessful at the micro level.
David takes an evolutionary approach to change. An excerpt from a podcast with David:
The whole Kanban thing really came about from the challenge of people resisting change. I was looking for ways of pinpointing root causes of problems. I found that introducing a full system where we’re limiting the work in progress, was a way of addressing quite commonly occurring problems. Problems with committing on something too early, making commitments where there was a great deal of uncertainty.
So under conditions of uncertainty, people were committing too early, and a Kanban system was a way of deferring commitment until much later, Lean people might say, “the last responsible moment.” And also controlling a lot of the variability in the flow of work through the limiting of work in progress, the understanding of different types of work and different classes of service and setting capacity allocations for those, controlling interruptions and disruption.
Eliminating the uncertainty and delaying commitment until later, the net result is much more predictable delivery. Those problems were commonly occurring, so implementing a Kanban system was like a point solution for an incremental improvement. And then, from that, we discovered that Kanban systems catalyze further changes. They provoke conversations about other problems, and we get this evolutionary change emerging.
Kanban has been a lot about perhaps not managing change but trying to avoid biting off too much change. And, in general, I’ve felt that there’s been a problem with organizations, executives particularly, the corporate magpies, they get excited about shiny objects, like new process solutions that promise a nirvana of projects, correctly prioritized and delivered on time, within a very reasonable budget and perhaps ever shrinking budgets.
They go after these exciting sounding results, often trying to achieve too much too soon, and their organization just doesn’t have a capability to absorb and manage all the change that they desire. They really want the outcome, but getting there is beyond their capability.
An orchestra tuning is a self-organizing system; in other words, it is a complex created by incalculable numbers of occurrences that arc self-gene rated and self-arranged. There is no plan to the multitude of event! that occur, but they form predictable and consistent sound patterns.
What can we say about this organization? In many ways, a tuning orchestra fulfills many of the important criteria often described as essential to organizational success:
It has a common purpose (to tune each instrument to a common pitch).
Each individual takes personal responsibility for fulfilling that purpose.
Each member is a highly trained professional, fully capable of performing any task required.
However, this organization—the orchestra—is predictably limited in its ability to produce music within the self-organizing system that tuning produces. When we listen to an orchestra tuning up. we can recognize it for what it is. We do not confuse the tuning with the music about to be performed. If the evening consisted of hours of musicians tuning, we would are want our money back.
But after a short lime, the musicians become quiet. The conductor comes to the podium. The baton is raised, and with the first down-beat the musicians produce music that is far more interesting, structurally and emotionally complex, dramatic, and moving than any sounds that came I from the orchestra when they were tuning.
We have witnessed a transformation from unharnessed potential that reached a status quo to focused potential fulfilling its promise. What made the difference? Not talent, dedication, skill, professionalism, resources, energy, and attention to detail, for there was no change in these characteristics.
In business, we often hear the call for more of these very qualities. “Our organization needs more dedication, attention to detail, a higher skill level, more professionalism, more resources, more energy.” These certainly are useful and important qualities to have in an organization. But, as we can see from our orchestral example, by themselves, these factors are not enough. The composer and the conductor provide vision, leadership and a profound understanding of structure that enables the resources of the orchestra to be put to good use.
The musical score is the most dominant factor. An orchestra with a conductor but without a score would hardly be more productive than the tuning-up exercise. In fact, an orchestra can play a score without a conductor, although usually not as well. So the composer’s role is supreme. Rut the best score, unperformed, does not reach its height of fulfillment either. The composer, the conductor, and each musician performs a unique function within the music-making process. The separation of function allows each individual to serve the performance of the music. At its best, the orchestra is one of the finest examples of organizational control—the ability of a group of people to join together and accomplish their collective purpose through their shared efforts. Control is multiplied throughout the organization by combining clarity of a unifying principle (score) with competence of personnel (musicians) and leadership skills (conductor).
An organization can be as highly professional as the world’s best orchestras once it becomes well-structured, with a thematic unifying principle that is consistently reinforced throughout its various activities, To learn the lesson of the orchestra, we must move away from self-organizing systems that produce limited status-quo results and into a highly composed system that is capable of superior performance.
In the podcast featuring Ari Weinzweig, CEO and co-founding partner of Zingerman’s in Ann Arbor, Mich. The Zingerman’s Community of Businesses (ZCoB) has annual sales of over $40 million. ZingTrain, a consulting and training company shares Zingerman’s approach to business with like-minded organizations from around the world, and offers a variety of management training seminars in Ann Arbor, as well as customized workshops and presentations at client sites.
Joe: A big part of your organization has become Zing Training. What started that? Did you just wake up one day and say, “Gee, we need to bottle this up?”
Ari: ‘Well, we opened in ’82, and then in ’93, Paul and I spent about a year writing a new vision for the business. When we opened, we were very clear about our vision. And actually the first natural law of business, I think, is organizations that have a clear vision of greatness are going to have a better shot at succeeding. So when we opened in ’82, we were very clear in our minds and what we wrote down that we only wanted one deli. We didn’t want a chain or replicas. We knew that we wanted something that was unique to us and not a copy of something from New York, or Chicago, or LA.
We knew that we wanted really great food and service but in a very accessible setting, and that we wanted a really great place for people to work, and to be bonded into the community. By ’93, so 10, 11 years in, I mean, we kind of had done that. In that, we had filled in, expanded twice on the site that we’re on.
We’re in the historic district, so it’s not easy to do that. We kind of had, I guess in hindsight what would be the equivalent of an organizational “midlife struggle.”
I don’t think it was a crisis, because we weren’t crashing, but we weren’t really clear on where we were going. We had achieved what we had set out to do despite going against the odds. So we spent about a year coming up with our next vision, which we wrote out.
It was called Zingerman’s 2009, so it was for 15 years into the future. That vision outlined that we would have a community of businesses all here in the Ann Arbor area, because we like to be connected to what we’re doing.
Each building should be a Zingerman’s business, but each would have its own unique specialty. So that way, we could grow but keep the deli unique, and do other things. And we would only do a business when we had a managing partner or partners in it that would own part of that business and have a passion for whatever that business did, and be connected to it every day going for greatness.
And after we wrote that vision and rolled it out, then Maggie Bayless??who we had known at the restaurant?? she had been, I mentioned a waitress there. But she had gone back to school and gotten her MBA at Michigan, and wasn’t that thrilled with the corporate world, but loved training.
She read that vision. She came to us and said, “Well, what about doing a Zingerman’s training business?” That’s how it started, then we worked on it for a while and opened it up in 1994.”
Patrick Lencioni is one of my favorite authors. One of his books, Death by Meeting: A Leadership Fable…About Solving the Most Painful Problem in Business (J-B Lencioni Series)advocates the structure of a daily check in. He says the keys to make it successful are don’t sit down, keep it administrative and don’t cancel when someone can’t be there. It is important to share the news. I highly recommend the book and the outline of the four different types of meetings he discusses: Daily, Weekly Tactical, Monthly Strategic, and Quarterly Review. Having frequent short meetings simply keeps everyone on track. Sharing daily activities and schedules allows you to not operate in a vacuum and the knowledge of a team is always more powerful than the knowledge of an individual.
Listen to a tip from Patrick about improving team communication:
Hoshin Kanri is a Lean Organization’s method to set mid to long term management plans. We prioritize our resources and activities by involving members through a method called catchball. Though it seems an easy process to understand most organizations design their systems based on the structure of the organization. It is a reason that Six Sigma may be better suited for the typical hierarchy structured command and control organization. It is also, why the catchball approach is very difficult for most organizations.
Catchball was explained before, but a few details that I felt worth mentioning. Managers in a hierarchy structured organization believe that not having a detail process will hinder getting their plans enacted. They also are hesitant sending their well-thought out idea and creating a free for all atmosphere around it. It often may be the fear of losing control. What they will find is that as you play catchball, the further you go down in the organization, the more tactical the feedback is. People want leaders to lead. In the same vein, most people want to do a good job. How to implement your idea, vision is often contained within the tacit knowledge of your organization. Catchball makes that knowledge explicit. Prioritizing activities and resources are best left to the parts of the organization that is closest to the job to be done.
An organization is structured into functional areas and each area is given a mission to efficiently reach the organization’s purposes. In Hoshin, we prioritize these activities to achieve company vision and targets. The Hoshin at each department level clarifies strategies and targets to reach these targets (macro and micro PDCA). This way problem identification at the place of work is needed to study these problems, develop improvement measures needed to reach targets. The team leader or manager takes on responsibilities to clarify the measures needed to achieve the Hoshin targets based on the workplace mission. Workplace mission is demonstrated in the question “For whom and what type of value added products and services should be provided?”
Another way of viewing this process is that you are incorporating multiple PDCAs into a grander PDCA. This ensures that checks and follow-ups are made during implementation of Hoshin so that the whole organization is moving in one direction with team members driving the initiative versus management. The entire organization is one large PDCA cycle with a defined target. Each division and other layers create specific targets with the appropriate activities to achieve these.
As a result leading indicators rather than lag accountability measures can be created. Leading indicators are not easy to create. Many times they are only known by the people doing the work. Another way to think about this is that leading indicators are at the level of individual or the team’s process, the activity that they do.
Bonus Material: Adam Zak, co-author of Simple Excellence: Organizing and Aligning the Management Team in a Lean Transformation details the role of senior management in achieving a successful transformation to organizational excellence. Maintaining a focus on the big picture, the book explains what value streams are and how to use them to structure your business to align everyone with the things that matter most. It boils constraint management down to its practical terms and lays out a sound approach to accounting that enables everyone to spend money where it adds value and to stop spending money where it doesn’t.
How many people on your work team know the organization’s most important goals? 58%
How many people on your team know how they’re doing on those goals? 35%
How many people know exactly what they are supposed to do to help achieve the organization’s most important goals? 54%
Does your team consistently plan together to achieve their most important goals? 47%
This is a video preview of Store 334, a video featured in FranklinCovey’s Leadership and Execution workshops. Grocery Store 334 had its share of troubles. When manager Jim Dixon got everyone clear on the store goal, he thought his work was done. But only when everyone was accountable for the goal and empowered to make decisions did things start to change.
The 4 Disciplines of Execution:
Discipline 1: Focus on the Wildly Important – Human beings are wired to do only one thing at a time with excellence. The more we narrow our focus, the greater the chance of achieving our goals with excellence. Discuss what must be done or nothing else will matter. Using a tool called the Importance Screen, learn how so identity and narrow all of the possible goals down to 2 or 3 critical things that must be done with excellence. Learn how to create a ” line of sight” from your goals to the company goals.
Discipline 2: Create a Compelling Scoreboard – People play differently when they’re keeping score. Work through a process of identifying specific measures for those goals that have been identified in Discipline 1. Understand the difference between “leading” and “lagging” indicators. Using a tool called the Measurement Builder, create a team “scoreboard” that informs and motivates everyone contributing to the achievement of the goal(s}.
Discipline 3: Translate Lofty Goals into Specific Actions – To achieve goals you’ve never achieved before, you need to start doing things you’ve never done before. Using an entrepreneurial model, challenge the group to identify new behaviors that will result in new (better) outcomes. Learn the methods for finding the best behaviors by identifying where they might already exist in your or other’s organizations, or by brainstorming and then creating the best behaviors that don’t currently exist anywhere. These new behaviors are then translated in to very specific activities on a weekly basis which, when completed, will help to achieve the larger team goals.
Discipline 4: Hold Each Other Accountable – All of the Time – Knowing others are counting on you raises your level of commitment. Understand where you and your team are on the “scale of commitment” regarding the goal, and what you can do to increase the level of commitment to the goal. Address the actual practice to be used (WIG Session) in keeping the team engaged and focused on the top goals. Focus on four critical elements of this process; 1. Meeting is about the WIG’s, 2. “Triage” Reporting. 3. Finding 3rd Alternatives, 4. Clearing the Path for each other.
What makes Hoshin so unique over other planning methods is the effort that is put into the cascading effect of the Hoshin plan. This effect is called “Catchball”. Catchball drives the strategic planning process into every level of the organization and every employee and provides them the opportunity to define how they will contribute to that success.
Catchball(PDCA) works like this:
(Plan) Leaders set the strategies and targets. The team members, made up of the people closest to the work to be improved, put a plan together to make it happen. Ideas are tossed back in forth and open debate is encouraged and expected. Agreement is reached and a plan comes together with a defined course of action and responsibilities.
(Do) Continuing dialogue takes place. “Are we on track? Do we have the time and other resources required? What are we learning that needs to be incorporated into the plan?” Changes are made as a result of this dialogue.
(Check) The leader or the preceding layer monitors and is responsible for the outcome. The leader resolves confusion and helps at key points acting very much like both a coach and a manager during the process.
(Act) Continuous review and discussion will keep the team on target. The goals are accomplished as a result of interaction not because of a prescribed method.
This is the secret of Hoshin Kanri and I believe the preferred method for engaging change. Most processes are built around the existing organizational structure depicted in the top of the picture. Targets and measures are set and many times a mandate on how we will achieve them. Hoshin Kanri through the use of catchball develops a more collaborative structure (depicted on bottom left) and as a result an easier method for change and even more importantly sustainability.
This is not about relinquishing control. It is about gaining more control over implementation. Collaboration does not insure the best answer gets enacted. It typically insures that something does get enacted. It takes away that paralysis from planning. No longer are we trying to gather buy-in to get something accomplished, but rather change is being driven from the bottom up with a sense of joint accountability. The best answer becomes the best implementable action. Eventually through continuous improvement a better answer will surface than was originally conceived.
Recently, I have been challenging the traditional hierarchy of organizations. I have found it limiting when trying to develop new collaborative structures internally and externally. Dan Pink provides a nice example on an empirical basis.
(Video is an excerpt from Daniel Pink’s TED-Global talk of July 2009.) The members of many companies today practice routines related to traditional, formulaic management concepts like “ROI decision making” and “management by results,” but such routines — and the mindsets and organization culture they produce — may not be well suited for today’s crowded, less-predictable marketplaces.
Paul Yandell is a manufacturing and supply chain specialist with strong skills in identifying and eliminating waste and improving operational performance. His particular strengths are building infrastructure to support turnaround and growth situations, building and leading teams in total quality environments and he is bilingual (Spanish).
Co-author Larry Rubrich of the above book told me in an interview:
Joe: Well, you’re kind of a stickler about that Lean isn’t a set of tools. You go into discussing, let’s say, the four components that you need for Lean implementations right away. Even early in the book, you do that. Could you name them and describe them briefly?
Larry: Before we even get started with the four components, organizations need to understand, why are they doing Lean? They need to ask themselves that question: what do they hope to get out of Lean? And ultimately, the answer is: Lean can help create a safe organization that makes money. And generally, the making?money part and the safety are important aspects for organizations. But they need to understand where they’re headed with Lean as a business operating system and applying system thinking to their organization.
So, having decided that. They want to make a safe organization and one that makes money, we can go into the four components. And basically, the four components start with what we call Lean planning. Lean planning is about understanding that Lean is about helping the organization achieve its goals.
Lean planning focuses on what Lean activities are going to be done to help the organization achieve its goals. Lean planning prevents Lean from being used as an add?on or an appendage rather than the system that can help the organization achieve its goals.
So that’s the first part. Lean planning is the responsibility of the organization’s leadership team.
Then we go from Lean planning to what we call Lean concepts. Lean is about eliminating waste that reduces the flow of both the information product and the physical product. And so we like to get organizations to understand that when you’re in production of a project and producing a project, that you’re really in production in two areas. Both in the administrative area??and this is the drawings and the estimating and other activities that must be done to support the physical project??and then, ultimately, the job?site activities which produce the product.
So you’re really producing things in both areas, both in the admin area and in the project area, on the job site. And it’s important for organizations to understand that we’re really producing things in both areas, and we need to focus on the waste that prevents the flow of both information and materials.
So Lean concepts is about identifying wasteful activities that restrict the flow of both information and the physical product on the job site.
Next, we go to Lean tools. Once you’ve identified what the goals of the organization are and where the waste is, then you can apply Lean tools to eliminate the waste. And there’s a dozen, 15 different Lean tools, including the construction Lean tools, that will help you eliminate the waste. Each of the tools has a specialty area. For example, 5S is about creating a safe, clean, organized not only environment in the office but on the job site also. So each tool has a specialty.
Then the fourth component of Lean is what we call Lean culture. To use Lean as your business operating system, to be successful with Lean, you have to build that on the foundation of a Lean culture. And that’s about leadership, communication, empowerment, and teamwork within the organization.
Joe: In my previous talks with you, you struck me as a no?nonsense guy. You say that all these four components need to be implemented simultaneously. This seems like a big task to bite off, to me. Can you chunk it somehow, or do you really need to do all four at the same time?
Larry: You really do need to do four at the same time, although the starting points really are the lean planning and lean culture. But ultimately, it’s a much smaller task per person when you understand lean is about getting the entire organization involved in lean activities. When we look at the four components, we have the lean planning and the lean culture part, which are the leadership team’s responsibilities. If we look at lean concept and lean tools, you’re relying on the rest of the organization to help you implement those activities so that you can get some support for achieving the organization’s goal.
Lean is about getting everybody involved in training and getting everybody involved and participating in lean activities. Once you do that, it’s not just four or five people doing lean. You’ve got an entire organization. You split up the four components and now you have a much more manageable task.
Joe: You talk again about changing culture. In any organization, it’s really tough. You just don’t wave a wand and change culture or make an edict that we’re changing culture today. Can you tell me how to do it, a short synopsis of it? Is there a way you do it?
Larry: This is really a great question. The difficulty for most organizations, whether you’re talking about manufacturing, health care, or construction and service, is nobody’s focused on culture. They let the culture develop on its own, unguided, and then they wonder why they have people in their organization with bad attitudes that don’t care about the organization. So ultimately, where you have to start with culture is you got to start with an understanding that organizational culture is a learned process and it’s developed by the organization in response to the working environment established by the organization’s leadership and management team. So what you have for culture is based on the reaction of everybody to the environment that’s been created by the leadership team.
So if you’re going to change that culture??and most organizations require culture change to support Lean??you have to do this in a couple steps. Ultimately, culture change takes a long time, but you can get it started by doing two things.
First, about the leadership team creating a values and behavioral expectation statement, a little pocket card that says, “This is how we will operate. These are our behavioral expectations, not only for the leadership team but for everybody in the organization.”
So creating these value statements and then, essentially, instituting them and enforcing them within the organization becomes a powerful part of getting that culture change. Obviously and ultimately, the leadership team has to be willing to follow those 100 percent.
So creating the values and behavioral expectations are the start of it. Now, for construction organizations, this can be a difficult flip because many construction organizations already have value statements. But they’re not being followed, and ultimately, they’re meaningless. So we have to reinstitute them in some cases and give them some teeth.
When I say, “give them some teeth,” ultimately, for organizations that really change ??a reference: one organization, the leadership team agreed that you get two violations of the value statement, and you’re out of a job; you’re going to be terminated. So that can reinforce what needs to be done.
Once, you’ve created the values and behavioral expectations statements and we’ve got that within the organization, next you have to integrate the values and the Lean activities into associate performance evaluations, promotion opportunities, hiring, merit increases, bonus activity, and new?employee training. All have to be integrated with what you’re looking for from a Lean standpoint and your goals with Lean and also the value statements.
The first time in the organization that somebody gets promoted or rewarded and they’re not a 100?percent supporter of Lean activities or they’re a violator of the value statement; your culture change is done. So those are very important activities to get started, and then all of that has to be followed up with communication, empowerment, and the teamwork part of creating a Lean culture.
Many people will review Hoshin Planning as the way to introduce a Lean Transformation where others will consider only for mature Lean companies. I agree with Larry above on the need to address all four areas but may stop short of calling that Hoshin Kanri planning. I believe that you must have a solid understanding of the Lean Tools discussed previously to do a true Hoshin Kanri approach. Without this understanding, you will be fighting the tools and as a result not trust the process and/or the people. The “Hoshin” is developed at each layer of management clarifying strategies and targets to assist in reaching the preceding layer’s targets. This results in both a macro and micro PDCA. This greatly increases the line of sight and shared responsibility to each other in achieving these goals. Kanri is defined as a method to efficiently achieve purposes through PDCA (Plan-Do-Check-Act).
Robert Fritz’s and his book The Path of Least Resistance for Managers outlines an excellent approach for practicing PDCA both at the micro and macro levels. In the book Fritz’s discusses The Nine Laws of Organizational Structure:
Organizations either oscillate or advance.
In organizations that oscillate, success is neutralized. In organizations that advance, success succeeds.
If the organization’s structure remains unchanged,the organization behavior will revert to its previous behavior.
A change of structure leads to a change of the organization’s behavior.
When structural tension dominates an organization,the organization will advance.
When structural conflicts dominate an organization,oscillation will result.
An inadequate organizational structure cannot be fixed. But you can move from an inadequate structure to a suitable structure.
When a senior organizing principle is absent, the organization will oscillate. When a senior organizing principle is dominant,the organization will advance.
The values that dominate an organization will displace other competing, lesser values.
This structural tension is an excellent description that helps us identify the performances gaps at a much more humanistic and intellectual level versus the quantitative approach of metrics. In Lean, understanding current state (reality) is a key to improvement. Our existing aspirations and values form this current condition. Are dynamic urges (targets) are how we form are future state. In Hoshin along with this dynamic (micro) component, we introduce another component, vision (macro). Borrowing from Fritz’s again:
Vision and the Dynamic Urge
In addition to current reality, vision is the other element that forms structural tension. An organization that lacks vision cannot create structural tension and will eventually oscillate.
The dynamic urge is our intrinsic desires; we want what we want independently from the circumstances.
Like people, organizations have dynamic urges. These are contained in the purpose of the organization, the hope that people have for the organization.
Organizations view dynamic urges in three basic ways:
Close Shot: Desires are seen as goals that must be achieved in the short run.
A Long Shot: Desires are seen as so distant in the future that they -ire vague, bordering on hopes and longings.
A Medium Shot: Desires are seen as aspirations that can be achieved if we discipline and organize ourselves to achieve them.
Aspirations/Values and Advancement
A medium-shot framing of current reality and vision is the best combination to create strong structural tension. Vision is seen as aspirations and values, and current reality is seen objectively and with the right perspective.
An organization that is unclear about its aspirations often lets its reactions to prevailing circumstances guide its direction.
Advancing organizations have clear aspirations and values and take actions that are true to them.
This ninth law of organizational structure, “The values that dominate an organization will displace other competing, lesser values,” goes both ways. If the dominant values of an organization are self-serving, political, and manipulative, then what is trivial will become more important than the accomplishment of a greater cause. As a result, when we implement Hoshin are values must be aligned. Without we will not have a healthy tension and respect for each other that is needed. Hoshin Kanri allows us to consider what types of structural changes we need to make. This process not only allows for change, it actively seeks it. Change and restructuring become naturally motivated. As we progress, the organization becomes clear about the vision we share and joins together in making change work. Again from Robert Fritz:
Shared Vision and Choice: When people join together in a common cause, each person makes an individual choice to participate. There is tremendous power in the act of making a choice, for it defines our personal resolve and our intended direction. When we are forced or manipulated into participation, we rebel.
It’s our nature to resist autocracy. We may do it subtly through passive aggressive tricks. We may resist in the privacy of our own mind, imaging poetic justice and good old revenge, or we may do it publicly by causing a showdown and then getting out of Dodge.
However, we do it, we resist and rebel. We do it to affirm our own independence of spirit. We do it to save our soul. You can’t have shared vision when someone is trying to manipulate you into compliance, even for the best of reasons. Shared vision implies choice, we choose to join with each other to create this that matters to us all.
Balanced Scorecards tell you the knowledge, skills and systems that your employees will need (learning and growth) to innovate and build the right strategic capabilities and efficiencies (internal processes) that deliver specific value to the market (customer) which will eventually lead to higher shareholder value (financial). – “Having Trouble with Your Strategy? Then Map It” by Robert S. Kaplan and David P. Norton – Harvard Business Review.These are timeless principles.
Professor Bob Kaplan discusses the importance of the balanced scorecard:
Thirty years ago, Kaplan and Norton developed the Balanced Scorecard documented in their book, The Balanced Scorecard: Translating Strategy into Action. The Balanced Scorecard translates a company’s vision and strategy into a coherent set of performance measures. The four perspectives of the scorecard:
Financial: How do we look to shareholders?
Customers: How do customers see us?
Internal process: What must we excel at?
Innovation and Learning: Can we continue to improve and create value?
I have found the use of the Balanced Scorecard becoming more and more prevalent in my work. There seems to be a lack of understanding on how the four perspectives intertwine in many organizations. Balanced Scorecard aligns organizations to new strategies: away from the historic, short-term focus on cost reduction and low-price competition, and toward generating growth opportunities by offering customized, value-added products, and services to customers.
In essence, I believe that the Balanced Scorecard is alive and well. However, a basic shift is required in the implementation. In the past the Balanced Scorecard was anything but balanced. There was an exorbitant amount of time spent on internal processes. In most cases forty percent or more was spent on internal processes and improvement. In the future, I think there will be a shift towards more time being spent on the customer perspective. First we will have to re-phrase the scorecard slightly:
Financial: How do we look to stakeholders (0ur entire value stream; Supplier to Customer)?
Customer Relations: How do we enable the use of our product and eventually co-create?
Internal process: What must we continually improve at?
Innovation and Learning: Can we continue to create value through knowledge sharing?
Hoshin Kanri is a management system that creates a method of policy deployment in the form of both organizational and employees goals. It is a step by step implementation and review process from a systems approach perspective for change. In the simplest form, top management sets a vision and bottom line employee sets the tactics. In the middle, there is a lot of give and take and coordination through the use of a term catchball that results in:
Prioritizing activities and resources
Organizational involvement from top to bottom clarify their own target and activities
Utilizing PDCA in both the management and employee cycles of improvement
The difference in Hoshin planning is that we do not accept the current situation but seek to aspire to something greater. We seek solutions between the current and aspired state by bridging the gap through the process of Kanri the other part of the process. Kanri is defined as a method to efficiently achieve purposes through PDCA (Plan-Do-Check-Act).
Hoshin Kanri is different than just your typical continuous improvement is that we are not solving the typical workplace problem but rather the value-added problems based on top management thinking (Vision and Targets). The “Hoshin” is developed at each layer of management clarifying strategies and targets to assist in reaching the preceding layer’s targets. This results in both a macro and micro PDCA. This greatly increases the line of sight and shared responsibility to each other in achieving these goals.
The workplace mission is defined within Toyota from the question “For whom and what type of value added products and services should be provided?” In this way, measures are created from the value added problems determined in the Hoshin process. Breaking the annual strategy down to what I call “Doable Chunks” is one of the secrets to Hoshin Kanri’s success.
It is not only the task but the team size that will assist in a positive outcome. Jeff Bezo’s of Amazon fame always used what he called the two pizza rule. If you needed more than two pizzas to feed the group, the group was too big. Smaller groups promote: informal communication, better assignment of tasks, more manageable task, increase participation, reduces information needed to be processed and most importantly – A CLEAR LINE OF SIGHT.
The approaches of Hoshin Kanri and Leader Standard Work seem to have a common thread in them. It is one of shared work and responsibilities and as a result regular feedback or reflection. It makes the management process continuous over something more formal such as a review.
Is Hoshin Kanri Different than Management by Objectives? From a comment by Casey Ng (TERA PRUDENT SOLUTIONS PT):
Being personally gone through a number of stages of Hoshin Kanri before it taking its final shape today. I had no doubt about the similarity of MBO to Hoshin Kanri. Someone may be able to tell whether Hoshin Kanri was originally base on Drucker’s Management by Objective back in 1956.
In the late 80’s we called Hoshin Kanri “Policy and Activities”, it was quite simple, annually, we shared our ideas of what needed to be changed or implemented in the current year, then we put the themes on the left hand side of the paper and listing up the activities to implement them. Very rarely we concerned about target setting or measurable. Considering at that time, desk top computers are still very rare commodities. A3 size report was in the infancy of hand written reports with pencil diagrams. Gantt charts and other fancy presentation was remotely luxury.
Comparing today’s Hoshin Kanri to MBO, the main differences are the relentless asking the questions of “Why” and “How”, instead of just applying the “North Bound Train” concept of Objective and targets setting that basing on historical performance.
Most good Hoshin has breakthrough components in it, whether measurable or not, it becomes secondary important.
In the breakthrough journey, the clear articulation of the optimum stage is very important, but after reality check and setting up conditions for the next achievable goal, the ideal situation needs to be defined. Then develop the “how” and only then consider the targets.
I always use a simple example to explain the differences between “Optimum Goal” and “Ideal Situation”
Optimum Goal: Our car will not kill any pedestrian in accident”
Ideal situation: The design of our car will reduce the potential of killing pedestrian in accident at 40 KM/H”
The above are my view about the different of Hoshin Kanri to MBO.
Matt Wrye, a Lean Implementer that has a passion for continuous learning was my guest on the Business901 podcast, Developing a Learning A3 and the transcription, Developing a Learning A3 Transcription. We discussed using the tool of A3 for their learning reports. Below are several formats for your use. I recommend viewing one before reading the transcript or during the listening of the podcast.
About Matt Wyre: Matt is the author of the popular blog “Beyond Lean,” which centers on evolving leadership and changing business.
Certainly in these days of information overload and web analytics we have more information than ever before to make our decisions with. I believe that this data is extremely important and needed to manage your company and your marketing. This data along with most financial data is all past tense. It tells a little of what will happen in the future or with our next marketing campaign per say. This data more importantly needs to be interpreted correctly and that relies on the basis of being a good problem solver. We think of themselves as the creative, free spirit and intuitive type. Most people are quite comfortable with, if not proud of their ability to analyze and solve problems. They generally do well at it or maybe they just adapt well to the outcomes that are driven by them.
The fact is that we error in our problem solving more often than we care to admit. We rely on trial and error as the most practical and effective means of problem solving. It has been that way since the beginning of time. Success is building on failures. You have to leave someone fail to learn. But how many of these are a result of bad luck or poor analysis.
We commonly begin our analysis of a problem by formulating our conclusions; we thus start at what should be the end of the analytic process.
Our analysis usually focuses on the solution which we intuitively favor; we therefore give inadequate attention to alternative solutions.
The solution we intuitively favor is more often than not the first one that seems satisfactory.
We tend to confuse “discussing/thinking hard” about a problem with “analyzing” it (these2 activities are not at all the same).
We focus on the substance (evidence, arguments, and conclusions) and not on the process of our analysts.
Most people are functionally illiterate when it comes to structuring their analysis.
If people have not learned and understood problem solving techniques, they cannot formulate a reasonable conclusion. It is a guess and a reaction based simply on intuition.
Marketing with A3 is my attempt to bring a problem solving methodology to sales and marketing. The book itself will not spawn a lean transformation or a significant culture change within your company. It is a workbook, that I would use to introduce and guide me through the A3 process. It provides a background on A3, explanation of terms and many of the tools of A3, questions that will facilitate discussion of each step in the A3, blank forms and ten sample A3s for reference. The samples included are:
Direct Marketing Inbound and Outbound Calls
Training Program Outline
Sales Communication on a Promotion
Gap Analysis of an Annual Advertising Campaign
Churn Rate Gap Analysis
Increasing Consulting bookings
Gaining Control of Internal Costing structure
Business Plan Analysis for Industrial Segment
Increase in Workshop Attendance
Increase in ROI of present Marketing Activities
Sales and Marketing not only needs to improve but must improve their problem solving skills. The book, Marketing with A3 is the introduction needed. It enables sales and marketing to use the Lean tool of A3 as a template or structured approach for their strategies and tactics. It will also demonstrate meaningful and measurable results of their activities. You will enter meetings armed with facts and profound knowledge of sales and marketing efforts. As a result, you will engage in more meaningful conversations. It will require a different approach. The dialogue is sometimes not easy. But seldom is any improvement.
Marketing with A3 is the author’s attempt to improve the problem-solving process of sales and marketing. Using A3 in the Marketing process will provide you a standard method of developing and creating your marketing programs. It will recap the thoughts, efforts and actions that take place for a particular campaign, such as advertising or public relations or even a launch. The tools are explained and examples are given.
The important part is that you will learn how to format your A3 report in any way that most effectively communicates your story to your team and others. An A3 report can really highlight the value that marketing supplies.The book contains ten A3 reports from five contributors.
This is not a strategy book. The book is designed to help you create and utilize A3 at a tactical level in a sales and marketing department.