I highly recommend this book if you want to attempt using a Hoshin Kanri approach without the use of an external consultant. This book is one of the better “how to” guides available, Policy Deployment & Lean Implementation Planning: 10 Step Roadmap to Successful Policy Deployment Using Lean as a System. The book is an easy to follow workbook that also contains sample spreadsheets on CD that will allow you to customize the process to your unique organization.
From the book, the 10 Steps to Policy Deployment using Lean as a System:
- Establish a Mission and Guiding Principles
- Develop Business Goals
- Brainstorm Opportunities to Achieve Goals
- Define parameters to value opportunities
- Establish Weighting Requirements, Rate Opportunities, & Prioritize
- Conduct a Reality Check
- Develop Lean Implementation
- Develop Bowling Chart
- Countermeasures
- Conducting Business Reviews.
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 is kin to System Thinking that you may remember from Peter Senge’s, The Fifth Discipline: The Art & Practice of The Learning Organization and The Fifth Discipline Fieldbook: Strategies and Tools for Building a Learning Organization.
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.
An interview with Tony Manos: Podcast: Tricks from the Trenches on applying Hoshin Kanri eBook: Tricks and Tips on Hoshin Kanri
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:
- 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?