The Positive & Negative Sides of Hoshin Kanri

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.

Hoshin sounds good doesn’t it? In next week’s Business901 podcast, I asked well-known and long time established Lean Six Sigma consultant, Forrest Breyfogle this question:

Joe: Is this similar to the Hoshin Kanri approach where we are taking things down the organization and back up and going through that, kind of Americanizing that approach?

Forrest: I think it really challenges the Hoshin Kanri system. Hoshin Kanri leads from the strategies and then you cascade that throughout the organization. I do have it cascading, throughout the organization, but I don’t have strategies as the lead to cascade throughout the organization. I think there are problems with the Hoshin planning process. A lot of times those strategies are worded like we want to be the best of the best, and also those strategies that are in the Hoshin planning are typically not developed in line with the financials.

What I’m suggesting is you really like to have strategies aligned to financials. We have certain example that we want to improve profit margins; we might look at our data and then we come back and say, “Gee-whiz, we’re just getting an awful lot of returns.” I think one of our strategies is to figure out what we need to do to reduce the number of returns that we actually are having. There’s going to be an owner of that. The owner of that metric is going to be asking for projects and efforts to go in and reduce the number of returns. Using an approach that I suggest, we might come out and say the most important thing to improve profit margins is reducing defect returns. I have never seen a strategy coming out from the traditional approaches saying you need to reduce the number of defects. It’s not so grandiose but to me that may be the most beneficial thing you could do for an organization, just as an illustration.

Forfest Breyfogle: is the CEO of Smarter Solutions. He has authored or co-authored over a dozen books. His most recent book is The Business Process Management Guidebook: An Integrated Enterprise Excellence BPM System. His five-book set, Integrated Enterprise Excellence provides radical management advancements in the utilization and integration of scorecards, strategic planning, and process improvement.