What is hoshin kanri?
As we approach the end of 2019, many of you were already thinking about the next 12 months. In fact, you have probably been thinking about them for a while. What will the company need to achieve to remain successful? What are your goals? What problems will need to be solved in order to thrive?
Strategy is a fundamental part of a leader's job. The question is: is that strategy built on the assumptions and beliefs of the leadership team, or is it explained by detailing real data and problems and with input from the rest of the organization? Does that strategy describe actionable improvements that have a clear correlation with achieving the business objectives? Do people understand what their contribution to those objectives is?
If you are trying to answer these questions, strategy deployment (hoshin kanri, if you prefer the Japanese term) may be the right approach for you.
It is one of the foundations of the lean system and, for that reason, it will always be at the center of discussions at the Lean Summits, for example, in the “Strategy and Management System” track.
As always in these roundups, let's start with a definition.
THE DEFINITION OF HOSHIN KANRI
According to the Lean Lexicon, hoshin kanri is “a management process that aligns – both vertically and horizontally – an organization's functions and activities with its strategic objectives. A specific plan – typically annual – is developed with precise goals, actions, timelines, responsibilities and measures”.
The Lexicon goes on to explain how hoshin usually starts as a top-down process when the lean transformation is launched. “However, once the main goals are set, it should become a top-down and bottom-up process, involving a dialogue between senior managers and project teams about the resources and time available and needed to achieve the goals. This dialogue is often called catchball (or nemawashi), as ideas are tossed back and forth like a ball”.
One of the main goals of hoshin kanri is to identify the projects that are necessary but also achievable, those that will involve people from all functions and bring about changes whose positive effect will be felt across the whole company.
Over time, as the lean transformation progresses and the company becomes more familiar with the process, hoshin “should become much more bottom-up, with every part of the organization proposing actions to senior management to improve performance”.
According to Flavio Picchi, President of Lean Institute Brasil, “hoshin aligns leadership horizontally and vertically, connecting problem-solving and improvement initiatives at different levels of the company with organizational goals, thus avoiding scattered efforts”. In this article, he discusses 10 strategic problems that hoshin can help solve.
FOCUSING ON CRITICAL BUSINESS PROBLEMS
Another member of the Lean Global Network, Christopher Roser, defines hoshin as “a combination of a prioritized to-do list and PDCA” (read the article in English here). This point about prioritization is very important, because choosing the battles we want to fight is fundamental to achieving continued success.
This seems to be the experience of a Velux plant in Poland, which managed to drastically reduce its list of KPIs using hoshin kanri. “Before we implemented policy deployment, we used to have a lot of data and KPIs, and people were really confused. Besides, we ended up using only a few of them. Hoshin simplified our daily meeting system and limited the number of KPIs (from 117 to 18 at one of the sites). It forced us to redefine our objectives and, as a result, gave everyone a clear understanding of their responsibilities. In our new structure, goals cascade from the top down, and problems are escalated from the bottom up”.
Another great example of a successful application of hoshin comes from Itaú Unibanco in Brazil. In this article, Victor Catisse and Robson Gouveia explain how this approach helped the bank prioritize and solve its problems. They also remind us how useful it is to use an obeya room to track problem-solving activities and figure out the next steps. Check out this video to visit an obeya room at a cancer treatment center in Brazil with the organization's CEO and learn how they use the room to drive their hoshin. In another video (available in Spanish with English subtitles), we hear from a hotel director in Tenerife.
To understand how important strategy deployment is in a lean organization, read this article by Jim Womack (in English). He describes hoshin planning as one of the three main elements of a lean management system – together with A3 thinking and daily management –, but he also sees problems in the way it is used in most organizations.
Jim writes: “Hoshin plans are developed at the top, without feedback from lower levels about the resources available or the conflicts between the hoshin plans and the pre-existing budgeting and management performance systems with their KPIs. [...] It is no surprise that strategy deployment initiatives that look very impressive at first glance – all those visual boards and obeya rooms! – often fail to complete and sustain the hoshin”. Jim's warning should be heeded: “Not asking critical questions about the deployment method and not being realistic about resources is the main cause of hoshin failure”.
One of the things lean thinking does best is to make work easier. If we look at hoshin this way, we can say that what it does is effectively take management work (in this case, creating strategies and deploying them) and break it into parts to make sure it is easy to define, track and complete. Vall d'Hebron Hospital, the largest hospital in Catalonia, pioneered the use of hoshin kanri in a healthcare setting (in English). In that article, its former CEO says: “Hoshin is where strategic planning and daily operations come together. The KPIs you track are used to assess the effectiveness of the plans you are deploying and to make sure that weekly, monthly and yearly we are working as we should. Hoshin reflects a fundamental change in organizational culture. Today, it is the organizational objectives that cascade down from the hospital's management – not directives. At the lowest level of the organization, people know exactly what they need to do to meet the targets that will collectively contribute to achieving those objectives across the hospital”.
IS HOSHIN DIFFICULT?
In a nutshell, hoshin kanri allows you to focus on what really matters for business success and turn the company's objectives into actionable items that people at different levels can tackle. This, in turn, defines their roles and helps them see their contribution to business success (in this sense, it is a great tool for fostering engagement).
One of the things that makes it quite challenging is the fact that management often suffers from short-termism, whereas hoshin kanri (as well as lean thinking itself) works best when a clear, long-term objective is defined and communicated to everyone in the organization. When developing your hoshin, it is advisable to build your plan for the next year (for example) within the context of your long-term mission. True north cannot be reached in the short term. However, if we understand how to take full advantage of it, hoshin kanri can be a powerful tool that helps us organize our thinking and activities and identify the steps we need to take to reach our destination.
Take IOV1, the cancer treatment center we mentioned earlier, for example. They rely on hoshin kanri to fulfill their mission of reducing the burden of cancer on people – an honorable and lofty goal that cannot be achieved in the short term.
So, is hoshin difficult to use? It depends on management behaviors, as Michael Ballé reminds us in this column (in English). He writes: “If used as a transactional planning technique, it can turn against the management team, creating more frustration, demotivation and disengagement. To work as it should, hoshin kanri requires management to have a very clear vision of the dimension of improvement and a strong practice of gemba walks to see the reality of work situations firsthand and understand people's strengths and weaknesses in order to have practical ideas on how to help them achieve their own goals, even when they are stuck”.
HOW AND WHEN TO START WITH HOSHIN?
There is no manual on when hoshin kanri can or should be introduced, because every situation is unique and requires a unique approach. However, we can learn from the experience of Vall d'Hebron Hospital. In their article (in English), Vicenç Martínez Ibañez and Antoni Campos Rubiño tell us: “When it comes to hoshin, the most critical lesson we learned is that you cannot do it without creating stability in your processes and orienting everyone toward the same goal. Had we explained this at the beginning, we would not have succeeded. With everything lean, you basically need to wait for people to ask for the next step in the journey – when they improve to a point where they stagnate and need to move to the next level”. These are important insights.
When you are ready to start your hoshin efforts, the next question you will ask yourself is: “How?”. Should the focus be on problems at the process level or at the organizational level?
In this article (in English), Wiebe Nijdam tries to answer that last question: “The simple answer is that you should start wherever the problems you want to solve are, as long as there is a daily accountability system and boards are present at every level of the organization”. Wherever you bring your hoshin, the first thing you will notice is a sharp increase in the visibility of problems and improvement opportunities.
Wiebe's examples are very clear:
- Start at the organizational level and you will clearly see what needs to improve in your overall value stream, which, in turn, will tell you what contribution you should expect from different departments.
- Start at the process level and you will learn how individual cells can contribute to the success of that process.
“The work must be translated into individual contributions from each level of the organization or, at the process level, from each cell in the production area. That way, the gaps will soon become easier to identify and, with them, the improvement opportunities”, writes Wiebe.
Check out that article for great visuals and advice on how hoshin kanri works in practice. And here (in English) you will find the system applied in real life (in this case, a ministry in the Netherlands).
Before saying goodbye, I want to share one last article with you – this time a publication from our sister, The Lean Post. In it, Mark Reich gives us a very powerful metaphor (in English) to explain hoshin: “A body whose muscles atrophy is weak, not adaptive or competitive. However, muscles need something to attach to, something that connects them. Individual muscles must be aligned to a skeleton that provides a common purpose and way of thinking. In this way, continuous improvement and hoshin complement each other if practiced correctly. Continuous improvement strengthens the body; hoshin holds it together.
Note 1. See the articles published about IOV in Portuguese:
https://www.lean.org.br/artigos/581/o-aprendizado-lean-tambem-acontece-entre-os-setores
https://www.lean.org.br/artigos/312/conectando-as-etapas-do-cuidado-um-plano-para-cada-paciente
https://www.lean.org.br/artigos/262/aplicando-lean-na-saude
