What is Hoshin Kanri?
The word Hoshin in Hoshin Kanri comprises of two Japaneese Characters namely ”Ho” and “shin.” These two characters represent “method” and “shiny needle” respectively. And, collectively the meaning of Hoshin becomes “methodology for strategic planning.”
In professional terms, Hoshin Kanri is a method that helps build strategic planning to setup and achieve goals with minimum or no waste to resources due to lack of communication between the management and the operations staff. It helps achieving goals by ensuring that the tactics developed by the management work in a consistent manner so that the operations staff can give up to the mark performance.
See the below figure to understand Hoshin Kanri in an implemented way:
When Hoshin Kanri should be used?
It is an important tool that a company can integrate to develop strategic planning to achieve tough annual goals and ensure continuous improvement at all levels starting from the top management to middle management to operations staff.
Companies should implement Hoshin Kanri if they have been facing problems in achieving annual goals. With this methodology in action, companies will start working on its basic principles, which are,
- Planning – it is all about setting focus on the things that are really valuable and matter for the success of the company
- Preparing workable strategies – it is all about discussing the company focus with top management and coming out with the workable planning
- Preparing and evaluating KPIs – it is all about selecting and deciding the business metrics that are essential to achieve the goals
- Keeping the track – just creating a good plan and metrics cannot bring the expected results. To ensure that planning works, it is must to keep a track on everything that is must to gain good results. It includes regular follow ups at all levels from top management to middle management to operation staff.
Hoshin Kanri works well when you communicate and go with the staff. If you are being harsh with the operations staff or there is lack of communication, you will not get the expected results. Results may be good but not enough to achieve your goals. Let us understand this with an example. If you want your son or daughter to follow your instructions with due respect in their eyes for you, then you have to pamper them and take care of their needs. If you try to be harsh and just want them to respect you while you neglect them and their needs then results will be opposite. The same strategy needs to be followed in an organization at every level.
How Hoshin Kanri fits into strategic business planning
Some of the big organizations such as Toyota, Bank of America, and Nucor Steel have been using this methodology and their success cannot be hidden. Likewise every organization can be benefited from Hoshin Kanri model. This model has four phases that make it fit into the strategic business planning for highest success rate.
Just like when you think of holidays, planning phase starts too. You involve your family members or friends in the planning depending upon with whom you will spend the holidays. Everyone in the group starts discussing about the destination, hotel, flight, taxi, and several other things. And, finally a common plan is prepared ensuring the best holidays. And then the roles and responsibilities are divided between different people as per their eligibility. All members in the group work together to ensure that all requirements have been met before you guys leave to the holiday destination.
Like this the success of Hoshin Kanri depends upon the strategic planning, tactics, distribution of roles and responsibilities among eligible candidates, and tracking. Let us have a look at different phases of Hoshin Kanri.
The four phases of Hoshin Kanri:
Phase one – Preparing a plan
The most important phase is preparing a strategic plan, which should be focused on two things – one is annual goal and second is overall company growth. Planning should be done with utmost care by involving every member of the top management so that critical issues can be discussed, KPIs can be decided, and goal owner can be decided.
Phase two – Developing approach
After the top management has configured the goal, the role of middle management comes into the action. Phase two of Hoshin Kanri involves creating tactics that can help achieve goals set by the top management.
Phase three – Taking action
It is the phase of implementing the tactics developed by the middle management that usually includes reporting managers and project managers. Reporting managers and/or project managers hold a meeting with supervisors or team leaders and make them understand the tactics they have developed, how the tactic should be followed, and how results can be generated by working together with the operation staff. In other words, we can say it as the phase of action.
Phase four – Tracking results and making adjustments
It is the phase of analysis. During this phase, middle management analyses how their tactics are working and what the progress rate is. The top management holds meeting with the middle management and discusses about the progress toward the goal. So, it is the phase when a reverse flow starts – from operation level to top management. During this flows reports are generated at every level and shared with the upper management. Like this the flow touches the top management where a thorough analysis is done to find out the success rate, blocking factors (if any and how to fix them), and so on.
If the result of this phase is not as expected then amendments are done in the tactics developed in the phase two and then they are re-implemented with a better approach from the middle management to the lower management to operation staff.