In the 1950s the American Management Guru, Peter Drucker, suggested that to be successful in business it is necessary to be better than all your competitors for at least something that will be important to the customer. There must be some specific reason why they would choose to buy from you rather than buy from a competitor, even if on average the competitor can outperform you.

If for example your organisation scores more points in total for Quality, Price and Delivery, but a competitor can out score you on one of them, say Quality, then that supplier will win when the customer is mostly concerned with that issue. If another has a reputation for being better on price, then he will win in a price competitive market irrespective of your abilities on the other two criteria.

It is not only important to be the best, it is even more important to be ‘perceived’ as being the best. Perceptions and reality are often very different. Many organisations fail because they do not understand this important fact. They may know what they are good and bad at doing but the customer may well see things very differently. Even if the customer is mistaken it will still be their prerogative to choose.

When a company does not have a strategic vision or leadership does not support the vision, any improvement methodology is bound to fail. It will be viewed as a “flavor of the month” and will only get lip service. By tying improvement methodologies into the strategic plan, the organization becomes aligned to the same goals. Silos are eliminated, and employees work together.

Hoshin Kanri is the only proven means by which this can be achieved when competition is at its most severe. It is a systematic approach that can be ruthlessly applied to grind down even the most severe competition.

Toyota have persistently applied Hoshin Kanri-style management for several decades. They have never wavered in this. In the 1950s, they were well behind most of the world’s leading automotive producers but, year by year, one by one, they moved through the pack passing one competitor after the other until in the end, in 2007, they outstripped the giant General Motors to become the world’s leading automobile producer. 

For years both Ford and GM attempted to stop their advance but they were unable to do so for no other reason than they did not fully understand Hoshin Kanri, Japanese Total Quality Management (TQM), (they did attempt the American version) and now they are fighting for survival with huge losses reported on the Internet.

Japanese Total Quality Management (TQM) is founded on the principles that each individual in an organisation is recognised as being the expert in their own job, that humans seek recognition and want to be involved and are motivated by a desire to be recognized as a contributor to the success of the community to which they belong. 

The overall objective of this form of TQM is to attempt to create an organisation (which includes the entire supply chain) in which the collective thinking power and job knowledge of all of these individuals is galvanised into a programme in which everyone is working both individually and collectively to work towards making their organization the best in its field, both in fact and in the eyes of its customers, and all other interested parties.

Organisations that have applied Hoshin Kanri have in some cases come from being also ran in their field to becoming performance record breakers in only a matter of 3 to 4 years. Hoshin Kanri is not a difficult concept to understand or to apply. Most organisations will have some of its elements in place and in some cases a large percentage. However, Hoshin Kanri does require meticulous planning, targeted benchmarking and the effective and systematic use of the tools for continuous improvement at all levels of the workforce. In short it is a means of managing a business.

Hoshin Kanri is a Japanese management term which has no direct equivalent in the English language. The term roughly embraces four key elements of business management namely: Vision, Policy Development, Policy Deployment and Policy Control. It is also directly linked to a fifth, which is TQM, which is the means by which the Goals, which have been determined in the Hoshin Kanri process, are achieved.

One attraction of Hoshin Kanri is the fact that the programme that you develop will be unique and will reflect the personality of your organisation almost from the start. The result of that work will be entirely yours. By its nature you could not go to any other organisation and find a Hoshin Kanri programme identical to yours, you could not buy it off-the-shelf.

Hoshin Kanri offers an effective way to tie the long-term strategy of the organization to process improvement efforts. Typically, organizations select their kaizen events and process improvement projects on the basis of where they currently feel pain. If they had a recent rash of external defects, they might decide to initiate a Six Sigma project as a corrective action response to the customer. 

Significant time and money is involved in running a Six Sigma project and may not be the best tool. In addition, although this is currently where the company is feeling the pain, it may not be the true highest priority project in looking at the big picture.

What is needed is a systems approach that focuses on the long-term vision and strategy of the organization. The time, talents, and money of the organization should focus on improvements that will affect the flow of the entire organization. As such, organizations should consider systems thinking using theory of constraints to ensure a broad impact on the entire organization. 

This will also greatly increase the momentum of improvement. As improvements are completed, more people throughout the organization will notice their impact. More people will experience the effects quicker, which will drive the participation and involvement of more people.

An important step in the hoshin kanri adoption process is preparing people for them to participate with vigor and value in the discussions. The better qualified, the more talented the team, the greater the potential for everyone to contribute to the strategy formulation and deployment process. But there is no miracle, teams that are not used to similar processes may find it difficult to contribute at first.

In addition, Hoshin Kanri cascades the overall strategic vision of the organization throughout all levels, enabling employees to see how they fit into the big picture of the organization. This linkage aligns everyone on the same strategy and vision. By focusing employees in a common direction, the improvements can have a much larger impact in considerably less time. 

Think about a small team whose members understand what they need to do and how effective they are in working together. Imagine a company of 500 or 1,000 employees all working together to achieve a common goal.

It is important to declare, however, that hoshin kanri is not a method that delegates the responsibility of top management to strategically conduct the company, but it is a way in which top management can share with all trends and the vision of the future and obtain from people feedback on this future perspective. This does not take away anyone's responsibilities but considers that others can also contribute responsibly to the future of the organization.

With Hoshin planning and Lean daily management (LDM) in place and actively being deployed, your organization goes from passively playing defense to playing offense, building for the future by having the skills, infrastructure, and culture to get there. 

Your staff will know the why behind the what, and the leadership rounds and leader daily disciplines will add discipline and accountability that keep focus on those critical goals throughout the year. Also, the translation of the Hoshin planning goals to the LDM board will add the why behind the what to the focus of the LDM boards, what processes and issues are being looked at, the rationale behind the numerical goals, and other factors as well.

The hoshin kanri opens a perspective that everyone can contribute to the strategic design process, each in its size and responsibility, but adding a different and complementary vision to the organization's sustainability plan.

Hoshin kanri can be many things to an organization. It can be used as a method of strategic planning and a tool for managing complex projects, a quality operating system geared to ensuring that the organization faithfully translates the voice of the customer into new products, or a business operating system that ensures reliable profit growth. 

It is also a method for cross-functional management and for integrating the lean supply chain. But, most of all, it is an organizational learning method and competitive resource development system.

References:

CUDNEY, Elizabeth A. Using hoshin kanri to improve the value stream. CRC Press, 2018.

BERLANGA, Gerard A.; HUSBY, Brock C.; ANDERSON, Heather K. Hoshin Kanri for Healthcare: Toyota-Style Long-Term Thinking and Strategy Deployment to Unlock Your Organization’s True Potential. Taylor & Francis, 2018.

KESTERSON, Randy K. The Basics of Hoshin Kanri. CRC Press, 2014.

HUTCHINS, Mr David. Hoshin Kanri: the strategic approach to continuous improvement. Gower Publishing, Ltd., 2012.

BOISVERT, Lisa. Strategic Planning Using Hoshin Kanri. White paper, Goal/QPC, Salem, NH, USA. Available at: https://goalqpc. com/cms/docs/whitepapers/GOALQPCHoshin Whitepaper. pdf. Last consulted on, v. 10, n. 07, p. 2017, 2012.

JACKSON, Thomas L. Hoshin Kanri for the lean enterprise: developing competitive capabilities and managing profit. CRC Press, 2006.

BECHTELL, Michele L. Navigating organizational waters with Hoshin planning. National Productivity Review, v. 15, n. 2, p. 23-42, 1996.