It's a common frustration in manufacturing. The executive team sets a bold new strategy for the year, perhaps to reduce waste by 15% or launch a new product line. But six months later, you walk the shop floor and nothing has actually changed. The daily tasks of your frontline employees are completely disconnected from the goals set in the boardroom.
This is not a failure of effort; it is a failure of alignment.
To fix this, world-class manufacturers turn to Hoshin Kanri. Imagine steering a massive ship. You cannot just spin the wheel and hope the rudder turns; you need a mechanical linkage that connects the captain's command to the engine room. The 7 steps of Hoshin Kanri provide that linkage, ensuring that your organization’s long-term vision is translated into daily action.
In this guide, we will walk you through exactly what this methodology is, how to use the famous "X-Matrix," and the specific steps to implement it in your facility.
Key takeaways
- Alignment is key: Hoshin Kanri connects the "vision" of leadership with the "action" of the frontline.
- Dual flow: It uses a top-down and bottom-up approach (Catchball) to ensure goals are realistic.
- The X-Matrix: A single visual tool that maps goals, strategies, projects, and owners on one page.
- Execution focus: It's not just about planning; it uses monthly reviews to ensure the work actually gets done.
What is Hoshin Kanri?
Hoshin Kanri, often referred to as "Policy Deployment" or "Hoshin Planning," is a Japanese management method designed to help organizations effectively implement their strategic objectives.
Originating from the Japanese terms "Hoshin" (direction/compass) and "Kanri" (management/control), this method ensures that every member of the organization is aligned with the company’s overall goals. Essentially, the Hoshin planning process translates high-level objectives into actionable tasks that employees at all levels can comprehend and execute.
One of the unique aspects of Hoshin Kanri is its integrative approach. It combines top-down directives with bottom-up feedback, drawing heavily from Lean process management principles.
Senior leadership sets the vision, but they do not dictate how to get there. Instead, targets are communicated down, and the "how" is developed by the people doing the work. This dual-directional flow (often called "Catchball") ensures the strategic plan is realistic and adaptable, fostering a culture of continuous improvement and engagement.
The 7 steps of Hoshin Kanri
Hoshin Kanri is a powerful methodology, but it requires discipline. It is not something you do once a year and forget; it is a continuous cycle.
In this section, I will explore the 7 steps of Hoshin Kanri to provide you with a comprehensive guide to driving your organization toward sustained success.
Step 1: Establish organizational vision
Step 1 of the 7 steps of Hoshin Kanri creates the foundation. You cannot align a team if you don't know where you are going. This begins with a clear understanding of your current state versus your desired vision.
- Assess reality: Conduct an honest assessment of your existing business planning processes and execution capabilities.
- Identify gaps: key areas for improvement where your current performance does not match your ambition.
- Communicate: Ensure the vision statement connects seamlessly to your company’s overarching mission statement.
Step 2: Develop breakthrough objectives
Breakthrough objectives are ambitious goals intended to drive significant improvements over a three to five-year period. These are not small tweaks; they are major shifts.
- Stretch goals: These objectives should push your organization beyond its comfort zone.
- Strategic focus: Examples might include entering a new market, reducing total manufacturing costs by 30%, or adopting a new service delivery mode.
- Tools: Use tools like the "four quadrants of growth" to identify these opportunities.
Step 3: Develop annual objectives
You cannot eat an elephant in one bite. You must break down your 5-year breakthrough objectives into 1-year chunks. This is Step 3 of the 7 steps of Hoshin Kanri.
- SMART goals: Ensure goals are Specific, Measurable, Achievable, Realistic, and Time-bound.
- Example: If the breakthrough goal is 30% cost reduction in 3 years, the annual objective might be "reduce scrap rates by 10% this year."
- Market alignment: Conduct market research to ensure these annual goals align with current demand and your organizational capabilities.
Step 4: Cascade goals throughout the organization
Once you deploy annual objectives, they need to be cascaded down to departmental levels. This is often done using a Hoshin Planning Matrix (or X-Matrix).
- Catchball: This is the negotiation process where managers and teams agree on targets. It ensures buy-in.
- Value stream mapping: Use this to identify where improvements can be made to meet the goals.
- Alignment: Assign department, team, and individual objectives that align with the mission. This fosters a sense of ownership and accountability.
Step 5: Implement annual objectives
Planning ends here; execution begins now. This step involves implementing improvements through structured problem-solving approaches.
- Methodologies: Use Kaizen events, innovation projects, or Lean Six Sigma projects to execute the work.
- Continuous improvement: Employ strategies like the DMAIC model or the PDCA cycle (Plan-Do-Check-Act) to ensure the implementation is effective.
- Culture: This step transforms the plan from a document into a culture of continuous improvement.
Step 6: Perform monthly reviews
Most strategic plans fail because nobody checks them until the end of the year. Hoshin Kanri demands monthly rigour.
- Monitor progress: Check the status of the specific metrics and projects defined in Step 4.
- Corrective action: If a metric is "red" (off track), identify the root cause and implement a fix immediately.
- Accountability: Regular check-ins ensure that forward progress is maintained and issues are addressed promptly.
Step 7: Conduct an annual review and reflection
At the end of the year, you must close the loop.
- Assess results: Did you achieve the annual objectives? If not, why?
- Lessons learned: Determine what went wrong in the process. Was the goal too aggressive? Did you lack resources?
- Refine: Use these insights to adjust the strategy for the next cycle. This creates a continuous cycle of growth and development.
The Hoshin Kanri matrix
The Hoshin Kanri matrix (often called the X-Matrix) is the tool that makes this all possible. It provides a single-page graphical representation of your company’s strategy. By clearly illustrating the direction, the matrix helps every employee understand how their individual actions contribute to the big picture.
The 5 main sections of a Hoshin Kanri matrix
The Hoshin Kanri matrix is typically organized into five main sections, laid out in a compass pattern. Here’s a breakdown of each section and what you should focus on:
- Long-term strategic objectives (Southern section): The southern section of the matrix contains the organization’s long-term goals. These are the overarching targets that the company aims to achieve over several years. They set the direction and provide a vision for future success.
- Annual objectives (Western section): Moving to the western section (clockwise), you’ll find the annual objectives. These are the specific goals set for the current year, aligned with the long-term strategic objectives. They break down the broader vision into manageable, actionable parts that can be tackled within a shorter time frame.
- Improvement initiatives (Northern section): In the northern section, the focus shifts to improvement initiatives. These are the projects and actions that need to be undertaken to achieve the annual objectives. They are essentially the steps or strategies put in place to drive progress.
- Improvement targets or Key Performance Indicators (KPIs) (Eastern section): The eastern section lists the improvement targets or KPIs. These are the measurable outcomes that indicate whether the improvement initiatives are successful. They provide a way to track progress and ensure that the organization is on the right path.
- Resources (Far east section): Finally, on the far eastern side of the matrix, you’ll find the resources section. This part identifies which team members are responsible for each improvement initiative and KPI. It outlines the allocation of resources, ensuring clarity on who is accountable for what.
How to read a Hoshin Kanri matrix
It may look complex, but reading it is straightforward.
- Start at the South: Read the long-term goal.
- Move Clockwise: See how that long-term goal translates into this year's objective (West), then into a specific project (North), and finally into a metric (East).
- Follow the dots: In the corners of the matrix, you will see dots (or "X" marks). These represent the correlation between the sections, visualizing exactly how the plan is interconnected.
Benefits and drawbacks of Hoshin Kanri planning
Like any methodology, Hoshin Kanri has pros and cons. Understanding these will help you decide if it is right for your manufacturing environment.
Benefits
- Visual alignment: It helps your organization focus and visualize corporate goals on a single page.
- Unified direction: It ensures that every level of your company, from the CEO to the operator, is aligned with overarching objectives.
- Agility: By integrating agile elements, it breaks up rigid hierarchical structures and fosters a more flexible work environment.
- Ownership: The "Catchball" process builds buy-in, so employees feel they own the plan rather than having it forced upon them.
Drawbacks
- Risk of rigidity: Hoshin Kanri has the potential to set rigid goals that become irrelevant if the market changes quickly.
- Implementation effort: To fully compensate for its limitations, it often requires the incorporation of additional methods and tools.
- Complexity: It can add complexity and require significant effort to implement effectively, especially the first time you use the X-Matrix.
Frequently asked questions (FAQs) about Hoshin Kanri
Q1: What is the main purpose of Hoshin Kanri?
The main purpose is to eliminate the waste that comes from inconsistent direction and poor communication. It aligns all employees toward the same key strategic goals.
Q2: What is the "Catchball" process?
Catchball is the back-and-forth dialogue between managers and employees where they negotiate goals and resources. It ensures that targets are realistic and understood before they are finalized.
Q3: How often should Hoshin Kanri be reviewed?
While the plan is typically set annually, the 7 steps of Hoshin Kanri dictate that progress must be reviewed monthly to ensure the team stays on track.
Q4: Can Hoshin Kanri work for small businesses?
Absolutely! However, the X-Matrix might be simplified. The core principle of aligning daily actions with long-term vision is valuable for a company of any size.
From strategy to execution
Implementing the 7 steps of Hoshin Kanri in your organization can be a transformative step toward achieving cohesive and strategic growth. By ensuring that every team member understands and contributes to the overall goals, you foster a culture of collaboration and focused effort.
However, the most difficult part of Hoshin Kanri is not the planning; it is the management of the projects that come out of the plan. You will generate dozens of improvement initiatives (Kaizen projects), and tracking them all on spreadsheets is a recipe for failure.
LeanSuite's Kaizen and Project Management System is designed to be the engine that drives your Hoshin Kanri strategy.
It provides the framework to define, manage, and track the specific improvement projects that arise from your X-Matrix. Whether you are managing a breakthrough objective or a simple daily fix, our system ensures that every project is documented, assigned, and completed. Don't let your strategic plan gather dust on a shelf.
