Mid-year is approaching fast. You will soon meet your employees or managers to review your objectives. ou will necessarily ask the following questions: what have you delivered since the beginning of the year? What should you prioritize by the end of the year?
Your organization has its strategic plan with its ambitions and your goals are directly related (hopefully). But is this really the case? Is the strategy well suited to all strata of your company? And most importantly, is your organization able to adjust along the way?
Hoshin kanri, what is it, and what is it used for?
Like many notions from lean, it is a Japanese term totally untranslatable, because very poetic. Literally, it is the methodology for aligning strategy at all levels of the organization. The Hoshin Kanri does not just present the strategy at each level in a cascade. The methodology defines different types of strategy levels, provides continuous feedback and builds on other lean concepts. This term could be translated as “strategy alignment”, although Hoshin Kanri covers much more than just alignment.
Starting with the Vision, each employee ensures that all intermediate goals are aligned. The team works on projects that will bring a tangible result to one or more of the strategic axes. Strategy alignment also ensures that each activity makes a significant gain in one of the areas or objectives. Projects or activities are therefore evaluated in light of the targets that the organization has set for itself. All in all, the organization ensures that it stays focused, concentrates on the right projects and maintains consistency for all teams.
The strength of Hoshin Kanri is that it is both top-down and bottom-up. Specifically, the highest level of management indicates the Vision and Mission and the goals to be achieved. This is the top-down part.
Reciprocally, at each hierarchical level, the teams prepare the action plans. They define how to achieve the results set by the leaders. They question these in order to make them evolve. This is the bottom-up part
Supported by various tools, strategy alignment remains very agile. Indeed, it must be considered that a project can be replaced by another one along the way. Especially if it contributes more to the intended objectives. This exercise requires rigor, as it is easy to add rows in an Excel spreadsheet and therefore projects to work on.
Five levels of strategic alignment
Hoshin Kanri offers levels, to separate the different elements. Indeed, the time horizons are very different depending on the type from vision to action.
- Vision: a very distant ideal or utopian objectives that guide the orientations.
- Strategic plan: quantitative and qualitative targets for the next three to five years
- Strategic objectives: quantitative and qualitative targets for the current year
- Tactics: the target state for all or part of the objectives for the next weeks or months
- Action plan: the concrete actions, according to the PDCA principles, for the next days or weeks
As a picture is worth a thousand words, here is a summary of the Hoshin Kanri levels.
The underlying principles
Strategy alignment is based on PDCA loops. This is how Agility enters the process. This is the opposite of strategic planning, which tends to simply state the objectives. With each action taken, the team questions the results achieved. They compare with what was intended. They then adjusts their action plan as they progress toward the intermediate goals.
In order to stay on course and concentrate efforts, the Pareto principle supports the Hoshin Kanri. You separate the “numerous and insignificant” elements from the “rare and critical” ones. It’s all about identifying the few actions that will bring you the most results. It is better to carry out a few promising projects than to botch many projects that will not bring all the expected benefits.
Hoshin Kanri is a powerful methodology, which comes with several tools. I will introduce them in a future article.