What is Hoshin kanri?

Hoshin kanri is a management system. It carries a company's long-range goals down to the people who do the work, and it carries what those people learn back up. The term is Japanese. In English, you also see it called policy deployment or strategy deployment. The Lean Enterprise Institute's lexicon has an entry under strategy deployment. All three names mean the same system.

Hoshin kanri isn't a single tool. It's a yearly planning cycle, a few standard forms and a steady rhythm of reviews. These parts depend on each other. You can own every form and still not run Hoshin, if nobody reviews the plan or if nobody below the top had a say in it.

What makes it different from a plan in a binder

Three things separate Hoshin from an ordinary annual plan:

• It runs in two directions. A company can start top-down. Once the major goals are set, the people who receive them test them and answer back. The Lean Enterprise Institute's lexicon says that strategy deployment may start top-down, but that once the major goals are set, it should become a top-down and bottom-up dialogue. The answer-back process is called catchball.
• It separates breakthrough work from daily work. Hoshin covers the few things that must change. Routine measures still matter, but they belong in your normal management, not in the Hoshin plan.
• It has a review rhythm. The plan gets checked on a schedule, usually monthly and quarterly. Each review asks the same question: what is the gap between where you are and where you said you would be?

The seven steps, with a worked example

Published descriptions of Hoshin commonly use seven steps. The step names vary a little from source to source, but the shape stays the same. The example below follows one company through them.

The company is fictional. It's a metal parts maker with 180 employees, one plant and two shifts. Its numbers are made up to show the method. They aren't results.

1. Set the long-range vision. Look three to five years out. The owner and the leadership team decide that the company must win on delivery and quality. They call this their True North.
2. Develop breakthrough objectives. Turn the vision into a few large goals. The team writes two: ship 98% of orders on time by 2030, and cut customer-reported defects in half by 2030.
3. Develop annual objectives. Decide what must happen this year. The team writes three: reach 94% on-time shipments, cut Line 2 scrap from 4% to 3%, and train every supervisor to write an A3.
4. Deploy the objectives. Hand each objective to the person who will own it, and let that person answer back. The plant manager receives the on-time objective. She hands the changeover work on Line 2 to the production supervisor. He says that the work needs two hours of maintenance time a week. They agree on the work and record the ask.
5. Implement. People do the work. The second-shift supervisor starts an A3 on first-hour scrap at the Line 2 press brake.
6. Review monthly and quarterly. Each month, the leadership team reads the same chart, looks at what missed and decides what to do about it. Plan-Do-Check-Act (PDCA) is the engine under these reviews. You make a plan, do the work, check the result and act on what you learn.
7. Review the year and reset. At the end of the year, the team asks what worked, what didn't and what the next year's objectives should be. The cycle then starts again.

Notice what the example doesn't say. It doesn't say that the plant hit its numbers. Hoshin doesn't promise that. It gives you a way to see the gap every month and to know who is working on it.

The four standard forms and practices

You will meet these names in any writing on Hoshin:

You don't need every form on day one. You do need the two-way talk and the reviews. Without them, the forms are decoration.

Up, down and across

Most people picture Hoshin as a tree: goals move down the org chart, level by level. That's the vertical part. There's also a horizontal part. Peers at the same level often depend on each other. In the example, the production supervisor can't cut changeover time without the maintenance lead's help. If you plan only down the tree, you miss that dependency until it causes a miss.

When you deploy a goal, ask the person who receives it who else they need. Then put that person in the conversation.

What Hoshin is not

• It isn't the annual budget. A budget forecasts money. Hoshin picks the few breakthroughs you will work on. If you merge the two, you get a budget dressed up in strategy language.
• It isn't a KPI dashboard. A dashboard shows how the business runs today. A Hoshin chart tracks the improvement work that you committed to this year.
• It isn't a one-time event. If a plan launches in January and nobody schedules the reviews, it's just an annual planning exercise. See common Hoshin failures for how to spot this early.

Where to start

If your company has never run Hoshin, keep the first year small:

1. Write one long-range statement that your leadership team agrees on.
2. Write three or fewer annual objectives, and give each objective one named owner and a date.
3. Hold a real two-way conversation with each owner before you call the objective final.
4. Put 12 monthly reviews on the calendar before the year starts.
5. Work at least one objective through an A3, so that people see how the method handles a real problem.

How Run Hoshin handles this

Run Hoshin is a hosted app that covers the deploy, implement and review parts of the cycle. You write objectives in words and hand them down the org chart. Each objective arrives as step 1 of an eight-step A3. You hold your one-on-ones in the app, and it keeps a dated record of what was agreed. It doesn't cover long-range planning or the year-end reset. Of the four forms above, it has only the A3: it has no X-matrix screen, no bowling chart screen and no catchball tracking. It doesn't compute a rollup of numbers or check that the goals below add up to the goal above. See what the app does not do yet.

Sources

• Lean Enterprise Institute, Strategy Deployment
• Lean Enterprise Institute, Hoshin Kanri