More Related Content More from Flevy.com Best Practices (20) Hoshin Kanri1. © Operational Excellence Consulting. All rights reserved.
Hoshin Kanri
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© Operational Excellence Consulting. All rights reserved.
2. 3© Operational Excellence Consulting. All rights reserved.
Workshop Objectives
• Gain an understanding of the principles and key
concepts of Hoshin Kanri
• Define the Hoshin Kanri process, tools and key
elements
• Describe the Hoshin Kanri step-by-step
approach to planning, implementation and
review process for managed change
• Gain practical knowledge and skills in applying
the Hoshin Kanri process and tools
3. 5© Operational Excellence Consulting. All rights reserved.
Workshop Outline
• Introduction to Hoshin Kanri
What is Hoshin Kanri?
Purpose of Hoshin Kanri
Linkages of Hoshin Kanri, Balanced
Scorecard & MBO
Comparison of Hoshin Kanri with MBO
• Underlying Principles of Hoshin
Kanri
Plan-Do-Check–Act Cycle
Pareto Principle
Cause-and-Effect Relationship
• Hoshin Kanri Process Using PDCA
Approach
Review of Strategic Planning Process
Hoshin Kanri Steps
Hoshin Kanri Incorporating the Balanced
Scorecard
Top Management Objective Setting
Deployment to Department Managers
Operationalize through Projects
Performance Review
• Hoshin Kanri Tools
X Matrix
Alignment & Deployment Chart
Management Control Chart
Daily Management Matrix
A3 Report
Software for Hoshin Kanri
• Elements of Hoshin Kanri
Performance Measurements
Breakthrough Hoshin
Daily Management
Cross-functional Management
• Management Reviews
Types of Reviews
Checklist & Guidelines for Reviews
• Critical Success Factors
• Summary & Closing Comments
5. 9© Operational Excellence Consulting. All rights reserved.
“Total Quality does not
guarantee the companies
will produce strategies.
Winning strategies must
come from the minds of
the leaders, augmented
by inputs from the
troops.”
- Edwin Artzt
Chairman & CEO, Procter & Gamble
6. 11© Operational Excellence Consulting. All rights reserved.
“But Apple really beats to
a different drummer. I
used to say that Apple
should be the Sony of this
business, but in reality, I
think Apple should be the
Apple of this business.”
- Steve Jobs
9. 17© Operational Excellence Consulting. All rights reserved.
Hoshin Kanri
• Taken together, Hoshin Kanri means a
methodology to capture and concretize strategic
goals as well as to develop the means to bring
plans to reality
• In other words, Hoshin Kanri is target-means
deployment
10. 19© Operational Excellence Consulting. All rights reserved.
Purpose of Hoshin Kanri 1
• Provides a step-by-step planning,
implementation and review process for
managed and sustainable change
• Facilitates a set of coordinated processes that
accomplish the core objectives of the business
• Clarifies specific annual target policies derived
from long- and medium-term policies that
encompass the long term visions of the
company
11. 21© Operational Excellence Consulting. All rights reserved.
Benefits of Hoshin Kanri
• Every employee is clear of their role and objectives
• Leadership evident at all levels
• Everyone understands the goals of the organisation
• Aligns resources, objectives and metrics to all goals
and at all levels of the organization
• Employees are involved in setting targets,
improvement schedules and reviews
• There is a clear line of sight
12. 23© Operational Excellence Consulting. All rights reserved.
A Hoshin Kanri System for Goal
Alignment
•Alignment
through entire
company
structure using
top-down goal
setting
•Each
subsequent
goal supports
the previous
level‟s goals
Verticalalignment
Organization
Goals
Department
Objectives
Individual
Objectives
Department
Objectives
Individual
Objectives
Individual
Objectives
Individual
Objectives
13. 25© Operational Excellence Consulting. All rights reserved.
Activity 2: Brainstorming of
Management Initiatives/Projects
• In groups, based on your organization‟s Vision,
Mission and Values defined in Activity 1, list
down all the management initiatives. Write each
initiative/program/project on a Post-it note.
Time: 10 mins
14. 27© Operational Excellence Consulting. All rights reserved.
Comparison of Hoshin Kanri & MBO
MBO Hoshin Kanri
1. Basics •Behavioral theories
•Scoring system
•Lean or Total Quality
•Control cycle
2. Organization •Focused on the
individual
•Focused on the
organization and groups
of individuals
3. Operating
System
•Decisions on objectives
(“troubleshooting
system”)
•Planning of coherence
between objectives of the
individuals
•PDCA cycle
•Management by
processes
•Top-down / bottom-up
flows
15. 29© Operational Excellence Consulting. All rights reserved.
Comparison of Hoshin Kanri & MBO
MBO Hoshin Kanri
6. Evaluation of
Performance
•Based on results
•Tied to personnel
management
•Based more on “how”
(process) than on results
•Integrated into line
management
- Audit by the
director/ manager
- Self-evaluation of
results/ objectives
differences
- Evaluation by “internal
customers” and
colleagues
•No direct link with
personnel management
16. 31© Operational Excellence Consulting. All rights reserved.
Major Weaknesses of MBO
• Performance Appraisal as Principal Objective,
rather than Business Results
• Simple reflection of the budget
• Large number of objectives, therefore dispersive
17. 33© Operational Excellence Consulting. All rights reserved.
Major Strengths of Hoshin Kanri
• Synergy between top-down and bottom-up
processes
• Continuous, systematic management of
processes
• Rigorous application of PDCA cycle
• Emphasis on cause-and-effect relationships
18. 35© Operational Excellence Consulting. All rights reserved.
Breakthrough
• Breakthrough means
improvement to a
significantly higher
level of performance
• Lack of breakthrough for
a business organization
would place it in a
position of regression in
a competitive
environment
Think BIG:
Boldly Important Goals
19. 37© Operational Excellence Consulting. All rights reserved.
Control
• Control implies adherence to a
current standard
• Reasons for maintaining control:
Improvement might be uneconomical
Few alarm signals
Hold the materials, processes and
products to specification
Maintain current performance levels
Hold the gains achieved by recent
breakthrough projects
20. 39© Operational Excellence Consulting. All rights reserved.
Relationship of Breakthrough & Control
• In the situation of “out-of-control”, resources are
diverted to address the sporadic problems, while
chronic problems are often neglected
• Control is often a pre-requisite for breakthrough
to take place
• Control implies doing things right
• Breakthrough implies doing the right things
21. 41© Operational Excellence Consulting. All rights reserved.
Activity 4: Breakthrough & Control
• In groups, based on the list generated in Activity 2,
classify each initiative/program/project (“Post-it-Note”)
under the heading of „Breakthrough‟ or „Control‟.
Time: 15 mins
Breakthrough Control
22. 43© Operational Excellence Consulting. All rights reserved.
Underlying Principles of Hoshin
Kanri
• Plan-Do-Check-Act (PDCA) Cycle
• Pareto Principle: Focus on the vital
few
• Cause-and-Effect Relationship
23. 45© Operational Excellence Consulting. All rights reserved.
Pareto Principle (80/20 Rule)
• To identify the “critical few” from
the „trivial many”.
• The top twenty percent of the
problems account for eighty
percent of the cost of poor quality.
Also called the “80/20” rule.
• Emphasize the need to focus
resources and attention on the
issues which provide the greatest
contributions.
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24. 47© Operational Excellence Consulting. All rights reserved.
Cause & Effect
• Purpose
To identify and structure the causes of a given effect
• When to use
When investigating a problem, to identify and select
key problem causes to address
When effect of a problem is known, but possible
causes are unclear
To find other causal relationships, such as potential
risks or causes of desired effects
25. 49© Operational Excellence Consulting. All rights reserved.
Activity 5: Target and Means
• In groups, brainstorm as many means as possible to
achieve the following targets. Identify the top two
means which have the highest impact on the
outcome.
1. Turnaround a loss-making bakery shop by end 2012
2. Get pre-school children to be well-behaved and
disciplined at home and in public places
3. Climb to the top of Mt. Everest by end 2014
4. Give up the smoking habit within 3 months
Time: 10 mins
26. 51© Operational Excellence Consulting. All rights reserved.
Review of Strategic Planning Process
Shared
Values
Mission
Vision
Environmental
Assessment
Strategies
Strategic Objectives
Action Plans
Reason for
existence
Future
intent
Guiding
Principles
Broad statements of direction
Capabilities and risks
Things to change or improve (3-5 years)
Implementation
27. 53© Operational Excellence Consulting. All rights reserved.
Hoshin Kanri Steps 1
1. Establish organizational vision
2. Develop 3-5 year strategic plan
3. Develop annual objectives
4. Deploy/roll down to departments
Departments develop plans and means
Focus deployment – not everyone needs to be
involved in everything
Iterative (catch-ball) nature may take time
28. 55© Operational Excellence Consulting. All rights reserved.
Catch-Ball Process
Group Goals & Priorities
Division Objectives
Department Objectives
Section Objectives
Frontline Objectives
29. 57© Operational Excellence Consulting. All rights reserved.
Strategic Planning Incorporating
Balanced Scorecard & Hoshin Kanri
Customer
Perspective
Learning &
Growth
Perspective
Business
Processes
Perspective
Financial
Perspective
Targets Set
for Key
Performance
Indicators
Process
Execution &
Improvement
Project
Plans &
Resource
Allocation
Drives
Nego-
tiationInputs
Results – Reflection to Identify Continuous
Improvement Opportunities
30. 59© Operational Excellence Consulting. All rights reserved.
There are several areas to focus on when
employing a strategic planning process
Customer
Perspective
Learning &
Growth
Perspective
Business
Processes
Perspective
Financial
Perspective
Targets Set for
Key
Performance
Indicators
Process
Execution &
Improvement
Project Plans
& Resource
Allocation
Drives
Nego-
tiationInputs
Results – Reflection to Identify Continuous
Improvement Opportunities
(1) Complete full scan of the
environment including
input for targets from top
management
(2) Ensure that all business
objectives are covered by
KPIs and targets are set for
each KPI
(3) Apply common filter to list
of proposed projects
(4) Allocate resources against
portfolio of projects
(5) Top management is the
owner of the project portfolio
(6) Regular reviews based on
standard forms and templates
(7) Adopt a process view to reflect
improvement
1 2 3 4 5 6
7
31. 61© Operational Excellence Consulting. All rights reserved.
Four Key Phases of Hoshin Kanri
• Top Management
Objective Setting
• Deployment to
Department Managers
• Operationalize through
Projects
• Review Performance
32. 63© Operational Excellence Consulting. All rights reserved.
Phase 2: Deployment to Department Managers
Deployment to
Department Managers
PROCESS OUTPUTINPUTS
Cross-functional
Resources Request
Functional
Scope?
A
Finalized first-level
Hoshin Kanri
Deployed as
Functional Objectives
No
Yes
B
33. 65© Operational Excellence Consulting. All rights reserved.
Phase 4: Review Performance
Monthly Review of
Results
PROCESS OUTPUTINPUTS
Quarterly review of
Hoshin Kanri
Actual vs.
Planned?
Updated Control chart
Report of Project Status
Investigate & take
countermeasures to
address discrepancy
Yes
No
C
Rewards & Recognition
34. 67© Operational Excellence Consulting. All rights reserved.
Common Hoshin Kanri Tools
Alignment & Deployment
Chart
For improvement hoshin
Daily Management Matrix
For daily management
Gantt Chart
For review purposes
Management Control Chart
For review purposes
36. 71© Operational Excellence Consulting. All rights reserved.
Daily Management Matrix
Customer Perspective
Financial Perspective
Internal Processes Perspective
Learning & Growth Perspective
37. 73© Operational Excellence Consulting. All rights reserved.
X Matrix
Step 1: What?
Breakthrough
Thinking
Step 5: Who?
Resource
Deployment
Step 4: How
Much & When?
Measures
Step 3: How?
Which Key
Processes?
Step 2: How
Far? This Year?
38. 75© Operational Excellence Consulting. All rights reserved.
Activity 7: Alignment & Deployment
Time: 60 mins
• Select an Annual Objective based on Activity 6.
Cascade the annual objective down to the
following levels using the Alignment &
Deployment Chart
Division
Department
Section
40. 79© Operational Excellence Consulting. All rights reserved.
Types of Hoshin Kanri
• Main Objectives vs. Support Objectives
• Improvement (Breakthrough) vs. Daily
Management
• Cross-functional vs. Functional
• Level of Deployment
41. 81© Operational Excellence Consulting. All rights reserved.
Main & Support Objectives
• Support objectives are objectives aimed at
supporting the main objectives or improving
the internal business processes
• These objectives are formulated by functional
managers
42. 83© Operational Excellence Consulting. All rights reserved.
Hoshin Kanri Deployment Tree
Frontliner
Section
Manager
Department
Manager
GM
M1
Improve Process
Quality
M1.1
Improve Assembly
Process Quality
M1.1.1
Improve Process
Capability at FOL
M1.1.1.1
Improve Bondability
of MQFP Devices
…
M1.1.2
Implement Defect
Prevention at EOL
M1.1.2.1
Implement Vision
System for MQFP
Trim Process
…
M1.2
Improve Test
Process Quality
…
…
43. 85© Operational Excellence Consulting. All rights reserved.
Concept of Performance Measurements
• Performance Measurements are the critical
results that must be achieved at each level in
order to reach overall organizational goals.
• They are determined during the goal setting and
alignment process
44. 87© Operational Excellence Consulting. All rights reserved.
Key Business Drivers
• Critical areas that determine the success for an
organization in a certain strategic approach
• Possible Key Business Drivers might include:
Innovation
Productivity
Quality
Cost
Delivery
Service
45. 89© Operational Excellence Consulting. All rights reserved.
The Balanced Scorecard Approach
FINANCIAL
BUSINESS PROCESSES
Vision
and
Strategy
To succeed financially, how
should we appear to our
shareholders?
LEARNING & GROWTH
CUSTOMERS
To achieve our vision, how
will we sustain our ability to
change and improve?
To achieve our vision,
how should we appear to
our customers?
To satisfy our shareholders
and customers, what
business processes must
we excel at?
Source: Kaplan & Norton
46. 91© Operational Excellence Consulting. All rights reserved.
Performance Measurements - Benefits
• Provide data for evaluating how well
organizational goals are being achieved
• Encourage Management by Fact and Problem
Identification
• Provides a clear format for communicating up
and down the management chain
• Facilitates project identification
• Provide a basis for recognizing good
performance
47. 93© Operational Excellence Consulting. All rights reserved.
Improvement Hoshin
• Objective deployment that relates a
breakthrough improvement in key areas
• Objectives and Goals for Improvement Hoshin
could be determined through one or
combinations of the following:
Strategic / Business Planning
Business Excellence frameworks (e.g. SQA)
Managerial grid
Benchmarking
48. 95© Operational Excellence Consulting. All rights reserved.
Steps in Defining Improvement Hoshin
1. Derive target for specific objective
2. Perform analysis of past performance of the object being addressed
– trend, Pareto analysis and cause-effect relationships, etc.
3. Define tactics / means to achieve objective target
4. Identify the metrics for the defined tactics / means
5. Identify the person(s) responsible and deadline for completing the
tactics / means
6. Define a forecasted improvement trend for the objective being
addressed
7. Set up a management control chart to plot the actual improvement
trend versus that of the forecasted trend
8. Take countermeasures when the actual trend deviates from the
forecasted trend
49. 97© Operational Excellence Consulting. All rights reserved.
Cascading of Policy Deployment
Policy Deployment cascades down,
with the tactic and targets
at one level becoming
the objective and
goals at the
next level.
Objective Goals Tactic Targets
What HowMeasure Measure
Objective Goals Tactic Targets
What HowMeasure Measure
Objective Goals Tactic Targets
What HowMeasure Measure
Department Manager
Section Manager
Engineer
50. 99© Operational Excellence Consulting. All rights reserved.
Daily Management
• Objective deployment related to
maintaining and controlling the
current level of performance.
• Objectives measurements
subjected to daily maintenance
should be important
performance parameters that
require regular monitoring. Vital
signs of how the organization is
performing.
51. 101© Operational Excellence Consulting. All rights reserved.
Steps in Defining Daily Management
1. Select important performance parameters to be subjected
to Daily Management
2. Analyze the capability of the performance parameters over
a certain time interval
3. Define minimum acceptable level of performance (plan) for
the parameters
4. Set up a management control chart to plot the actual
level of performance versus the minimum acceptable
level of performance
5. Take countermeasures when the actual level of
performance deviates from the minimum acceptable level
of performance
52. 103© Operational Excellence Consulting. All rights reserved.
Cross-Functional Management
• Coordination of inter-functional
activities to achieve
management goals
• Management of horizontal /
project organizations that cut
across different functions or
departments
• Incorporate the use of project
management tools
53. 105© Operational Excellence Consulting. All rights reserved.
Cross-Functional Integration &
Project Management
• Hoshin Kanri, in the form of Improvement Hoshin, are
operationalized through projects
• Variables affecting the success of projects include:
Cross-functional Cooperation (Teamwork)
Quality of Project Leadership
Systemic Support
Reward & Recognition System
Availability of Resources
Review & Reporting Structure
54. 107© Operational Excellence Consulting. All rights reserved.
Purpose of Reviews
• To monitor the Hoshin Kanri plans and results
• To review the status of the projects initiated
based on improvement hoshin
• To monitor key performance parameters and
address any anomalies
• To improve on the Hoshin Kanri process
55. 109© Operational Excellence Consulting. All rights reserved.
Key Points to Note for Reviews
• Emphasis on corrective actions and systemic
support to address deviations from plans
• Provide opportunities for recognition of
achieved targets and good efforts
• Address system issues hindering the
achievement of objectives
56. 111© Operational Excellence Consulting. All rights reserved.
Monthly Self-Review
• Emphasis on self-diagnosis by individuals or
teams (process owners) responsible for the
policy
• Monthly self-review should include:
Updating the management control chart to check
progress of the plan
Analysis of discrepancies from planned results
Follow-up with countermeasures to address
discrepancies
Reporting the discrepancies and countermeasures
57. 113© Operational Excellence Consulting. All rights reserved.
Quarterly Review
• More formal review involving functional
management and senior management
• Quarterly formal review should include:
Review of how the results of lower level objectives are
contributing to higher level objectives
Review of the trends of management control charts
Presentation of project status
Understanding of problems encountered and their causes
Evaluate the objectives and make adaptive changes to
the tactics and targets
58. 115© Operational Excellence Consulting. All rights reserved.
Annual Review 2
• Emphasis on understanding which means led to
the achievement of which targets (cause-effect
relationship)
• Standardize resulting improvement to other
areas, where applicable
• Document and disseminate lessons learned
from Hoshin Kanri of current year
59. 117© Operational Excellence Consulting. All rights reserved.
Activity 10: Issues & Challenges
of Management Reviews
• Identify the top three issues and challenges that you have
encountered in past management reviews. For each
issue/challenge, define a mitigation plan.
Time: 15 mins
Issue No. Description of Issue/Challenge Mitigation Plan
60. 119© Operational Excellence Consulting. All rights reserved.
Checklist for Annual Planning Session 2
6. Have the employee and customer satisfaction
issues been picked up?
7. Are there any related strategies that it would
make sense to merge into a single strategy?
8. Any measures that should have specific
targets over several quarters or several years?
61. 121© Operational Excellence Consulting. All rights reserved.
Guidelines for Managing Review
Meetings 2
4. Travel and unplanned meetings are kept to a
minimum
5. Ensure that people are given time for the
preparation of data about the background to
deviations from plans (~2 weeks)
6. That business units should use same hoshin
review charts/tables to review strategies
63. 125© Operational Excellence Consulting. All rights reserved.
Operating Effectiveness
• Capacity of organization to achieve major
results in selected objectives
• Factors contributing to operating effectiveness:
Continuous improvement as guiding principle
Selection of appropriate management levers
Performance measurement and feedback systems
64. 127© Operational Excellence Consulting. All rights reserved.
Coherence
• Three dimensions of coherence
Horizontal (Cross-functional) Fit
Improvement objectives and actions are aligned across various
functions
Vertical (Functional) Fit
Priority of objectives of subordinates aligns to that of functional
supervisor
Strategic Fit
Extent of short-term actions, aimed at short-term objectives,
contributing to medium- and long-term objectives
65. 129© Operational Excellence Consulting. All rights reserved.
9 Reasons Why Hoshin Kanri Fails
1. Wrapping today‟s management process in A3 paper
2. Not knowing why
3. Setting, broad, vague, shallow objectives
4. Cheating on the “therefore” test
5. Marking it yellow or red and moving on
6. Using the down-up-down process for negotiation, not
consensus
7. Happy planning
8. Writing your hoshin plan on the computer
9. Having a strategy that is too good to be changed
Source: gemba panta rei
66. 131© Operational Excellence Consulting. All rights reserved.
Key Points / Summary
• Hoshin Kanri is a management tool aimed at
translating management objectives to various
levels of the organization
• The main purpose is to achieve Focus and
Alignment of organizational objectives
• Policy deployment is based on basic principles
of Lean, i.e. customer focus, management by
fact, teamwork and continuous improvement
67. 133© Operational Excellence Consulting. All rights reserved.
Key Points / Summary
• Regular reviews are important to monitor the
progress of the policy deployment
• Effective Hoshin Kanri are determined by:
operating effectiveness of the organization,
coherence of the objectives and mobilization
of individuals and teams involved in the Hoshin
Kanri process
68. © Operational Excellence Consulting. All rights reserved.
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