The document discusses using Hoshin Planning to improve the selection and success of Six Sigma projects, emphasizing its importance in linking strategy to project outcomes. It details the Hoshin Planning process, including project hopper creation, strategy alignment, and implementation planning through structured reviews. A case study illustrates the application of Hoshin Planning in a fast-growing company facing operational challenges.

1. Using Hoshin PlanningUsing Hoshin Planning
for Six Sigma Projectfor Six Sigma Project
SelectionSelection
Ed PowersEd Powers
ASQ Denver SectionASQ Denver Section
March 31, 2004March 31, 2004

2. About….Ed PowersAbout….Ed Powers
►Co-Founder and EVP Operations, PrivateCo-Founder and EVP Operations, Private
Escapes, LLCEscapes, LLC
►Eight years experience in executive qualityEight years experience in executive quality
management, operations, and consultingmanagement, operations, and consulting
from Center Partners, Sorcia, and Hewlett-from Center Partners, Sorcia, and Hewlett-
PackardPackard
►Six Sigma Black BeltSix Sigma Black Belt
►Examiner, Baldrige National Quality AwardExaminer, Baldrige National Quality Award
►ASQ Certified Quality ManagerASQ Certified Quality Manager

3. PremisesPremises
►Selecting appropriate projects is one of theSelecting appropriate projects is one of the
biggest challenges facing Six Sigma Blackbiggest challenges facing Six Sigma Black
Belts and ChampionsBelts and Champions
►Hoshin planning is an overlookedHoshin planning is an overlooked
methodology that can be used to addressmethodology that can be used to address
this problemthis problem
►Six Sigma Black Belts and Champions canSix Sigma Black Belts and Champions can
be more successful using a hoshinbe more successful using a hoshin
approachapproach

4. AgendaAgenda
► Challenges with the Six Sigma Project SelectionChallenges with the Six Sigma Project Selection
ProcessProcess
► Overview of the Hoshin MethodOverview of the Hoshin Method
► The Hoshin Planning ProcessThe Hoshin Planning Process
► How to Link Strategies with Six Sigma ProjectsHow to Link Strategies with Six Sigma Projects
► The Hoshin Deployment and Review CycleThe Hoshin Deployment and Review Cycle
► Case StudyCase Study
► Where to StartWhere to Start

5. The Project Selection ChallengeThe Project Selection Challenge
““Some feel that project selection is the Achilles'Some feel that project selection is the Achilles'
heel of Six Sigma. One quickly learns that ifheel of Six Sigma. One quickly learns that if
projects are not selected properly the Six Sigmaprojects are not selected properly the Six Sigma
initiative can be at risk: Projects don't deliver theinitiative can be at risk: Projects don't deliver the
expected bottom-line results, the organizationexpected bottom-line results, the organization
becomes frustrated with the effort, and, slowly butbecomes frustrated with the effort, and, slowly but
surely, attention and resources are focused onsurely, attention and resources are focused on
other initiatives.”other initiatives.”
Source: Ronald D. Snee “Dealing with the Achilles’ Heel of Six Sigma Initiatives,” Quality Progress, March 2001

6. A Recommended ApproachA Recommended Approach
1.1. Identify Black Belt (BB) projects to be worked onIdentify Black Belt (BB) projects to be worked on
in the early stages of Six Sigma.in the early stages of Six Sigma.
2.2. Create a project hopper.Create a project hopper.
3.3. Examine the project portfolio to make sure theExamine the project portfolio to make sure the
projects meet the strategic improvement needs ofprojects meet the strategic improvement needs of
the organization.the organization.
4.4. Create an improvement system that manages allCreate an improvement system that manages all
the improvement efforts of the organization.the improvement efforts of the organization.
Include the Six Sigma projects as well as theInclude the Six Sigma projects as well as the
other improvement projects.other improvement projects.
Source: Ronald D. Snee and William F. Rodebaugh Jr., “The Project Selection Process,” Quality Progress, September 2002

7. Typical Business PlanningTypical Business Planning
Commit Funds
and
Resources
Develop
Detailed Plans
Implement
Plans
Review
Results
Determine
Priorities
Collect
Information
Develop
Strategies
Communicate
and Delegate

8. The Window of OpportunityThe Window of Opportunity
Commit Funds
and
Resources
Develop
Detailed Plans
Implement
Plans
Review
Results
Determine
Priorities
Collect
Information
Develop
Strategies
Communicate
and Delegate
Work Here!

9. Strategic PlanningStrategic Planning
1. Strategic Direction1. Strategic Direction
2. Customers and Market Analysis2. Customers and Market Analysis
3. Competition3. Competition
4. Necessary Solutions4. Necessary Solutions
5. How We Will Win5. How We Will Win
6. Development and Introduction Plan6. Development and Introduction Plan
7. The Value Delivery System7. The Value Delivery System
8. Risk Analysis8. Risk Analysis
9. Pro-Forma Financial Analysis9. Pro-Forma Financial Analysis
10. First-Year Plan10. First-Year Plan
Plan-10 Step Plan
Do-Execute
Check
Act
Yearly
Updates &
Adjustments

10. Business StrategiesBusiness Strategies
Market Leader
Market
Challenger
Market
Follower
Market
Nicher
Total Market Share
Expand
•New users
•More usage
Defend
•Position
•Flank
•Preemptive
•Counteroffensive
•Mobile (broaden/diversify)
•Contraction (divest)
Attack
•Frontal
•Flank
•Encirclement
(blitzkrieg)
•Bypass
(diversify,
leapfrog)
•Guerrilla
(price wars,
legal moves)
Subvert
•Clone
•Imitate
•Adapt
Coexist
•Specialize
•Partner
Source: Kotler, Marketing Management, 1997

11. Strategic PlanningStrategic Planning
1. Strategic Direction1. Strategic Direction
2. Customers and Market Analysis2. Customers and Market Analysis
3. Competition3. Competition
4. Necessary Solutions4. Necessary Solutions
5. How We Will Win5. How We Will Win
6. Development and Introduction Plan6. Development and Introduction Plan
7. The Value Delivery System7. The Value Delivery System
8. Risk Analysis8. Risk Analysis
9. Pro-Forma Financial Analysis9. Pro-Forma Financial Analysis
10. First-Year Plan10. First-Year Plan
Plan-10 Step Plan
Do-Execute
Check
Act
Yearly
Updates &
Adjustments

12. Step 10: First Year PlanStep 10: First Year Plan
5-Year
Objectives
Development &
Introduction Plan
Creation of
New Value
Key Business
Strategies
Steps 1-7
Hoshin
Business
Fundamentals
Key Process
Improvement Plans
Breakthroughs
Process Control
Strategic Process
Improvement
Step 10

13. Japanese Planning MethodsJapanese Planning Methods
ProcessPerformanceMeasure
Time
hoshin kanri
“policy control”
kaizen
“continuous
improvement”
nichijo kanri
“daily control”

14. •Describes the “what” and
the “how”
•Reinforces leadership
•Objectives and goals are
process based
•Goals are set based on
required process performance
•Encourages cooperation
•Comprehensive and
integrated
•Describes the “what,” not
the “how”
•Reinforces authority
•Objectives and goals are
functionally based
•Goals are set arbitrarily
•Encourages competition
•Fragmented and disjointed
Management By Objective Hoshin
Planning MethodologiesPlanning Methodologies

15. Leadership
Leadership
Leadership
Organizational AlignmentOrganizational Alignment
Implementation
Review
Planning
Customers,
Suppliers,
Technologies
Source: Sarv Singh Soin, TQC Essentials

16. The Hoshin Planning TableThe Hoshin Planning Table
OBJECTIVE STRATEGY (OWNER) PERFORMANCE MEASURENO.
TARGET/GOAL
A
B
C
D E
WHY
WHAT
HOW
Tied
to
HOW
ANNUAL PLAN
HOSHIN PLANNING TABLE
PREPARED BY:
PAGE OF
DATE FISCAL YEAR DIVISION LOCATION/DEPARTMENT
SITUATION:
Tied
to
WHAT
A. Describes the business situation and WHY we are here.
B. WHAT objective is to be reached (1 - 1.5 years).
C. What Target/Goal is to be reached (one year).
D. HOW we are going to reach the OBJECTIVE (strategies).
E. How we will measure progress of each strategy.

17. Hoshin Planning CascadeHoshin Planning Cascade
ANNUAL PLAN
SITUATION:
OBJECTIVE PERFORMANCE MEASURESTRATEGY (OWNER)
TARGET/GOAL
Strategy
SITUATION:
OBJECTIVE PERFORMANCE MEASURESTRATEGY (OWNER)
TARGET/GOAL
Objective Strategy
STRATEGY NO. OWNER
PERFORMANCE
METRICS
TACTICS
Objective
Objective
Vertical and Horizontal
Problem Decomposition

18. Hoshin Planning ProcessHoshin Planning Process
Form Team
Collect
Situational
Data
Draft
Critical Busi-
ness Issues
Draft
Key Success
Factors
Draft
Strategies,
Goals & Owners
Document the
Plan
Share, Refine
& Cascade
Draft
Business
Objective(s)

19. Linking to Six Sigma ProjectsLinking to Six Sigma Projects
►Identify underlying themes in statedIdentify underlying themes in stated
strategiesstrategies
 Revenue enhancementRevenue enhancement
 Cost reductionCost reduction
►Sort into “knowns” and “unknowns”Sort into “knowns” and “unknowns”
►Decompose “unknowns”Decompose “unknowns”
►Cascade and implement as Six SigmaCascade and implement as Six Sigma
projectsprojects

20. Hoshin Implementation PlanningHoshin Implementation Planning
ProcessProcess
Form Team
Refine
Strategy and
Perf. Meas.
Determine
Key Success
Factors
Develop Work
Breakdown
Structure
Sequence
Tasks
Assign
Owners
& Timelines
Document
the Plan
Brainstorm &
Select Best
Solutions

21. The Implementation Planning TableThe Implementation Planning Table
STRATEGY TACTICS
N D J F M A M J J A S O
NO.
PERF. METRICS
A
B
C D E
WHAT
HOW WHEN
FY 99 ANNUAL PLAN: IMPLEMENTATION PLAN
PREPARED BY: DATE FISCAL YEAR DIVISION LOCATION/DEPARTMENT
No.
Tied
to
WHAT
A. WHAT objective is to reached (Strategy assigned)
B. What Performance Measure is to be reached.
C. HOW we are going to reach the objective (Tactics).
D. WHO is responsible for what.
E. WHEN we are going to complete each Tactic.
OWNER
WHO

22. Hoshin Review CycleHoshin Review Cycle
►Periodic, formal reviewsPeriodic, formal reviews
►““Roll up” sequence, lowest to highest levelRoll up” sequence, lowest to highest level
►Plan, Do, Check, ActPlan, Do, Check, Act
►Constructive and supportive, not critical andConstructive and supportive, not critical and
judgmentaljudgmental
►Results published and communicatedResults published and communicated

23. Case Study: Center PartnersCase Study: Center Partners
►BackgroundBackground
 Outsourced contact center servicesOutsourced contact center services
 Young company, rapid growthYoung company, rapid growth
 Acquired by WPPAcquired by WPP
►Challenges:Challenges:
 Shrinking top lineShrinking top line
 Pressure on bottom linePressure on bottom line

24. ANNUAL PLAN (FY2003)
HOSHIN PLANNING
Prepared By: Richard Keith Entity: Center Partners Location: Fort Collins
Date: 3/5/2003 9:12:00
AM
Dept: Headquarters
Situation: After a very strong 2001, 2002’s financial results have been disappointing. Top-line revenue growth, especially with new clients, has
been slow to materialize. Improvements have been made in the sales and marketing effort in 2H ’02, but further investments and improvements in
strategy, structure, and process are needed to sustain top-line growth. Furthermore, continuing operational improvements are also required to
grow operating profit because of lower, “commodity” pricing and higher benefit costs that have pressured gross margins.
OBJECTIVE NO. STRATEGY (OWNER) PERFORMANCE MEASURE
1.0 Grow operating profit, gross
margins, and diversify and
strengthen our revenue stream.
TARGET/GOAL
 O.P. improved >= $x
 Pipeline >= $y
 Close new business with recognized
revenue of >= $z
1.1
1.2
1.3
Create a high-powered sales and marketing
process. (Martha)
Improve profitability through increased
efficiencies. (Kären)
Identify value of WPP connections and
implement revenue generation. (Richard)
 8 direct mails
 12 PR placements
 5 magazine editorials
 2 consultant events
 8 trade shows
 Realize $a million of GM planned for
in the budget
 Reduce monthly client performance
penalties to $0
 Reduce Attrition to <4%/mo.
 Improve GM:Revenue by b% over
current budget by yearend
 Win 2 deals with WPP in 2003
Hoshin Plan File Name: 2003 Hoshin 3/5/2003 9:12:00 AM Page 1 of 1

25. Gross Margin “5 Why’s” DiagramGross Margin “5 Why’s” Diagram
Low G.M.
Support ratios out of line
Inadequate Agent labor cost management
Performance penalties
Lower contract pricing
Non-value added support costs
High attrition
Unpaid scope creep
Unrepaid pass-through costs
Bad contract terms (SS8/9)
Variability in Agent billing High attrition dynamics
Tenure and history of raises
Labor market and where work is located
2nd
level Agent pay does not match function
Agent pay linked to tenure, not performance
No pay caps in place
Needless promotions
Lack of audits/updates
Tougher client negotiation
Lack of CP walk-away power
Competitive market pricing
Lack of strong sales funnel
Poor org. structure design Limited assumptions
Low Agent morale Current work system limits contribution
Poor coaching
Poor scheduling policies
High stress High queues
Lack of client’s customer focus (QA)
Pay not competitive Recent pay cut
Company downsizing
Can’t say no
Cost of doing business
Bad client contract terms
Bad vendor contracts History of lower volumes
Low QA scores
Low SL/High AHT New Agents on floor
Client Best Practices
Poor coaching
Client QA measurement issues
Client not allowing CP-paid attrition training
SOW scope creep
(0.25%)
(0.8%)
(1.7%)
(2%)
(0.5%?)
(1%)
(?)
(2003 G.M. improvement opportunity)

26. Hoshin 1.2 Deployment CascadeHoshin 1.2 Deployment Cascade
1.2 Improve
profitability
through
increased
efficiencies
1.2.1 Develop and implement self-directed work teams
1.2.2 Implement world-class coaching
1.2.3 Reduce unscheduled absences and schedule our
operations more efficiently through Absence Management
1.2.4 Develop consistent, understandable guidelines for
compensation.
1.2.5 Imagine, develop, and deploy company-wide desktop tools
that provide measurable performance improvements.
1.2.6 Provide information to internal and external decision makers
in a format they prefer to use in sub-second response time.

27. FY03 ANNUAL PLAN: IMPLEMENTATION PLAN
Prepared by: Ed Powers Entity: Center Partners Department: Quality Status:
Q4 Q1 Q2 Q3No. Strategy No. Tactics Owner
D J F M A M J J A S O N
 

Complete Design X X 
1 Map process and details Ed w/team 18 
2 Document process Jason 19 
3 Refine metrics and goals Ed 19 
4 Run financial models and
determine compensation
Ed w
Tommy and
Jenny
19 
5 Do site Ops review Rick 20 
6 Get executive approval Ed w/ Rick
& team
20 6 
7 Revise training to fit mentoring
model
Todd 27 
8 Revise Spring Training program
(incl. Checklist)
Todd 27 
9 Revise Mentor training program Todd 8 
10 Revise Coach’s Checklists Rita 13 
11 Develop Major League and Coach
curricula
Todd 3 
1.2
.1
Create a
production
environment that
promotes high
performance and
Agent self-
sufficiency, and
optimizes
leadership and
support
resources.
Pilot with AT&T Bay X X X X
12 Identify Mentors Jason 20 
13 Determine Coach assignments Robert 28
14 Run stats to determine team
assignments
Jason 22 
15 Determine Major League and All
Star teams
Robert 28 
16 Train and certify Mentors Todd 9 
17 Run Spring Training Todd 16-
30

18 Set up promotions and hand-outs Rick 24
19 Check HRMS and Payroll issues Tanya 24 
20 Train Coaches Todd 7 
21 Conduct awareness sessions (all
participants)
Todd 7 
Performance Metrics
 Reduce 90-
day Attrition
by 3%
 Reduce
Agent Time
to Norm by
20%
 No increase
in net labor
costs
 Improve
employee
satisfaction
by average of 22 Train All Star players Todd 7 

28. FY03 HOSHIN REVIEW TABLE—JANUARY 2003
Status:  = On Track      = Behind Plan        = Far Below Expectations     = Metrics or strategy change
Trend:    Concern: H = High, M = Moderate, L = Low
Prepared by: Richard Keith Date:2/18/2003 Entity: Center Partners Dept: Headquarters
Status/ Trend/ ConcernNo Hoshin
Objective
(Plan)
Performance Target /
Goal
Actual
Performance
(Do)
Oct Nov Dec Jan
Root Cause of Deviation
(Check)
Corrective Action
(Act)
1.0 Grow operating
profit, gross
margins, and
diversify and
strengthen our
revenue stream.
 O.P. improved >=
$x
 Pipeline >= y
 Close new business
with recognized
revenue of >= z
 2 strategies in the
green
 O.P. improved in
January over
budget
 Pipeline at $w
 No new business
closed
 Metrics refined
      Late 2003 budget approval
and changes in targets have
slowed progress in some
areas
 Marketing and sales
misalignment
 Need to better align marketing
and sales efforts to build
revenue at a faster rate
Status/ Trend/ ConcernNo Hoshin
Strategies
(Plan)
Performance
Metric(s)
Actual
Performance
(Do)
Oct Nov Dec Jan
Root Cause of Deviation
(Check)
Corrective Action
(Act)
1 Create a high-
powered sales
and marketing
process.
(Martha)
 8 direct mails
 12 PR placements
 5 magazine editorials
 2 consultant events
 8 trade shows
 Funnel growing;
lots of RFPs now
 BOOST
opportunities
being acted on
 New products
defined
    
2 Improve
profitability
through
increased
efficiencies.
(Kären)
 Realize $a million of
GM planned for in
the budget
 Reduce monthly
client performance
penalties to $0
 Reduce Attrition to
<4%/mo.
 Improve
GM:Revenue by b%
over current budget
by yearend
 2 strategies in the
green (See
Hoshin 1.2
Review Table)
      Lingering 2003 budgetary
concerns are causing
milestones to slip and scope
to change
 Need to identify additional
 Resolve budget questions as
soon as possible
3 Identify value
of WPP
connections and
implement
 Win 2 deals with
WPP in 2003
 Progress linking
with WPP on
financial segment
opportunities,
     Richard and Martha to develop
implementation plan to
include WPP summit
conference by late March
 Need to resolve if internal

29. Where to StartWhere to Start
►Learn the basics of strategic planning andLearn the basics of strategic planning and
hoshin kanrihoshin kanri
►Work with Champion/Executive Sponsor toWork with Champion/Executive Sponsor to
identify opportunities for strategic planningidentify opportunities for strategic planning
participationparticipation
►Facilitate/co-facilitate annual planningFacilitate/co-facilitate annual planning
►Own the deployment and review cyclesOwn the deployment and review cycles

30. Recommended ReadingRecommended Reading
►Total Quality Control EssentialsTotal Quality Control Essentials, Sarv Singh, Sarv Singh
Soin. McGraw-Hill, ISBN 0070595488Soin. McGraw-Hill, ISBN 0070595488
►Beyond Strategic Vision: EffectiveBeyond Strategic Vision: Effective
Corporate Action with Hoshin PlanningCorporate Action with Hoshin Planning,,
Michael Cowley and Ellen Domb.Michael Cowley and Ellen Domb.
Butterworth-Heinemann, ISBN 0750698438Butterworth-Heinemann, ISBN 0750698438