Strategy Excellence

Is the Hoshin Kanri autocratic with a short-term view, or even blind?

Is the Hoshin Kanri autocratic with a short-term view, or even blind?


Preamble

The criticism of the Hoshin Kanri is based on a review of definitions or presentations published either in paper books or on the Internet, as well as on examples actually encountered in our consulting experience. This is not a criticism of the way in which the various organizations or consultants implement it practically in the field; they may well have applied an improved method that does not include the problems mentioned in this document. Nor is it a criticism of the fundamentals of the method or of any original versions, as they may have been distorted since the 1970s, or they may have been designed at a different time that justified different methods.



Hoshin Kanri: a reminder of its definition and origins

Hoshin Kanri's literal translation (方針管理) is "compass management" or "management of the direction".
It is a method of deploying corporate policy or strategy, or in a broader sense of deploying "breakthroughs" such as with transformation or change programs.
It was developed in the 1960s and 1970s in Japan, notably by a subsidiary of Hewlett-Packard and Bridgestone. It has its origins in a mixture of Management By Objectives (by P. Drucker), the teachings of W. Edwards Deming (notably known for the PDCA) and Joseph M. Juran at seminars in Japan.



The descriptions of the Hoshin Kanri method are not very consistent with its principles

In its principles, Hoshin Kanri has a long-term vision and is participative

The deployment method starts from the organization's "Vision".
It deployes a strategy or breakthroughs that are by definition long-term.
Although the deployment method is "top-down" or as a cascade, it incorporates iterative and participative mechanisms:
  • "Catchball", which is an iterative process of discussion between two hierarchical levels
  • Annual and monthly PDCA loops


However, these principles are rarely applied in the stages of the deployment process

Current description of the deployment process*:
  1. Establish organisational vision
  2. Develop breakthrough objectives
  3. Develop annual objectives
  4. Deploy annual objectives
  5. Implement annual objectives
  6. Monthly review (PDCA)
  7. Annual review (PDCA)

What are the problems and consequences?

1. No analysis, neither strategic (market, competition...) nor of current state is highlighted
  • Lack of vision of reality: without analysis of current state the risk is not to have a good vision of the reality at all levels.
  • Too top-down: when deploying annual objectives, not analysing the current state or measuring gaps between annual objectives may lead to misinformed and overly "top-down" decisions

2. The deployment of objectives begins at the annual level
  • Short-term vision and late participative mode: the definition of priorities and projects at the "n-1" level is limited by the year and therefore does not make it possible to define long-term projects; those responsible at the "n-1" level may not feel sufficiently involved to participate in the definition of long-term projects at their level


3. An annual strategic review and a monthly tactical review
  • Changes are necessarily significant in a complex environment; it is simplistic to define a single periodicity for strategic and tactical reviews.
  • In addition, an annual review is totally inappropriate, especially at the beginning of the deployment. For strategic or breakthrough horizons at three years, this means that one third of the time has passed. In the event of a problem, it is a considerable waste of time; moreover, it will be very difficult to modify the trajectory, not to mention the deployments that are already well advanced. The image of the program could be disastrous and the program could not recover.





*review of 50 websites or presentations; there are some variants, but very few include explicit analyses and deployment of longer-term objectives



The same goes for the "Catchball" process

Common description of "Catchball":

 Common description of Catchball



What are the problems?

1. Lack of analysis of the existing situation at the different levels of the organization

2. Focus on the objectives (which is good in itself) and on the "how", but lack of discussion on the "what"


What are the consequences?

Risk of "negotiation" not based on objective data concerning the existing organizational entities with inappropriate resulting objectives (too high or too low).

Risk of not sufficiently involving staff, or even management, who will only see the "top-down result objectives" part.

A missed opportunity for management to better understand how their teams work and to discover new opportunities or levers for progress that can be applied elsewhere.

Although the general "what" is not negotiable, multiple variations depending on the environment specific to each organizational unit are possible.




The same goes for the Hoshin X matrix

Extract from a common X matrix:




What are the problems?

  1. Priorities for improvement are defined after the annual objectives
  2. Resources are only visible at "lower" levels, no responsibility is visible for breakthrough objectives



What are the consequences?
  1. It favours short-term improvements at all lower hierarchical levels, at te expense of longer-term ones, which contradicts a real "breakthrough".
  2. Lack of visible ownership of breakthrough objectives by members of the general management.



What solution? The "Vision Deployment / Vision Kanri "


Explicitly introduce the analysis and long-term deployment of objectives



Hoshin Kanri
  1. Establish organisational vision
  2. Develop breakthrough objectives
  3. Develop annual objectives
  4. Deploy annual objectives
  5. Implement annual objectives
  6. Monthly review (PDCA)
  7. Annual review (PDCA)
Improved Hoshin Kanri - Vision Kanri
  1. Define the vision
  2. Analyze current state: strategic and macroscopic analysis of the current state
  3. Develop breakthrough objectives
  4. Deploy breakthrough objectives and priorities: including a local analysis, a "Catchball" process on objectives and priorities at 3-5 years and a breakdown of annual objectives
  5. Implement annual objectives
  6. Tactical Review (PDCA): quarterly, monthly and weekly reviews
  7. Strategic Review (PDCA): annual and quarterly reviews



 

The current descriptions of the Hoshin Kanri give methods that look too much at their "compass" (the Hoshin) without looking up to look around or too late and not frequently enough.
With a compass, an explorer goes in the right direction; but if he doesn't look ahead he may find himself facing impassable obstacles and have to make considerable detours. The same applies to business life.

We prefer to replace the term "compass management" with "vision management" or "Kanri Vision" (ビジョン 管理):
  • It keeps the meaning of deployment of the strategic vision
  • It adds the meaning of seeing what is happening in reality

See the details of the improved Hoshin Kanri method.
 




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