What are the origins of Hoshin Kanri?

Japan suffered immense infrastructural damages after the Second World War. It had to start the difficult, long process of rebuilding everything. Allied forces occupied Japan during this period and managed the reparation process. Many American experts were enlisted to assist in rebuilding Japan’s economy, infrastructure, and to ensure that no military force was reestablished.

W. Edwards Deming, the “Father of Quality” was one of those enlisted. The goal was to start the production of new radios. However, the new management was not skilled, there were limited production facilities, and quality management was difficult.

Deming was instrumental in the creation of quality control initiatives that emphasized top-level management being responsible for clearly defining and implementing quality policies and procedures. This type of quality control framework was known as Hoshin Kanri and eventually spread to America and other parts of the world.

This article will explain: what Hoshin Kanri means, it’s history, and why you need to implement Hoshin Kanri within your business or line of work.

How did Hoshin Kanri get its name?

Hoshin Kanri, also known as Hoshin Planning, is a strategy that alters a company’s strategy. It involves setting new goals along with objectives at each level of an organization. This approach was created to improve company-wide communication, and to consolidate business goals. Hoshin Kanri, is a Japanese term that roughly means “compass management”. It also incorporates the principles of continuous improvement, which is a management approach designed to increase efficiency and quality through small incremental changes to processes. 

It’s sufficient to grasp that Hoshin planning starts with the definition of breakthrough goals.

What are breakthrough goals?

Breakthrough goals are those that require significant changes in the way businesses operate. This requires dramatic changes to the organization’s policy and trajectory, which can be coordinated both from the top and from below.

The seven steps of Hoshin Kanri

7 Steps of Hoshin Kanri

Step 1: The creation of an organization’s vision and mission.

Step 2: Identifying breakthrough objectives.

Step 3: The breakdown of breakthrough goals in accordance with organizational structure – separating between groups, departments, and teams. Then, annual improvement plans are created.

Step 4: Annual objective deployment from the top-to-bottom. This means that objectives are constantly dissected and rearranged as you progress down the organizational hierarchy before finally creating specific projects. Projects can be divided into the appropriate tasks and assigned to the right people in a group.

Step 5: Results review using key metrics to assess progress.

Step 6: Monthly & Quarterly Reviews. Using the PDCA cycle, problem-solving for missed objectives.

Step 7: Annual Reviews; Reflection, learning.

What is the Hoshin Kanri approach?

Hoshin Kanri model

The Hoshin Kanri approach emphasizes the importance of including all hierarchical levels to develop new policies to support your company’s overarching mission, vision, and values.

Every level of an organization works towards a goal of relevance. To confirm that they are working towards their goals, higher hierarchy levels must communicate with lower organizational levels.

Projects are completed when all members of a team complete their tasks. After a project has been completed, the project is closed.

At the lower levels of an organization, the satisfaction of the objectives results in higher-up goals being achieved.

Through negotiation and alignment, objectives are ticked off, and so with collective effort, new policy/organizational direction is achieved.

If a task or project is not completed at any given point, corrective actions are taken during the Hoshin Kanri review and problem-solving steps.

Hoshin Kanri – Helping Japan rebuild its economy and infrastructure

Knowing the history of a business tool is a great way to understand it.  The phrase “Putting principles into practice” was a fundamental part of Japanese thinking during the 16th century. This important ideology was utilized in samurai warfare and was printed in the samurai code. This philosophy is summarized by the word “Heiho”. “Hei” means soldier, “ho” means method. The word “strategy” is the modern translation. It is the basis of Japanese business principles, which are very similar to samurai warfare.

Hoshin refers to “Heiho”. “ho” today is a literal translation. It means method or form. “Shin” refers to a shiny needle or compass. “Hoshin” is the full term. It refers to a method for setting strategic direction.

Kanri is also possible to be broken down into two parts. “Kan means to control or channel. The second, “ri, refers to logic or reason. The administration or management is the most used translation.

Hoshinkanri = Compass Management

However, the 1950s didn’t establish Hoshin Kanri as a management method. This was the time when Japan sought to rebuild its economy and infrastructure after it had suffered so much during World War II. American experts were called upon for assistance in reconstruction, education, training, and other areas.

Dr. Edward Deming was one of the experts who was enlisted and was the brains behind the well-known Deming Cycle, a method you may be familiar with. Deming trained hundreds of managers, engineers, and scholars over a period of two months. Three key areas are the focus of his lectures:

  • Use of the PDCA Cycle
  • Understanding the causes of variation is crucial.
  • Process control via control charts.

Japan was able to adapt its management methods and take control of its business operations through the guidance of Deming and other management and business experts. In the early ‘80s, Hoshin planning started to creep into the U.S. mainly because some U.S. businesses had divisions or subdivisions in Japan. The process was a competitive advantage in the early 1990s by U.S. Hoshin Kanri users.

What are the key concepts of Hoshin?

Hoshin planning, as mentioned above, is a seven-step process that allows for the deployment of new organizational policies and direction.

Key concept #1: Lean management

Lean management is the systematic and incremental improvement of process efficiency as well as quality. It considers that organizational improvement must be continuous.

The Plan, Do-Act-Check cycle is a combination of Hoshin planning and lean management. A 4-stage iterative process for reviewing your business processes and products or services to identify problems and support improvement.

Key concept #2: Catchball

Hoshin Kanri Catchball is a method to maintain transparent feedback loops at all levels of an organization. Catchball’s purpose is to create an open channel for information sharing.

The objectives are passed like a ball from the top to the lower levels of organizational management. The lower levels relay information and tactic suggestions back to the top management.

There might be some iterative balls-passing until there is consensus, and the objective is met.

The goal for every employee is to assign tasks that support the new direction/policy. To score, a company must have a culture that includes shared leadership. Therefore, the catchball method was created.

Hoshin Kanri Catchball Process

Key concept #3: Hoshin X matrix

The Hoshin X matrix is a visually stunning, but complex tool that is used in Hoshin planning.

The X matrix has several fields that are arranged in a compass-like structure (North-South-East-West).

Your long-term goals are formalized by starting at the bottom of the matrix. The next step is your annual objectives (left or west). Next, your top priorities (top or North). Then, you will find your goals to improve (right or East). The people responsible for each task are listed at the extreme right.

  • Long-term South goals: The first step in defining your long-term goals is to support your company’s overall policy/directional changes. The long-term goals are the foundation for where an organization is going. These long-term goals, in our case, include:
  • West annual objectives. Long-term goals are used to establish annual objectives. The question What do you want to accomplish this year? It is determined which long-term goal and which annual objective are associated at the intersection of long-term goals.
  • North, top priorities: Next, you will expand on the activities that you would like to undertake to achieve your annual goals. You mark down which annual goal connects to which priority at the intersectional corners.
  • East, goals to improve These targets are set by an organization to be achieved within one year. You can also indicate which priority effects which target. You can also connect targets to longer-term goals.
  • Responsibility: To the right, you will see who has responsibility for which top-level priorities.
Hoshin Kanri matrix

Hoshin Kanri planning: The main benefits

Why waste your time or precious resources to implement the Hoshin Kanri method?

If you want to change your company’s strategy and policy, you will need a systemized, proven approach. This is where the Hoshin Kanri method comes in. As previously mentioned, the U.S. early adopters of Hoshin used Hoshin planning as a way to transform big vision into a strategy that gave them a competitive edge.

Kaoru Ishikawa, described a shift within the business world as more companies began to use data for presentations. To gain deep insight into market dynamics and customer experiences, as well as operational performance, statistical measures were used. This paradigm shift was made possible by Hoshin planning. Hoshin Kanri stresses the importance of gathering key metrics data to analyze success.

The four benefits of Hoshin planning

  1. Successfully develops a strategy for continuous improvement.
  2. Supports corrective action by aligning strategy with actions.
  3. Hoshin catchball is a team effort across the entire organization to deploy Hoshin targets. This ensures that everyone has an opportunity to take part.
  4. Hoshin planning offers a quick and flexible approach to systemized strategy planning by providing structure and uniformity. This allows a company to respond quickly to changes while still pursuing its overarching goals.