What is Hoshin Kanri and Why Is It Going to Become So Fashionable?

Discover what Hoshin Kanri is and how it can benefit your organization.

Defining the Japanese work method

Hoshin Kanri is a work method or system based on ensuring the whole company’s cooperation, to achieve the objectives of long-term strategic and short-term management plans. Hoshin can be translated from Japanese as “compass” and Kanri as “administration” or “control”.

Hoshin Kanri is designed to orient the organization in only one direction – achievement of objectives, with members taking the initiative.

The father of Hoshin Kanri is Professor Yoji Akao, who, in the late 1950s, introduced the quality function deployment (QFD) system within the total quality control (TQC) system.

Hoshin Kanri was very successful in Japanese companies, with perhaps its largest exponent being Toyota and, a few years later, the Western automobile industry. Although it was conceived specifically for quality functions, in response to customer demands and the need to reduce the design cycle, today it has been extended to director level and is a method of strategic planning based on Deming’s Plan-Do-Check-Act (PDCA).

The five fundamentals of Hoshin Kanri

1. Every company has tasks that combine two elements – routine and innovation. There are routine and repetitive, but necessary, tasks as well disruptive, innovative ones that change the course of action. Both have a common element – they rely on teamwork. Hoshin Kanri integrates all tasks, routines or improvements, based on the company’s key objectives.
2. Hoshin Kanri spans two dimensions – strategic direction and operational management. It is a method of strategic and tactical planning. In short, it enables the alignment of the company’s overall objectives, plans and long-term strategic and day-to-day processes.
3. It establishes a system for formulating objectives, plans and goals that cascades down the entire organization and is based on continuous improvement. Complementary to these elements, it also establishes indicators to assess the achievement of objectives and the effectiveness of plans. Consequently, it involves people through the clear assignment of responsibilities related to goals and processes.
4. It relies on periodic reviews to ensure progress – weekly, monthly and annual.
5. It focuses on a few goals critical to success. Resources are limited and not everything can be done (it discards the desirability or pathological optimism that occurs in many companies).

The model includes seven steps:

1. Identify business keys
2. Set quantified business objectives
3. Define the global vision and goals
4. Develop strategies to achieve goals
5. Determine action plans (tactics and objectives) for every strategy
6. Establish indicators that measure the performance of each process
7. Review the entire process

Steps four to seven are cascaded down the organization, through all departments.

Five advantages of Hoshin Kanri, in case you are not convinced of its benefits:

1. Alignment and motivation: it becomes one of the organization’s main communication tools and, therefore, allows the involvement of all workers toward achieving the objectives
2. Focus: it focuses on a few critical goals for success. Resources are limited and you cannot get everything done on time. So, it says, “whoever takes a lot of space, the less he tightens up”
3. Focus on improvement and objectives: it revives the value of strategic thinking and the importance of the roles of all people. Resources are limited, but people’s development is not. It adheres to the philosophy of Kaizen, which states that improvement is infinite, by supporting improvement in people.
4. Decentralization: strategies and plans are deployed throughout the organization, allowing for delegation and for all members to assume responsibility
5. Learning: it is important to correctly define objectives and strategies that lead to success, such as process measurement. Hoshin Kanri puts special emphasis on measuring and documenting processes, enabling the generation of “know-how” to repeat success

In conclusion, it is a practical means of effectively resolving a company’s root problems, in a fast and controlled way.

Why is Hoshin Kanri going to become fashionable?

In forums and schools and in American business talk, we are starting to hear about Hoshin Kanri and questions, such as, is it a new fashion? Are the classics back? We think, this time, it goes much further – the conversation is indicative of a paradigm shift in business management.

In the last 70 years, we have witnessed a profound change in management models, from management by control to management by objectives. That is, from order and command to planning and strategy. The problem is that strategy, in many companies (many of them large and well known) is a great and magnificent document that stays in the General Management drawer and does not move.

We are convinced that a change of paradigm in management models is needed, in view of the shortcomings of management by objectives and the crises into which we have been plunged. Current models are based on uncontrolled growth. The next challenge is global Lean management, which considers the processes, utilizes self-learning and values people.

Without a doubt, for what we provisionally call “management”, global Lean will exceed the model of direction by objectives, because, in addition to acknowledging that objectives matter, it also acknowledges the importance of the processes required to achieve them. Objectives and strategies are shared throughout the organization, through matrices of correlation. Cooperation is encouraged and know-how is harnessed and acquired in the processes.

The great challenge we face is how to apply Hoshin Kanri in Western companies. In Japan, the vision of quality and personal development is part of workers’ DNA. Workers are so involved with their companies that they see themselves as part of a family and feel pride in belonging. Western culture moves in other ways.

Hoshin Kanri is a method that puts people at the base of all process improvement, as how things are done is as important as what is done. Because it consists of a series of systems, forms and rules, every company can make it theirs.

For more information, visit our Consulting services web page or speak with your local SGS representative.

For further information, please contact:

Jason Hulbert
Associate Marketing Manager
Knowledge
Tel: +44 7912426878