Hoshin Planning Methodology

Hoshin Planning Methodology

consulting hoshin compassHoshin management means policy management. It provides direction to the whole organization towards attaining breakthrough improvements in key areas of customer satisfaction. Hoshin is a structured, systematic method of defining key entity issues, ensuring these issues receive adequate attention, checking performance to plan, and changing the plan when necessary. It yields the most effective plans to improve key issues relating to customer satisfaction. It provides the structure required to improve the planning process itself.

Hoshin effectively forces the use of data to evaluate the gap between planned and actual performance and determine where opportunities continue to exist for improving products/services. In MBO (Management By Objectives), individual goals move down to the next level. In Hoshin, entity or departmental goals and strategies to accomplish the goals roll down to the next level.

History of the Hoshin Process
The Hoshin process, which has evolved somewhat since its inception, was first used at Hewlett-Packard’s Japanse subsidiary, YHP, in 1976. The Japanese words ‘hoshin kanri’ can be generally interpreted as direction (setting) management for the entity. The words ‘nichijo kanri’ can be interpreted as daily (fundamental) management for the entity. The blending of these two methods is key to the success of the Hoshin process.

The basic premise behind the Hoshin plan is that the best way to obtain the desired result is to ensure that all employees in the organization understand the long-range direction and that they are working according to a linked plan to make the vision a reality. The second aspect of the plan is that there are fundamental process measures which must be monitored to assure the continuous improvement of the organization’s key business processes. In essence, all are heading in the same direction with a sense of control.

The Hoshin Planning Methodology
In the Hoshin process, strategic planning is systematized: the format of the plans is unified via standards. The standardization provides a structured approach for developing and producing the organization’s strategic plan. The structure and standards also enable an efficient linkage of the strategic plan through the organization. This ultimately leads to an organization-wide understanding of not just the plan but also of the planning process. This also holds true for the methodology used to review and track the plan’s progress. This built-in standardization enables the organization to evaluate decisions made by the organization’s leaders and to gauge the effectiveness of selected strategies.

Because the review process emphasizes not only results but how decisions are reached, the organization can identify successful decision-making methods and practices. The review methodology is essentially a built-in benchmarking process for the organization’s decision making. As an additional benefit, the review methodology can help identify areas of opportunity for the future. These opportunities can be used to modify failing strategies or to point to the next Hoshin objective to be pursued. This identifies the next mission to be accomplished as the organization strives to achieve its vision.

These opportunities for the future, coupled with the benchmarking aspect of the review methodology, are the vehicles for organizational learning at all levels.