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Hoshin Kanri — Understanding the spirit behind the form

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image - Hoshin Kanri in JapaneseThe surging interest in hoshin kanri (policy management, hoshin planning, policy deployment, and other translations) owes its success to several recent books by ex-middle level managers from an automobile transplant extolling the virtues of this approach among six sigma and lean professionals.

Hoshin kanri, like QFD, has its roots in 1960s Japan, and even shares a founding father: Dr. Yoji Akao, and an American first disciple, Bob King of GOAL/QPC.

Shortly after we translated Dr. Akao's QFD book, "Quality Function Deployment: Integrating Customer Requirements into Product Design" in 1987, work began on his Hoshin book, "Hoshin Kanri: Policy Deployment for Successful TQM". This was followed by Bob's "Hoshin Planning: The Developmental Approach" in 1989.

Both of these books portrayed hoshin kanri as a formal structure for defining long-, medium-, and short-term business strategies and objectives. Their rollout is organized on a year-by-year basis by defining and assigning roles and responsibilities (including authority) and periodic progress is tracked in such a way as to initiate timely and effective corrective measures when actual results deviated from forecasts (over achievement being subject to investigation as well as under achievement).

cover image of "Policy Management" by Glenn Mazur, et. al.In other words, hoshin kanri is an approach initiated by directors and CEOs, and deployed down and across the organization in order to realize them. My own book on the subject "Policy Management: Quality Approach to Strategic Planning," co-authored with two additional Japanese experts in 1998 (available in English, Japanese, and Spanish), confirms this.

One of the ways to visually indicate the relationships between the executive-level targets, means to achieve them, and those of direct reports is the use of matrices. Dr. Akao called them target-mean matrices and he used simple L-matrices to both build and display the data. Actually, earlier hoshin kanri charts used fishbone diagrams and pareto charts (called flags) to accomplish these same tasks.

Common to these tools was the need to focus on the critical few important strategies and not get bogged down in the trivial (which is a job for daily management). Key to effective and efficient deployment was simplicity.

I mention this because recent books by the ex-managers of the auto transplant exemplify hoshin kanri with very much 'middle-management' problems, such as reducing production costs and fixing quality problems. While these are certainly desirable outcomes, in my opinion, they rob hoshin kanri of its power — the capability to think big, plan big, and execute organization wide.

Perhaps this narrow approach is to be expected; after all, most high level decision-making by Japanese transplants is still done in Japan and only the mid-level deployments make it off the islands. On one of our hoshin kanri study missions, hoshin experts at one major Japanese electronics company confided they never involve their U.S. counterparts early on in the planning. Mid-level deployment begins after the big decisions are made by the Japanese headquarters and the details are rolled out overseas.

But now, U.S. companies are asking their six sigma and lean quality professionals to facilitate training and implementation of hoshin kanri, and recent inquiries to the QFD Institute have raised a concern: Everyone is asking "how to complete the 'A3-x' matrix' " because of these more recent books, rather than asking what is the best implementation of hoshin kanri for their specific project and organization.

This reminds me of the problem we QFD professionals still encounter: "How to complete the House of Quality?"  In other words, people are stuck on the "form" of the matrix and do not fully understand the "spirit" of the method.

Neither QFD nor Hoshin Kanri are about matrices. The matrix is nothing more than a tool to analyze and display different data sets. If the data set are small such as in Blitz QFD® or in hoshin kanri, matrices can waste time and effort and it may be better to replace them with simpler tables (such as this bad example of House of Quality use).

The A3 stuff gets even sillier in my opinion because it describes a paper size (roughly 11x17) which is a carryover from quality story formats that are used on the plant floor to succinctly explain how a simple problem was solved (by automotive assemblers).

While it is wise to encourage people to be brief and to the point, using a paper size to constrain executive decision making seems almost obsessive.

The x-matrix is one of the more difficult to master quality tools as it combines 4 data sets into one chart. (You should try the six-axis matrix!) While it can be useful to explain complicated interactions, building an x-matrix usually involves first creating 2-axis L-matrices and then combining them.

So my caution to quality professionals is this: Do not to get hung up on the A3 paper size or the need to use an x-matrix. Study and understand the essentials of hoshin kanri and be prepared to start out with simple tools and only move to complex ones when the data to be analyzed requires it. Since hoshin kanri should be limited to no more than 3-5 hoshin goals at a time, you may find matrices unnecessary.

So what is the essence?

  1. Form long-term vision, mission, and guiding principles. To do this, assemble a team of marketing, technology, society, and other trend watchers to determine strategy.
  2. Extract immediate opportunities and threats that address organizational strengths and weaknesses, and distill to the top few.
  3. Determine achievable targets for the next business term (hoshin). Determine tracking measures.
  4. Determine the means to achieve these targets, and how to measure and track them.
  5. Deploy targets to your direct reports commensurate with their responsibilities. Negotiate their means to achieve their targets. Add any departmental specific targets and means.
  6. Track actual performance of both the targets and means against the plan, as well as the degree of deviation triggering corrective actions.
  7. Have CEO review organizational achievement, improve management skills, and feed missed targets forward into the next business period.

When the means of hoshin kanri include new product development, it will often deploy to QFD. For this reason, we often include hoshin kanri as an advanced method at the front end of QFD, where projects are prioritized and project deliverables calculated. This is why hoshin kanri is included in the QFD Black Belt® Course. Hoshin Kanri tutorial may be scheduled at your company; please contact us.

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