Hoshin Kanri is a Japanese word that means “compass management”, or in the individual words “hoshin” means direction, and “kanri” means administration. It is a top-down approach developed in 1965 by Bridgestone Tire. They published a report analyzing the planning techniques used by Deming Prize winning companies. The techniques described were given the name Hoshin Kanri, and was widely accepted in Japan by the mid-1970’s, including at Toyota.
It is used for taking strategic goals and successfully communicating them down through the organization, then back up the organization, then finally put into action by employees with shared commitment.
Management needs to avoid picking too many key goals in order to stay focused on what is strategically important, and to avoid too many projects and initiatives that can spread an organization too thin. This can make it difficult for organizations to accomplish any goals. By working on fewer goals, the organization can accomplish them faster, thus leading to more goals being accomplished in the long run, which can seem counter intuitive at first.
Critical to success of the system is ensuring the objectives from senior management are effectively communicated all the way down the chain of command. A catchball system seeks to get opinions of both managers and employees through meetings and interactions in order to ensure the bidirectional flow of goals, feedback, and other information is being received throughout the organization. Instead of a top-down only approach, catchball allows for feedback back up to the senior management, where metrics and goals can be adjusted to prevent bad behaviors, unintended consequences, or confusion.
Here is the 7-step process, as defined by Lean Methods Group
- Establish Organizational Vision
- Develop Breakthrough Objectives
- Develop Annual Objectives
- Deploy Annual Objectives
- Implement Annual Objectives
- Monthly Review
- Annual Review
The Hoshin Planning Matrix, also called the X Matrix, captures the objectives and cascading priorities.