Hoshin Kanri, sometimes called Hoshin Kanri A3, is a management tool used at Toyota to align business strategy and mobilize the entire organization toward the business strategy. Hoshin Kanri means “Shining Metal, Pointing Direction” or “Directional Needle”. In other words, Hoshin Kanri is a North Star or a Compass. This also includes a discussion on performance metrics. If you have no vision, then leadership will be utterly difficult.
An important element in Hoshin Kanri is the alignment of outcomes with how we achieve those outcomes. For example, environmental stewardship is very important to Toyota but so is profit. Under Hoshin Kanri, any means to achieve a profit is not acceptable, but achieving a profit without violating environment stewardship is appropriate and good.
In contrast, Management by Objectives is a popular strategic planning tool also, but doesn’t concern itself with how outcomes are achieved – it’s only concerned with outcomes. But, Hoshin differs from that in a significant way: the focus on outcomes as well as a focus on means.
How we achieve the outcomes is very important.
Key Elements in Hoshin Kanri
- Driven by organization’s vision, not today’s problems
- It is a system to translate that vision into tangible and measurable objectives
- Alignment created by cross-functional planning to achieve short-term objectives each year
- At the heart of Hoshin Kanri is Plan-Do-Check-Act
- Catchball = alignment, clarification, and employee involvement
- Backwards from Perfect – is what starts most discussions
- Vision = Where we are going.
- Mission = What do we do?
- Values = What do we stand for?
A Litmus Test
Do the lowest-level employees at your company know the business strategy? Can they articulate their place in it? If not, then that is an opportunity for improvement.
A Business Strategy is most effectively executed when it is everybody’s story. Until then, it sounds nice, but lacks the power to mobilize the troops. It has to be everybody’s story.