Strategic Planning is key for the success of any Organization. Getting tangible value from the strategy can only only be realized when it’s translated into action by an organization that understands the priorities and goals of the business. Companies spend significant amount of time and efforts in planning their strategic goals and objectives. But, having Strategic goals and objectives is not sufficient until these are executed to actions. But there are always these type of questions, How the pan should be successfully carried out? How do businesses measure success?
You can have many methods to plan and make the strategy which will look great on paper or presentation, but when it comes to execution it becomes vague as those who have to deliver the results from the actions have no idea. That is the reason we need to have proper method to turn strategic planning into action.
Why to reinvent the wheel, a method of Strategic Planning was originated from post-war Japan and then it was spread in US and all over the world. The process is Japanese Language is called “Hoshin Kanri”.
What is Hoshin Kanri?
Hoshin means direction and Kanri means Administration. If we talk in Business Terms it means Policy Deployment which means that the strategic goals are driving the process within the company. It removes various barriers and improves communication among the team.
It is important to align all the levels of management to drive strategy into actions. Hoshin Kanri helps top-down communication of strategy, to get everyone involved to drive the strategy into action. Results are seen from bottom up.
The Initial Consideration in Hoshin Karni
The Hoshin Kanri Planning method is more than just a planning tool. It’s an effective medium to communicate organizational goals, collaborate on how to reach those goals, so everyone can all work towards the objectives that management has set. Here are some of the benefits when using Hoshin Kanri Planning.
The initial considerations in this approach to business system change are as follows:
- Measuring the business system as a whole
- Setting core objectives of the business
- Understanding the environmental situation in which the business operates
- Defining processes that make up the system, and their activities, goals, and metrics
- Providing resources to perform activities to achieve business objectives.
The Hoshin Kanri approach aims to ensure that insight and vision are not forgotten and ignored as soon as planning activities are over. It aims to guarantee that planning documents, once finalized, are kept alive and acted on daily, and not shelved as soon as they have been completed. It aims to prevent the daily quota of fire fighting, unplanned ‘strategic’ meetings, and quarterly bottom-line pressures taking precedence over the really strategic plans. In the Hoshin Kanri environment, short-term activities are determined and managed by the plans themselves. There is a continual process of checking to make sure that what is done each day reflects the intentions, the targets, and the vision the company has agreed to pursue. Both planning and deployment are critical features of Hoshin Kanri, hence the term policy deployment.
7 Steps Process for Strategic Planning
The processes chosen to develop any strategic plan is important. So with this article, I have solved your most important problem which is the method. So method is 7 steps process of Hoshin Karni.
Once this method is used the result is a set of specific action plans and resources necessary to achieve your business breakthrough. You might tweak the approach to meet your specific needs. However, commonly used Hoshin Kanri planning process consists of the following seven steps;
Step 1: Establish the Organization Vision and Values of the Organization
This means to define Vision and Values of the the company. This can be An effective vision statement that must be inspirational/aspirational, visualizing the future state of an organization. A vision statement should challenge and inspire employees. If the organization were to achieve all of its strategic goals, what would it look like 10 years from now? It can also be grouped as a set of missions and values important to the organization.
Step 2: Develop Breakthrough Objectives
Breakthrough objectives (BTO) address a futuristic view (3-5 years) of the organization. This could be acquiring a new line of business, disrupting markets, developing new products etc… BTO’s are revolutionary, achieved through the support, sponsorship and aspirations by the C-suite of the organization.
Step 3: Develop Annual Objectives
Establishing annual goals means breaking down your breakthrough objectives into goals that will need to be achieved by the end of the year. Moving from the long-term to short-term requires that your organization successfully define the medium-term. The organization must stay on course to ultimately build shareholder value and meet quarterly expectations.
Step 4: Deploy Annual Objectives
A goal expresses intent. Achieving goals requires taking actionable steps to stay on course by doing what is right on a weekly, monthly and quarterly basis (Execution). Each goal should have an owner with the skills and authority to see the goal through conclusion by using analytics to track progress. Support and understanding of the goals throughout the middle management / front-line is vital for daily administration. The principle of catchball applies, to ensure small improvements will get the organization even closer to the annual goals. These goals should be accessible and help team members make decisions about what work needs to be prioritized.
Step 5: Implement Annual Objectives
Now the time has come to implement Annual Objectives the Hoshins, the programs, the initiatives etc;. For operational excellence leaders, achieving the annual objectives is an essential daily management discipline. Management is once again breaking this down into a series of strategic change programs involving a myriad of initiatives i.e kaizen, 5S, gemba, 7W, agile (IT transformations) etc… At this level of the Hoshin Kanri planning process, mid level management teams plan out the details to implement the tactics. Hoshin Kanri planning software helps link these initiatives back to the overarching goals for medium to large enterprise organizations.
Step 6: Monthly Review
In this step monthly performance is reviewed. In first five steps objectives are defined at the corporate level and cascaded through the management level, all the way to the plant level or to the bottom. Step 6 requires holding a monthly review to continuously track progress and monitor outcomes.
Step 7: Annual Review
Annual performance review is important. At the end of each year, it is time to reflect on the Hoshin Kanri plan. This annual ‘check up’ is to diagnose the overall health of the organization. It is an opportunity to establish the corporate goals for the following year and begin the hoshin planning process once again.
Does Your Organization Need Hoshin Planning?
There are several symptoms that indicate that a Hoshin planning initiative might help your organization meet both short- and long-term goals. Do you have:
- Many unsuccessful or failed projects within the process?
- Long delays for incremental improvements?
- Frequently missed forecasts and budgets?
- Poor alignment between the vision of senior management and the daily operation of the organization?
- Annual goals that get announced in April instead of January?
- More projects with good potential in processes than you can realistically handle?
- Yearly plans that don’t seem to have any relationship to the last year’s plan?
- Employees who feel disengaged and disconnected from the team?
- No connection between front line continuous improvement activities and the strategic plan?
If you suffer from any (or all) of these challenges, it is a good idea to dig deeper into the Hoshin Kanri principles and process.
Hoshin Kanri X Matrix
After reading all this Now you have better understanding about Hoshin Kanri Method. Now we need to document everything at one place called the Hoshin Kanri X matrix. It is a template is a single-page document that includes goals, strategies, strategic projects (initiatives), and owners.
The name comes from the X that divides the matrix into 4 key quadrants:
- Long-term goals (south)
- Annual objectives (west)
- Top-level priorities (north)
- Metrics to improve (east)
X Matrix Template in Excel
Hoshin X Matrix Template is here which will help you to start your journey. Kabanize have provided the detailed explanation on their blog. However, I have explained in detail how to follow the steps;
How to Use X matrix Template
Typically, your organization’s leader is responsible for setting up the matrix (if applied on a grand scale) or any manager who is implementing it on a team level.
When filling the X matrix template, you need to list the most important parts of the diagram closest to the center.
1. Stategic Golas on X Matrix
- Mention these goals in the bottom (South) where above diagram shows in Blue color.
- Every initiative will have many smaller tasks that your team will have to process before achieving the goal.
- Consider the capacity of your team before rushing into filling 10 long-term goals.
- A simple way to calculate the overall number of tasks that your team will have to complete is to break down each initiative into an actual plan for execution to the smallest possible task before listing the next long-term plan in the matrix.
2: Mid Term Goals on X Matrix
- Your annual Plan will be in Yellow box inside West / Left Quardant
3. Short Term on X Matrix
- Most important activities to complete in short term.
- To do list for the upcoming months
- Top Quardant (Green Color) North
- Review on Monthly basis
- Key Matrices
4: Agree on KPIs
Share the plan with other stake holders by defining the key performance indicators. Let them agree to what needs to be achieved, these should be your SMART Goals.
List the stakeholders who are responsible to achieve these.
Following this line of thought, right next to the key metrics, you need to list the key stakeholders responsible for leading the completion of the activities in the matrix’s top quadrant.
Although Lean encourages shared ownership of the workflow, for more clarity, we recommend that you list only the people responsible for the successful delivery of the team’s work, or simply said team leaders, managers, and process owners.
Step 5: Connecting the dots – mark the dependencies
Finally, you should complete the picture by specifying the dependencies between every listing in your matrix.
We recommend starting with creating a legend of the different correlation markers that will connect each quadrant to the next.
Although you’ve got plenty of flexibility to customize them, we advise you to keep it simple and add no more than 3 different ways of correlations.
For example, you can list a primary and a secondary way of correlation. To distinguish one from another, use different figures for visualizing them (circles, triangles, squares, etc.).
You can apply all sorts of geometrical figures but remember that the matrix needs to remain transparent, and every person should understand the information inside in a single glance.
To mark the dependencies between the quadrants in your Hoshin Kanri X matrix, you need to place an appropriate figure in the squares on the intersections between each quadrant in the corners of the diagram.