1. business and industrial

How to Make Hoshin Planning Work
Paul Docherty – i-nexus
Paul: Okay. So, as he said, good morning or good afternoon everybody. My name is Paul
Docherty. I’m the CEO of i-nexus. And i-nexus is an enterprise software company focusing on
the concept of business execution. I’m not going to talk too much about that today because the
focus of today’s discussion is going to be really about understanding how you can make Hoshin
planning really work in your organization. By way of introduction, I think it’ll be helpful to
provide a little background of myself.
So I’ve been involved in operational excellence, Lean Six Sigma for nearly twenty years now.
Back in the 90’s, I led a fairly significant operational excellence program that really utilized
many of the concepts of Hoshin planning, really in a very embryonic way. And my
understanding of the process and my understanding of the concept have evolved over the last
ten years really through working with a number of organizations, some of whom are customers,
some of whom are working with our consulting partners. And I’ve seen it first hand. Some of
the real successes and also some of the, you perhaps would call, failures of, in terms of, not
realizing expectations that the senior team had for that approach. So since I founded i-nexus,
my goal has been to understand how we can help organizations develop execution disciplines.
What I want to share with you is some of the understanding that we’ve gained over the last ten
years in terms of how you can make Hoshin planning really work for you. So let me just
summarize what I’m going to cover.
The first thing I’m going to very briefly recap on the concept of Hoshin planning and making
the operating assumption that many of the people of the phone today are familiar with the
concept but I will, for the purpose of getting everybody to the same place, just quickly recap on
that. What I want to do from that, more importantly is focusing on what I see is the critical
components of Hoshin in terms of the DNA that’s essential for success and the things that you
need to preserve if you really do want to be successful. I’ll then switch really to looking at how
organizations deploy Hoshin, how they typically do that with the frameworks that they’re
using for doing that, and some of the challenges I believe will arise as a result of that. And,
finally, what I’d like to focus in on is the key things, and the really sort of essence of this
webinar, which are the things that we’ve discovered are key to realizing the full potential of
Hoshin planning.
So let me start by just elaborating a little bit more on the concept. So Hoshin planning or Hoshin
kanri or policy deployment or one of the many other strategy deployment, goal deployment,
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How to Make Hoshin Planning Work
terms that it’s known, it has its origins in Japan. And if you want to kind of understand where it
came from, in a sense, it’s the marriage of the concept of management by objectives with the
ideas that were being developed in Japan that time by Deming and Duran of total quality
management. And its first emersion as a terminology, if you like, was when it was used by in a
report prepared by Bridgeton Tyres in 1965, to give you some idea how long it’s been around,
where they used this term Hoshin kanri as a way of describing the planning approaches of a
number of Deming price winners at that time. And in terms of its basic concept, it literally
means shining compass management, or in essence you could describe it as a management
system that’s designed to keep us all pointing in the direction of the vision of the organization.
And in essence, it’s a systematic approach that applies the Deming concept of plan-do-check act
to long term or what is termed in Hoshin terms as breakthrough objectives and they help us to
translate those objectives into the actions that we need to take and drive those through to
deliver the competitive advantage that we see.
Now the process itself, and I won’t spend too long on this, isn’t specifically complicated. In
essence, it’s much like strategic planning. You imagine it start. It starts with a vision and
mission of the organization and then understanding what you fundamentally want to be good
at, what does the perfection of your vision mean, and then it’s a process of being credibly
selective at identifying a small set of breakthrough objectives. What I mean by breakthrough
objectives is something that’s game changing. It’s a way that you would imagine you can over
the next three to five years change the business model of your organization in such a way that
you will have significant competitive advantage in the market you have. And the whole idea of
that concept is that what we want to do is not just head off in that direction aimlessly. We want
to establish in a meaningful way, as we go down to the organization, using the planning
horizon of the next annual period one of the objectives that we need to do if we want to get
somewhere in 3-5 years, what do we need to do this year? And from a concept perspective,
we’ll see some of that realization of the goal through just continuous improvement. In this right
hand side of the picture, what is defined as Kaizen here, but what goal deployment is about is
articulating how much of the breakthrough goal you expect to achieve in the year and then
turning that aspiration into a set of underlying strategies, if you like, in terms of the objectives at
difficult levels of the organization.
One of the cool concepts we will explore more of the core concepts of Hoshin planning is an
idea which I think heavily goes from the more consensus oriented culture of Japan of what is
called catch-ball planning. And catch-ball planning is a concept where essentially the process of
looking at a target is something which is collaboratively done with the people who have to
realize it. And the process involves in this sort of handshake between the two where we look at
the possibility and we refine the targets to what is essentially consensus of what’s possible.
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How to Make Hoshin Planning Work
Now, obviously there is some tension here, and it’s intended to be some natural tension of this
process. But the idea is that by doing this as we go down to the process, we’re naturally creating
a degree of ownership and buy-in from the people who are owning the next level in the plan in
terms of their shorter term horizon as all the way down ideally to the what’s called the point of
impact, the level where you can actually change processes to make things happen.
This concept of implementing annual objectives really is fundamentally focused on a concept of
action planning. It’s about developing for each objective when you reach the point where it can
actually be done a clearly articulated action plan that says, ‚We’re going to do these steps.
These people are going to do this by this point in time.‛ And that plan really is to move you
from what is known in Hoshin terms as the jumping off point where you are today to where
you need to get to by the end of your annual horizon or some divisions of that annual horizon.
And the idea fundamentally behind Hoshin planning is that by building that cascade, by
articulating those action plans and by running those action plans and holding a regular rigorous
review every month to determine on a sort of plan-do-check act basis, has the plan been
articulated? Have we executed on that plan? Are the results of that plan different to what we
expected? And what can we learn from that. But by holding that kind of review process in
multiple levels in the organization, you can essentially drive a discipline of execution which
drives you through over the year. And there are some tools within the concept of Hoshin
planning which essentially look to see if there’s a deviation from the plan. And the idea of the
process is that the end of the execution stage for that year, you do a broad of plan-do-check act
cycle more than annual level to say, ‚Did we achieve what we expected to achieve? If we didn’t,
why didn’t we? And what do we need to do to both adjust the plan and optimize the way in
which we executed the whole planning process?‛
And the idea is that what we’re doing in the Hoshin kanri is that we’re embedding the benefits
that we’ve gained by essentially having an on-going concept of daily management. Well, daily
management is the concept of understanding the fundamental KPI’s that you’re running in the
organization and ensuring that you continue to control and execute on that in a way that
doesn’t move ground and that you’re making continuous incremental improvement through
that. Now, this kind of whole concept obviously, in many ways, is the ideal way of going about
breaking down business goals and then bringing to the table then those methodologies that
many of us are familiar within terms of reenact, Lean improvement ideas and variation
reduction and complexity reduction tools such as DMAIC and DMADV and other things as
ways of implementing improvement actions within the framework of Hoshin. There are
number of organizations that have been able to link these two things together in a very neat and
effective way.
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How to Make Hoshin Planning Work
So that’s really the concept of the process of Hoshin planning. Before I get into what I see to be
the DNA that you must preserve to really succeed with in this concept, I just want to talk to a
second to the potential of the concept. I mean, I call the real problems of executions, I often
characterize it as the ten percent problem. And I describe that ten percent problem just to mean
there’s less than ten percent of people in any large organization, even in any small organization
for that matter who fully understand what the organization’s trying to achieve and understand
their role in contributing to having that achievement happen. And, obviously, if we can execute
this cascade in a structured and disciplined way, then it has the potential calling to engage
employees in understanding how they fit in and also help them unleash creativity in terms of
how can they find ways of changing how we operate today to deliver on the targets that have
been cascaded through the process. Well obviously, there are other focus, other benefits and it
keeps us true to something which we can describe as our vision, if you like, what we’re trying
to achieve in moments where, let’s just say, all hell is breaking loose around us. So many of us
have real operational management experience and it’s very easy to lose sight of what you’re
trying to do, what I call important, when you’re firefighting the urgent. And Hoshin planning
provides a framework and a backstop to keep that focus there.
But I think if you want to characterize it in terms of what’s real values. And I think this is the
way that when people ask me, ‚Why should I do Hoshin planning? Why should I do goal
deployment or whatever we want to call it?‛ I characterize it in the sense that, the number one
problem facing all organizations is execution. I mean, our recent conference board survey and
those people who’ve attended previous webinars of mine will know that 55% of CEO’s very
recently pegged execution as their number one issue. At the end of the day, it’s not surprising.
They make promises to their stakeholders, shareholders and others, analysts, whoever and the
reality is that not delivering on those promises, getting your organization to execute on those
promises can be a terminal event for senior leaders. And I believe that this focus on execution is
the key because in simple terms, as this quote suggests, being able to execute well on what is
even a mediocre strategy can actually lead to significantly outperforming organizations who
poorly execute on what is essentially their most brilliant strategy. And I think this is at the heart
of what Hoshin planning offers an organization as well as the benefits of engagement of
employees. It offers the ability to leverage all of that talent, rather than just leveraging ten
percent of that talent, which is what I believe traditional processes and approaches to strategic
planning do.
So in essence, that’s a quick fundamental sketch of what Hoshin planning is. What I want to
drill a little deeper into—and to be less specific because I’m sure you can read about Hoshin
planning on the web or in documents, books, etc.—I want to give you a perspective on what I
consider to be the critical determinants to success if you are going to adopt which, if you like,
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How to Make Hoshin Planning Work
the critical success factors. I’ve evolved this perspective really not just from my own personal
experience, but through dialogue with leading practitioners who are, if you like, adapting and
implementing Hoshin planning in their organizations. And from dialogues with our
consultancy partners who helped many organizations to achieve this. I guess at the top of the
picture, I would put this essence of maintaining constancy of purpose. And the power of
breakthrough objectives, see many organizations take Hoshin planning and lose sight of the fact
that the first thing to do is to work on understanding how your vision translates into a small
and most of the emphasis on small, set, in my mind, one to five, not organizational wise, not
many, many, what I would call breakthrough objectives for the organization. These are the
things which describe a transformation in operation. It might be, to move from a direct model of
selling to a channel model of selling. These are the kind of high level changes to an organization
that might make huge difference to how you operate. And what is important about those break
through objectives is that they provide a sort of compass as the concept Hoshin planning
describes that gives us the guidance to keep going towards those goals when many of the things
around us. Many organizations know what it’s like, for example, to make a spot acquisition of a
new company, and the pressure that that can create to be diverted from your path that point in
time is one of the classic reasons why organizations lose focus on their goals.
I think another point that is very important is that there is a natural tension that I mentioned
before between the concept of catch-ball, this validation, query, probing, consensus setting of
objectives and targets between the different levels that you cascade and the need to help
organizations to really think in a stretch terms. Everybody’s heard of the concepts of big, hairy
audacious goals. I have a view that says that the very important balance to be taken between
what I would call an inside out view of the world which tends to be very incremental, and the
outside-in view of the world which basically has it it’s heart says, don’t be blindly optimistic
and create essentially happy plans that have targets the purely or outside the bounds of reality,
go through a rigorous exercise of understanding what it is that the market is performing at
today, where your competition are at. And set yourself a target that makes you better than that
but not necessarily to appoint of unrealism. This kind of concept of how to set that stretch goal
for the breakthrough goal, how then to ensure that you make the majority of that progress in
the first year, is a discipline which is core to the idea of Hoshin planning to be successful.
Again, when this concept of Hoshins or, if you like, top level, high level goals, this concept just
focuses really, really important. Whenever anybody goes through an exercise of Hoshin
planning for the first time, the natural path of least resistance is to essentially identify more and
more goals and more and more indicators to measure those goals. And this is a human trait of
trying to cover all the bases, when in fact, the reality is, the less you identify, the more
successful you’re going to be, because we’re going to dress those goals with far more tangible
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How to Make Hoshin Planning Work
and direct and deeper way. And I would say that this is one of the things that if it’s essentially
important in the DNA, not to see Hoshin planning is a way of just taking all the goals you have
today and rolling them out. It’s a thoughtful process of prioritization.
Another issue that is very much at the heart of Hoshin planning but is frequently not articulated
very well, and it’s just a few that people would be good at this—well, my experience is this is
just not the case—is the importance of causal thinking and the importance of taking the annual
goal to Hoshin for the year and translating that Hoshin, breaking it down into things which are
causally going to arrive at that outcome. There’s a very simple test that I always seek to do
when I look at a Hoshin planning, a multi-level Hoshin plan, and it’s the therefore test. If I can
take a plan that started the bottom and say, ‚If I do this, therefore, I will get that, and if I do
that, therefore I will get this.‛ And I see a logical flow, a causal chain that makes sense through
that, then I believe the plan. Not necessarily because it’s fully informed with data because you
have to find the balance but I believe the plan in more likely in a way than a plan where that
level of rigorous thinking haven’t been done.
I mentioned before catch-ball handshakes, and it’s very important to recognize what catch-ball
is and what is isn’t. In many organizations, catch-ball has effectively degenerated into a concept
of negotiation on targets, a bit like the annual budget dance that happened to many
organizations. What catch-ball is about , it’s testing reality, yes, understanding, but it’s a critical
process of not just saying, ‚I don’t like those targets, so I want to change those targets. I want to
change the—come up with a different approach to achieving that.‛ It’s a systematic process, of
looking at options, understanding what it is that we can do to potentially creatively achieve that
target and then presenting in a evidence-based way a view that says this is a sensible meeting
point between where want to get to and where we can get to, that embeds enough stretch that’s
going to challenge us but not too much that it doesn’t—it’s just not realistic. And doing it in
such a way where the owners on coming up with that lies on the person who’s going to own the
objective, not on the person who’s delegate to the objectives. And that concept of consensus
building is something which is critical to the DNA of Hoshin.
Another component which I think is often ignored is the concept of daily management. Now,
what daily management really is, is the fact that, once we’ve reached the goal, we need to
maintain the capability of the organization to deliver on that. So daily management is about the
organization devoting a certain amount of business as usual time to understanding and
controlling process performance and understanding and controlling defects in process and all of
the things which are at the heart of Lean. And what I find often happens is that people forget
that, that part of Lean is actually critical to support the Hoshin planning part of Lean. Because at
the end of the Hoshin plan, when I reach a point where I’ve reached a goal, I essentially move
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How to Make Hoshin Planning Work
that into daily management. I move from a target to improve to a KPI that I want to continue to
manage and monitor and act on on a daily basis.
Another point which I think is critical is the fact that Hoshin planning is built on the marriage of
PDCA and management objectives. And the idea of PDCA is very important in that it focuses
on mind, not to say, ‚Hey, you didn’t achieve what you said you will achieve,‛ but to be a little
deeper in our thinking around what it is that wears the other participants in the review can do
to help the person who’s trying to move this forward to actually identify and think through the
barriers that are stopping them moving that forward. And this component is critical to the
identification and the implementation through a data-driven and more thoughtful process of
countermeasures, where countermeasures is a concept in Hoshin where you say, ‚I’m off track
on my plan that I’m trying to achieve for my annual objective, then it’s not a case that my action
plan may be failing it, maybe other barriers that are unique to that situation. What can I do?
What should I do? What’s causing it and therefore what actions should I take to bring myself
back on track?‛ And that monthly review rolled up in to a quarterly review which has lifted up
a level to say, in terms of our annual objectives, are we on track? And then an annual review,
did we achieve our annual objectives and how far have we moved forward to what the
breakthrough objectives, that’s the key to keeping Hoshin planning on the agenda.
And finally, and I think this is a classic error many organizations make, which is that there isn’t
a direct linkage between the process by which resources, cash, people, and others are not
allocated in the organization which is typically a budgeting process and the way in which those
resources should be best deployed to make the goals in the organization. I’ve seen a number of
organizations and a number of our partners have recounted to me discussions about how to
synchronize that process together such that the Hoshin plans drive the resource allocation not
the arbitrary allocation of financial resources based upon scale of business units and other
things.
So if you want to wrap this up, with the final component which I think is critical is the fact that
Hoshin planning is not a one-shop process. Hoshin planning is an annual process, a monthly
process but in critical terms, on an annual basis, it’s a process by which what’s important is that
there is a senior lead group review of not just, did we meet the goals? But did we do the process
well? And what can we do to ensure we do the process better on the next situation? And that’s
continual improvement of processes as a final element in my mind of what I would say, the
vital few elements of the DNA of Hoshin planning that you need to make sure that whatever
approach you take, you sustain that. Now, I want to make a point here that I think it’s really
clear to most people who are using Hoshin planning. Many people think Hoshin planning is
about a set of Excel templates that you use to drive the process. But in fact, Hoshin planning is a
set of concepts which you can do in many different ways, and in fact, some of the ways is it’s
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How to Make Hoshin Planning Work
done today—and I’ll move on to this—lead to some real opportunities to not get the results you
expect. But at the end of the day, it’s a philosophy. It’s a set of approaches but it’s a process to
be followed, but not slavishly to the point that you don’t recognize—and I think this is a point
to make. Whilst you keep focus on your breakthrough goals, if the environment through your
results is telling you through the previous CA process as you move through the year that there
is a fundamental shift in some aspect of the environment, the market, legislative ground,
whatever it is, then that concept of Hoshin planning is to adapt. And I think it’s critically
important that you don’t consider it just to be a static and framework that you just drive, which
can lead to it being out of date and out of concept as you move through the year.
Okay. So that’s kind of, if you like, a summary of what I think of the things that matter. What I
want to do now—is for those people who are familiar with it, I’m sorry if it’s just a quick recap,
but it’s about explaining really how Hoshin planning has really evolved today in terms of this
sort of basic approach people are taking to it and what are some of the implications of that
approach. So many of you will be familiar, I believe, with the concept of an X-Matrix. And
essentially, what an X-Matrix is, is living within the constraints of an Excel spreadsheet, you
have the concept of a multi-level plan of identifying a set of breakthrough objectives,
understanding as you can say, as I was describing how far you’re going to try to reach in this
year, and then translating that down either into sub-objectives or directly into actionable
improvement priorities through identifying those things which are going through a causal
reasoning leads to the breakthrough objectives being achieved.
And what’s interesting about the process is that what this tool or form, if you like, leads to is a
way of structuring the thinking to an extent around how are we going to then manage or
measure the outcome of that, what are in many people’s plus the targets to improve, how will
we know we have achieved those improvement priorities? And who are the people, because the
key component into getting stuff done, and I believe this passionately, is accountability which is
of course fostered by ownership and visibility is understanding who is going to be responsible
by implementing those improvement priorities and by definition, achieving those
improvements targets to improve. So this concept of what is called the X-Matrix, sometimes
called the GDP matrix, is the heart of how many organizations are trying to articulate their
plans, whether on paper or whether on an Excel spreadsheet worksheet. And the process of
cascade using this tool involves creating multiple what I call sub X-Matrices, where essentially,
what you do is you rotate the X-Matrix one degree of ninety degrees to the right. And the idea
of that is, what was the breakthrough objectives on the CEO becomes the annual objectives on
the underlying next level down or the VP who is taking responsibility for achieving that. And
then, associate it with [0:29:16.6- 0:33:50.7 audio skipped] to drive those actions particularly at
the lower levels. I get some high level action plans. As I go through the organization, I get a
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How to Make Hoshin Planning Work
whole range of additional action plans if they independently updated potentially not being
updated by the matrix owner, but by members of their team who owned actions within that
matrix.
And then you see a further area of additional complexity as the organization struggles to
execute on all of those things, even with the focus. With all of the distractions, keeping that
focus that tends to be, very quickly, a number of reds and yellows, traffic lights that appear on
my Bowling charts. And what my Bowling charts provide me is a vehicle for seeing, at a glance,
am I green or am I seeing a diversion from the plan? And if I was seeing diversions, I need to
launch and implement countermeasures which themselves require independent analysis and
working through that. What I just thought is, this information just sounds very hard. And to an
extent, nothing comes for free in life, and if you genuinely want to make significant benefits for
your organization to transform how the organization is operating, then one way or another, you
need to achieve what this current approach of using various Excel worksheets can deliver you.
And I’m not saying it can’t be done, there are many organizations that [0:35:19.4 distorted
audio] but the review process [0:35:30.1 distorted audio] and very frequently, the reality is the
senior management [distorted audio] in terms of the management organization constantly have
[distorted audio] [0:36:08.8- 0:38:09.7 skipped audio] to get the power of understanding what it
is that I’m contributing to and how I’m contributing to it. Of course, at a local level, I’m having a
Hoshin catch-ball conversation about those objectives and how I play to those. But in terms of
understanding the big picture of being able to see how that then cascades down to the
organization, this lack of being able to see the full causal chain means that there is often, what I
would call, replication errors in the chain. It’s a bit like the way DNA replicates. If you get an
error, you get a problem in the reproduction in the organism. It’s the same with Hoshin. If you
get an error in the causal chain, somebody’s had a bad thought process around how A leads to
B, you just—that’s almost taking the organization down a path of action which is wasteful of the
effort being invested.
Equally, there is a human condition that basically wants to add things, not take them away.
And this is true of KPI’s that are frequently reminded of the fact that if you want to get from A
to B, then you need to know how fast you’re going and how much fuel you’ve got and if you’re
going on the right direction. Knowing about, for example, how hot, how warm your engine oil
is, because historically, once upon a time a long time ago, my engine overheated, that may not
be the thing you need to focus your attention on. I think that this is true of human nature and
one of the things that we need to build in our organization, is a competence to apply the
[0:39:37.4] principle, Alfredo ?? idea of you can get 80 from the 20. And that’s the core idea
behind Hoshin planning.
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Again, I think one of the components here is that the catch-ball without some discipline around
the handshake, the workflow, if you like with that handshake, without some ability to force a
dialogue to happen, what tends to happen is it operates with the weakest link in the chain.
There are obviously people who passionately care about that process and make an exercise to
do it. The other people they’re very much blind. ‚I accept those goals because my manager’s
telling me that’s what I have to do.‛ And we have to make that process more dynamic because
it’s the heart of making sure that the plan is executable and it’s meaningful and the actions are
owned by the people who can execute them.
Again, this is also evidenced in organizations where the what I call the down-up-down process,
down organizational goals breakdown, catch-ball up, this is what I could do at each level, down
again to make that happen. If that process is purely a negotiation process, and there isn’t the
openness of the minds of the senior management to be challenged on whether the goal is a
sensible goal or whether the approaches that can be achieved are actually achievable, then you
don’t get the success of Hoshin planning. And that I don’t believe is supported very well by the
mechanism which it traditionally provided, which is a combination of some executive, I don’t
want to call it this untimely, but shoot their training in the concept of Hoshin planning and then
send away the corner to go away and work out what your X-Matrix is, then to share it with
your team and to work through that process. I think it needs more structure, not just more
structure but more guidance to be successful.
Finally, and I’ll just pick out the next two points. It’s really, really important that we overcome
this issue of having another plan implicitly going on alongside the Hoshin plan. What
budgeting is in most organizations is a set of assumptions about how money and resources
should be spent in the organization. And to not align that with your Hoshin plan is already
undermining and eroding the Hoshin plan in that the full process is then, what can I do within
the constraints of resources that I have? There is, in some very innovative organizations, a
greater linkage between Hoshin planning and the concept of beyond budgeting but that’s not
something I have the time to go into today. But if you’re interested, I strongly recommend that
you delve into the area of looking at how beyond budgeting is a compliment and running really
by an ongoing forecast rather than a fixed annual budget, how to compliment to the concept of
Hoshin planning as an idea.
And then, finally, I think it’s fairly evident and probably pretty evident from the simple
diagram that I showed of all the various worksheets that need to be called native owned by
different people, that there is a number of hidden costs within Hoshin planning if you use Excel
spreadsheets. Of course, there’s a lot of attractiveness of using Excel spreadsheets. It’s very easy.
People know how to use them. You can send them to each other and basically consolidate them
in shared areas of various levels of complexity. But the thing I would get across is that the real
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How to Make Hoshin Planning Work
issue isn’t about the administrative overhead of all of that consolidation. The real issue is about
being able to see the line of sight and being able to ensure that as progress is happening at the
lower levels of the plan, it is reflective up through the plan to the level of people can make
sensible observations about their own Hoshin. And whether they, at the high level, need to take
additional contingency plan. This kind of integration, fundamentally, I’ll be honest, as the
company’s seen implementing this Hoshin planning with spreadsheets is just not happening.
And what it leads to is a degree which is a flurry of activity at the beginning of the year and
then it dies out through the year, and the CEO’s never quite gets the feedback that they expect
to get during the life cycles so there’s no longer the call, and then you get that erosion of
commitment from the senior management which is ultimately it doesn’t necessarily lead to
death, but it leads to slow death by a thousand cuts of the concept.
So what I would like to just move on to is—I don’t have much more to cover in this webinar
other than currently, I think there is some responses that you can sensibly intelligently make to
these challenges. And it’s this which I wanted to zero in on today. And I guess, at the heart of it,
as I mentioned before the foundation starts for me, is the, what I call core execution
competencies. And I think it’s very interesting to reflect that we do a lot of training of our senior
teams and our management organizations, on the principles of strategic managements, the tools
that’s coming up with strategy. We spent a lot of time off sight, and many organizations and
senior teams thinking about strategic goals and that kind of thing. But we don’t spend so much
time helping people learn the skill of turning a goal into something that’s causally driving it,
nor do we educate our managers wholesale on a continuous process. This talks back to previous
webinars that I’ve done around the importance, for example, of training the sponsors of projects
in giving them the coaching and the skills of how to be improvement cycle works, and
understanding how improvement tools work and prioritization tools work. Because if that isn’t
an innate skill, then what happens is what we inevitably fail to be able to differentiate between
the things we need to do to move a Hoshin plan forward and the things we need to do to get
things out the door. And this concept of really understanding what does plan-do-check act
really means. What does it mean to create and understand a plan?
What I’m doing the doing, I’m actually essentially implementing the plan but I’m looking to see
at the check stage whether the action that I’ve taken has generated different results. And what
we’re all very good at is a bit of a little P, big D, very small A and almost non-existent—sorry,
very small C and almost non-existent A. And that emphasis needs to be changed through
education of managers. I think equally the ability to visualize and understand the operation in
terms of processes, these are essentially, if you’re breaking your Hoshin plan down, inevitably
at some level, it translates into a process drivers. The importance of being able to articulate
those process drivers is critical.
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How to Make Hoshin Planning Work
Another thing which I think a lot of organizations don’t attend to as much as they should and is
the component of success is articulating in a lot of more detail how the Hoshin model will work
in the organization. What’s the annual Hoshin time table, at what stage will who do what to
achieve, and in what way would they do it? And how do we go about stretch goal setting, how
do we go about catch-ball, and what’s the rules of engagement between managers and their
reports? That kind of thing tends to be under emphasized in the training and the training
emphasizes the mechanics of the process. And my view is that mechanics is not where the
clever bit is. Mechanics give you a framework. The clever bit comes in maintaining the
principles which are underlying the success of Hoshin kanri. And equally, codifying the review
process so that it’s clearly understood who is going to do what during that review, how is it
going to be done and in what time table is that going to happen on in the organization? And to
what degree did contingency and our local countermeasures plans, how are they presented,
how did they claim to that improvement cycle, and is it the expectation that people will have
thought about their countermeasures before they come to the review or vice versa. And I think
this is something that organizations have to find their own way with or learn from the
experience of other consulting companies.
Another component which is, I think, pretty contentious in some Lean circles in certain purely,
let’s say particularly in the Eastern Asian world is the degree to which you align a reward
planning, I’ve already spoken about budgeting and forecasting, but aligning reward planning. I
think it’s amazing to me that organizations that adopt Hoshin planning has a discipline in the
organization, in parallel, adopt two other planning processes, one which typically is the
budgeting and forecasting process, financial forecasting process, and operate very often in
isolation a process by which they are doing performance appraisal of members of the team
which themselves have objectives with certain competencies. It’s important that you use a
common approach and a common development of that, so that when you link in how people
are rewarded in the organization, there is a [0:49:25.5 distorted audio]
And finally, and I guess, you could see the self-interest in the conversation, I personally believe
that if you’re going to do Hoshin planning correctly or well or to a level where you preserve the
DNA that’s important, you need to move up a level from using spreadsheets but to something
that preserves the simplicity but at the same time creates that line of sight for every employee
and takes the effort and complexity and administer it to overhead out of the whole catch-ball
handshake and the review process that organizations have and automatically reflects the
current position of the Hoshin plan on an interactive basis so that performance is transparent
because that’s another driver of creating focus and lays it’s sort of focus on execution and
keeping people both aligned and accountable for their delivery.
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How to Make Hoshin Planning Work
So, in essence, those are the things which, I believe, from experience, form the basis of the key
strategies that you can take to improve and make Hoshin planning work based upon the core
tenants that we explored earlier of what are the DNA that really is important in Hoshin
planning. Sure, [0:50:51.4 distorted audio] This is essentially a considerate view from
experience of working with a number of people. What I do here is often into the community,
really is another input that I hope will help you on your journey.
More specifically, I want to basically, obviously, offer two things as well. One of them is that, if
you’re genuinely serious about considering implementing Hoshin planning or you’re already
implementing Hoshin planning, then I believe i-nexus and our consulting partners can help you
in a number of ways. First of all, I offer the opportunity for you to reach out and just reach to
inexus.com and ask to take a look at and we‘d be happy to provide that, the power of our
business execution platform. I believe that we have pulled together, implemented what is really
the foundation stone that covers every aspect of Hoshin planning to make sure it’s successful
that critically enables that balance between simplicity and the power of a full [0:52:07.6 distorted
audio] And this is something that we can complement and it’s complemented by core
relationships we have developed with consulting organizations that are experts in the whole
side of the expertise which is more around development of the core competencies, ensuring that
you have a clearly articulated Hoshin planning system in your business. And if you are looking
for either of these two things or both of these two things, then I obviously look forward to
hearing from you and see how we can help you in my team would be very happy to do that.
So just to complete a quick summary. Hoshin planning, I believe, and I’m sure many of you
believe, has the power to transform your operation, your organization, to achieve
breakthroughs that no other approach, no, a few other approaches can potentially achieve.
There are a number of core principles which are admirably sacrosanct in the DNA of Hoshin
planning. But if you trade them, you trade them at your cost. I believe the current process to do
spreadsheet based Hoshin planning has some significant complexity and fluid. It doesn’t mean
it can’t be done. It just makes it harder than it needs to be. And I believe that successful Hoshin
planning needs a combination of things which is more than just the management mandate,
sheep deck training for senior managers and managers and instead of tools or forms to fill in to
make that process happen. I believe that we can help you whether you’re further down the
journey or whether you’re in the outset of your journey on this, but by bringing the
infrastructure and the expertise to help you execute your, or build that capability and execute
your Hoshin plan. And it looks like it’s just reached 4 o’clock, UK 11 o’clock Eastern. And that’s
the time I had allowed for the time, but obviously, if there are any questions, I’m very happy to
take those. I want to leave you with a couple of thoughts. And I’m sure you have your own.
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How to Make Hoshin Planning Work
First, I’m sure you can read these quotes but one of the things that I passionately believe is let’s
not get lost in the technology or anything else around you. When it comes to Hoshin planning.,
it’s about survival of the fittest. It’s about understanding how to react to the changes of the
environment. And it’s about inspiring your organization and moving from a ten percent
scenario to a hundred percent scenario and leveraging all that passion and energy in your
organization because they fundamentally understand what it is that they’re doing to make the
company’s success. Just to close out, we were running a series of additional webinars in a sort of
commitment to excellence basis and there are other webinars that explores further this theme of
Hoshin planning and which is running on the 22nd with one of our consulting partners and we’d
be very happy to have you join that, and if you visit our website, you can register directly there.
Okay. But I think I’ve covered what I had on my agenda to cover in terms of the slides. I’m
conscious for maybe a number of questions. So I’m happy to pick that up now.
Male: Okay, great. Yes. We do have some questions. First question, to start off, we all know
organizations change every four to five years. How can we be sure the strategy we design is
compatible with our partners such as suppliers and customer advance?
Paul: That’s a very good question. I think the obvious answer is that a bit like organizations
have taken the concept of operational excellence and realized that doing it themselves without
engaging their suppliers in their cycle of thinking about how we can achieve an objective as
their part of the value chain, you have to do the same with Hoshin kanri. You have to basically
determine who’s in the value chain of your organization and engage those elements in the value
chain which you’re going to have a significant influence on your outcome in your catch-ball
process. At the end of the day, a serious component of your outcome is fundamentally done
[0:56:35.4 distorted audio] then in that catch-ball makes sense to engage that.
[0:56:45.7 distorted audio] through multiple levels in your organization, is there an easier or
better way where I can manage these efforts and any suggestions on how to make it less
complex?
Paul: Sure. I think the answer to that obvious question is that there’s two ways you can go about
looking at this. I think that you can, of course, make the process of working with Excel easier by
attempting to get a degree of standardization and finding a place to share that information in an
easy way and a lot of organizations have gone down the road of building, shared repository
with the information. And I don’t want to undermine that the step of that takes. But clearly, I
wouldn’t have spent the last nine years of my life building i-nexus, the company and
developing our core product to business execution platform that we’ve developed if it wasn’t
possible or we didn’t believe it was possible, and we’re not alone. There are a couple of other
vendors of software that have thought the similar way. But it’s possible to create something
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How to Make Hoshin Planning Work
which is as simple and as easy to entering users as Excel, but which, by definition, provides a
more robust and structured way of looking at your cascade. I mean, one of the fun failings I
think, it’s fair to say, is it doesn’t make you really think about that line of sight and that causal
thinking. And once you know that’s a discipline that the organization should have, what some
other tools that can exist that they can do is give you a sort of heads up on how much of the
plan has been broken down, give you an understanding of how far that’s gone through the
organization and where as a management team, you need to emphasize your energy to make
that happen in terms of getting the rest of the cascade completed in the rest of the review
process in place. That dimension, if you like, that’s double week learning can’t happen with a
simple Excel style approach.
Male: Okay, any references that you can recommend to get a better perspective on Hoshin
planning? Is this the same as policy deployment?
Paul: Yeah. Firstly, policy deployment, Hoshin planning, goal deployment, strategy
deployment, we have all commonly used words which are various Americanizations or
Englishisms, if you want to call that, of the translation of Hoshin kanri. A couple of familiar
books that were basically written in very early stages. One by a member of the Toyota
management team and that’s very worth reading. What I’d like to do is perhaps rather than just
give a sort of half-path answer here, we will be following up with just a quick summary of this
session with anybody who’s attended. I’ll make sure it’s part of that follow-up. We provide
some photo reading references that you can turn to as the ones that I believe are really
successful. There’s some good ones like Pascal Dennis, for example. First thing, you get to going
the right thing done and there’s some good stuff around. There’s a very good work on Hoshin
planning by David Hudgens that’s been produced in the UK. There’s a number of very good
books that I would point in the direction, but I’d rather give a more comprehensive list.
Male: Okay, have you done any type of study, time capture analysis for the cost of time by
spreadsheets, and if so, what were the results?
Paul: Okay. Formally, no. Informally as partners of a benchmarking exercise of understanding
what the cost to an organization of working that way is, in simple terms, it’s a bit like an ice
berg. If you look at the surface of the iceberg in terms of the time spent, if you like, in updating
and circulating that whole spreadsheet forms, the reality is it’s not a great deal of difference, the
time that will be spent entering into a web-based tool or something that’s scripture on i-nexus.
But the reality is that’s not where the time is spent, not with the time of opportunity is lost. The
opportunity’s lost in the reconciliation of various different versions of information to produce
consolidated pictures. It’s lost in the ability to be able to react once you’ve got to a point of
monthly visibility. It’s almost too late in many cases to take a continuity actually. It could’ve
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How to Make Hoshin Planning Work
taken earlier if one of your KPI’s have been off track and everybody could see that. So that there
are some hidden costs that are articulated not just in lost time but in terms in lost performance
or lost opportunity to react faster would be my way of describing it. I don’t know if that’s
definitive enough but I guess in answer, it’s not unusual, and that maybe something just arrived
that we see the people who are trying to hold deployments of X-Matrices out of a business unit
level together. There’s always somebody who has a role like that. They can spend between 10-20
hours a week just trying to stay on top of all those X-Matrices.
Male: Okay, next question is, a lot of time is spent setting up the initial plan, businesses can
experience change throughout the year. How should one deal with these changes related to
changing the Hoshin strategy mid-year?
Paul: And that’s a very interesting question. I mean, I think this is actually one of the toughest
elements of that you have to find your own way on to an extent because if you look at the
Hoshin period, they would basically fall into two camps. They would either say, ‚You know
what? If you’re constantly moving, reacting to the changes around you, you will lose focus from
the beauty of the Hoshin planning. It keeps you focused on your annual objective.‛ I think that
it’s important to connect your annual objectives during the [1:03:19.3 distorted audio] and I
would say that the test is really very simple if—have something fundamentally changed about
the market or the environment we’re in, that means that this objective is now either meaningless
or needs to be adapted. And if to that answer to that question is yes, then adapt the objective.
But recognize that you’re still looking, unless there’s a fundamental change that what it is you
expect to be in the business in the next 3-5 years, you’re still looking to tie that annual objective
back to an overall breakthrough objective, 3-5 years of breakthrough objectives. And I think it’s
incumbent at the end of the process for organizations to think about when they do their annual
review whether through the learning of that change, whether they need to set a more stretching
objective in the following year to get them further towards their breakthrough objectives. Is that
the question?
Male: Yep. The next question is, how do you deal with the management who plays along
during development of the Hoshin but goes back to business as usual?
Paul: I think this is where, you know, I was talking about earlier where this key risk of using
that sort of spreadsheet driven model ,is that, it’s very, very hard to see into it from the top
management level. I believe, and maybe this is quite controversial concept in principle but at
the end of the day, if you want accountability, you have to create transparency, and you have to
create transparency so that you can see from the top of the chain right down to any manager in
the organization and see if their action plan is being progressed in the day by day basis. Now,
it’s not about creating the sort of centralized management control. It’s about allowing
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How to Make Hoshin Planning Work
exceptions to ripple up to the organization so that senior leaders can take a step which I think is
an imperative to be able to create the right culture of making a call two or three levels down in
the organization, not for, to rack someone in the eye or to give them a hard time but to ask
them, what it is that the senior leader can do to help them achieve their objectives and what’s
blocking their progress. I have to make many of those calls to actually change the way an
organization operates. And to create a recognition in people that, like many places, it’s not that
it’s nowhere to hide, but results speak more loudly than just playing the passive business
process.
Male: Okay, do you know of a software to populate X-Matrix and Bowling chart?
Pauk: I do. well, obviously, I can answer that question by saying, of course, I know i-nexus is a
software that’s designed specifically to support that process. It’s fair to say that some of the
other consulting organizations have developed their own tools to try and facilitate this process.
But if you were to look in the markets, you’d see that that’s really the sort of basic choices you
have.
Male: Okay, one of the participants indicated that you might have missed it but where is the
action happening, lots of plans, when does the work get done? Is this incorporated into
performance planning?
Paul: Okay. The work gets done—and if you think about the annual cascade—really prior to the
end of the year, assuming the end of the year is beginning of the cycle in the calendar year
depending on the organization. That’s the point at which you’re going through your
preparation phase to arrive at your catch-ball and your identification of improvement priorities
and action plans for drivers. Once you’ve identified action plans, those occur then and there,
they carry on being implemented all the way through the year. And the monthly reviews are
then fundamentally away from—they’re not reviews of KPI’s, they should be. And in the
concept of Hoshin planning, the reviews of execution, in other words, how are we doing in
terms of the action plan and is that action plan delivering the improvement we’re expecting and
if it isn’t, what contingency plan or countermeasure have you instigated? So, in my mind, there
is no difference in between that and performance management. I think in some organizations,
like I said before, would very helpful if then the actual objective setting and the performance
appraisal process if that’s synchronized with and built on the Hoshin plans, you have a much
higher greater success rate because individuals are not pulled in two directions.
Male: Okay, and how does Hoshin link with DMAIC?
Paul: That’s a good question. Obviously, DMAIC or other, what I would call, variation
reduction concepts, is a fundamental structured approach to understanding using lines and
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How to Make Hoshin Planning Work
function of x, the root cause of any variation and then effectively addressing the process
capability by fixing the process x variable through the better response. I mean, that’s why they
have a dispute with understanding DMAIC. But the reason I mentioned that is because
critically, when you look at the decomposition of a Hoshin plan, at some point, it very clearly
turns into, I’ve got to change this process. So I’ve got to change the outcome performance of this
process. And what DMAIC provides is one of the set of tools and I would add into that tool box,
Lean in the sense of removing waste and DMADV or design for Six Sigma in the sense of
removing complexity a set of tools that allow you to essentially shift the process capability, and
therefore it makes perfect sense that in the right kind of business execution infrastructure that
you’ve got, that the first thing that happens when you look at a problem, an action plan, is you
can take from a number of templates a proven approaches of which DMAIC is one to being able
to move a problem to move a process capability forward. And obviously, if you’re familiar with
a different approach, you would pick that approach when the process is stable and you want a
breakthrough improvement on that process. Okay.
Male: Okay, next question is, does the i-nexus solution have capability for top ten tracking? For
each business leader breakthrough objectives?
Paul: Absolutely. I don’t know if I’m too late but this, in a sense, because the purpose of this
webinar was not to have a tour over i-nexus, if you like, but more lead to sort of share some best
practices. But anybody who is obviously raising that question, if you’re interested in learning
more, please reach out to us in one of the team is very happily provide with a demonstration. I
know that the follow-up will provide on this webinar will provide you with a quick link to
register your interest in looking further.
Male: Okay, final question. You mentioned the need to develop casual thinking skills in
managers.
Paul: I’ll be clear that I’ve actually not saying that. I’m saying there’s a big difference between
casual thinking skills and causal thinking skills. And I’m more of causal thinking than casual.
Male: Okay. Do you have any other approaches from your experiences that you believe result in
greater success in gaining acceptance in application of this competency?
Paul: Yeah, you know, I think it’s fair to say that my experience is if you take somebody
through DMAIC or different forms of DMAIC training, whether it’s sort of a light weight
version of that like sometimes called yellow belt or green belt training, that curriculum in my
experience is a very good way of developing. It’s essentially expensive but it’s a very good way
of developing causal thinking skills. Because what it essentially emphasizes is the seven tools,
the various tools to help you think about causality of which the most commonly used tool is the
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How to Make Hoshin Planning Work
concept of Ishikawa or fishbone diagrams. My experience is that people who go through that
kind of training to become familiar with that kind of thing is confident in vicinity planning and
being able to understand and think through causal change by that, find the concept of Hoshin
planning much, much easier. Another thought by the way just to close that out is that one of the
things that I’ve found to be very successful company that implements this Lean Six Sigma and
Hoshin planning is that the coaches that are developed through being practitioners of Lean Six
Sigma, they provide excellent management coaches to help with the goal cascade process to
make sure it’s done in a rigorous way.
[End of Audio]
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