The key challenges for organisation's seeking to meet their stakeholder expectations are two-fold - first, translating the organisation's strategic goals into activities that the organisation can carry out in the near future, and second - monitoring the work to deliver these activities. Among organisations that also have formal quality management processes in place, a technique widely used in Japan has become popular - this technique is called Hoshin Kanri.
This page provides answers to common questions about Hoshin Kanri. It draws upon 2GC's world-class expert knowledge of strategy implementation frameworks, and our continuing active contributions to management research on strategic performance management and its application.
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What is Hoshin Kanri?
Hoshin Kanri is an approach for organising the implementation of strategy that is based on American management concepts popular in the 1950s. It blends “top-down” strategic planning and "management by objective" goal setting with a formal monitoring and review technique. One source accurately describes it as “Plan-Do-Check-Act (PDCA) applied to the planning and execution of a few critical (strategic) organisational objectives”.
Adoption of Hoshin Kanri started in Japan in the 1960s. Wider international use began in the 1980s but its practical similarity to other strategy implementation methods has limited its popularity.
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What is Hoshin Kanri in more depth...
Hoshin Kanri refers to an approach for organising the implementation of strategy that is based on management concepts that were popular in the USA in the 1950s; it was developed and popularised by American management academics paid by the US Government to help in the re-establishment of Japanese industry after World War 2, and so incorporated / reflected what was 'best practice' thinking at that time. Within Japan it is viewed as a component of the Total Quality Management (TQM) approach which is widely used by Japanese manufacturing firms.
Hoshin Kanri blends the principles of structured / top-down strategic planning, a goal setting approach called management by objectives and the "Plan-Do-Check-Act" monitoring that is a core part of the TQM movement. One source describes Hoshin Kanri as
“Hoshin Kanri - Plan-Do-Check-Act (PDCA) applied to the planning and execution of a few critical (strategic) organisational objectives”.
Bob King in Hoshin Planning: The Developmental Approach, Methuen MA: GOAL/QPC. (1989),
Even within academic literature, there is little agreement on what constitutes Hoshin Kanri. In part this is because the approach emerged from practice in Japan (rather than starting out as a defined process), and in part because western knowledge of the approach is influenced strongly by a handful of 'origin' papers that introduced the approach to English speaking audiences that each contain slightly different descriptions of the approach. So, for example, while some authors suggest the approach is simply the PDCA cycle applied to strategic management, others suggest use of an equivalent cycle with the acronym FAIR (Focus, Alignment, Integration, Responsiveness) where, in broad terms:
- Focus ➜ Act
- Alignment ➜ Plan
- Integration ➜ Do, and
- Responsiveness ➜ Check
There are numerous different interpretations of how the approach is practically implemented within an organisation. The approach is usually described in the form of several (between five and seven) progressive steps along the lines of:
- Establish a long term Vision
- Translate the vision into a few medium term strategic objectives
- Engage with organisation to develop annual goals and implementation plans
- Execute implementation plans
- Monitor implementation progress on monthly basis
- Review progress annually
Some descriptions focus on the use of Japanese words or special terms, for example the third step is sometimes called “catchball” or “ringi”, and the fifth step is sometimes called “gemba”. In practical terms there are no significant differences between the various descriptions.
Proponents of Hoshin Kanri often highlight the third (“catchball”) step as being a key differentiator. The catchball step involves some kind of structured dialogue between layers of the organisation that allows the annual corporate objectives to be cascaded down to departmental and individual level: the higher level presents the goals they would like the subordinate group to deliver during the year, and the subordinate group work out what they need to do to deliver these goals and propose a set of activities back to the higher level group; once agreement on the implementation steps is agreed, implementation is delegated to the subordinate group to carry out. This goal-passing activity can be repeated recursively to distribute goals across the whole organisation.
This focus on dialogue based goal alignment within the organisation is perhaps the only part of Hoshin Kanri that reflects the culture of its Japanese origins - in the 1950s there were no similar approaches to intra-organisation alignment in the American management academic literature.
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Similarities between Hoshin Kanri and the Balanced Scorecard
The identification of activity and outcome measures to provide feedback on what work is being done and its effectiveness is a required element of any Hoshin Kanri implementation. As a mechanism that helps a management team choose measures that help it monitor the implementation of a strategy, Hoshin Kanri provides a similar service to the strategic Balanced Scorecard - both facilitate the identification of key performance indicators and the setting of targets, both encourage the use of regular performance reviews.
Also much like Balanced Scorecard, Hoshin Kanri proponents suggest that overall performance of the organisation is reviewed annually, and that lower level goals are regularly reviewed and updated to correct misjudgements in the original design or to recognise the completion of subordinate tasks. High level goals are reviewed less often - perhaps once every two or three years, and usually as part of a wider strategic review for the organisation.
The expectation that in Hoshin Kanri an organisation begins its strategy implementation work with an agreement about the long-term strategic outcomes sought by the organisation's stakeholders is similar to the requirement for a Destination Statement in 3rd Generation Balanced Scorecard designs.
The emphasis on dialogue based intra-organisation cascading of strategic goals, and use of a PDCA or FAIR based review cycle makes Hoshin Kanri similar in approach to 2GC's ACME strategy implementation framework.
Being less complicated and more flexible, a modern Balanced Scorecard design has some advantages over Hoshin Kanri: in particular the use of contribution based cascading, which is a more transparent and robust method of intra-organisational communication and alignment than the catchball process.
How do organisations apply Hoshin Kanri to support strategy implementation?
Organisations apply Hoshin Kanri to support the implementation of a strategy, usually as an adjunct to a quality management system. Although use of a TQM system is not necessary for Hoshin Kanri to be applied, the ideas proposed for Hoshin Kanri are, by definition, simply reapplications of standard western management tools. In the case of Hoshin Kanri, tools that were popular in the USA in the 1950s and 1960s, including Management by Objectives and early formal Strategic Planning and Long Range Planning concepts. There is a good chance that an organisation would be applying many of the principles in Hoshin Kanri already through its other management processes, assuming they approximate 'best practice'.
The persistence of Hoshin Kanri as a useful tool in organisations is more a reflection on the absence of high level goal setting and intra-organisation goal sharing and communciation tools within the rest of the standard TQM approach: Hoshin Kanri provides these additional facilitles - acting (as one author puts it) as the "glue" that holds TQM together.
There are a number of well reported case studies regarding use of Hoshin Kanri within commercial organisations - many documents refer to one or more examples drawn from this group: Procter and Gamble, Komatsu, Hewlett Packard, Bridgestone Tyres and Rover Cars. Each of these organisations implemented Hoshin Kanri in a different way, which highlights its role as a guiding concept rather than as a formal method to be adopted. For reasons that are less clear, it is harder to find examples published for recent implementations of Hoshin Kanri.
Why use 2GC to help you with Hoshin Kanri?
If your interest in Hoshin Kanri is to help your organisation to articulate and implement a strategy then 2GC is very well placed to help you. Although Hoshin Kanri and Balanced Scorecard use different terminology, both encourage the use of best-practice strategy implementation methods, and both can be effectively implemented using 2GC's robust and proven ACME framework.
Hoshin Kanri suffers from lack of consensus about best practices regarding implementation, and from confusion about its role in strategy implementation given its 'glue' type role within broader TQM installations. 2GC's clarity of purpose and well defined, practiced methods are just what is needed to ensure that your Hoshin Kanri installation remains focused and is delivered in a way that your organisation can own and use.
Where to find out more
One of the issues that has held back Hoshin Kanri adoption outside Japan has been (reportedly) the lack of accessible / popular documentation of the approach. In researching this explainer article we found the following academic papers and helpful information sources:
- Hoshin Kanri - Barry Witcher. Perspectives on Performance vol 11(1), pp 16-24 (2014)
- Excellence is Born out of Effective Strategic Deployment: The Impact of Hoshin Planning - Mohamed Zairi and Alan Erskine. International Journal of Applied Strategic Management vol 2 (2) (2012)
- Hoshin Kanri: a tool for strategic policy deployment - Charles Tennant and Paul Roberts. Knowledge and Process Management vol 8(4), pp 262-269 (2001)
- Hoshin Kanri: Implementing the Catchball Process - Charles Tennant and Paul Roberts. Long Range Planning vol 34, pp 287-308 (2001)
- Hoshin Kanri - Wikipedia Page - https://en.wikipedia.org/wiki/Hoshin_Kanri
There are a broad range of commercial websites that have short explainer articles about Hoshin Kanri too, one that we found particularly helpful was by Clearpoint Strategy.
Of course if you prefer, just get in touch via our Contact Page and ask us about Hoshin Kanri - we look forward to your questions!