Understanding Hoshin Kanri to Align Leadership Goals: Another Look
There seems to be increasing interest in hoshin kanri among companies that have adopted lean methods. After all, what is not to like? Hoshin Kanri has been interpreted as policy deployment or direction management. It promises to focus the goals of people throughout the enterprise on critical business issues so the firm can react quickly to a changing environment.
As with many lean programs there is a serious danger of mistaking the tools for the process. One of the most popular tools of hoshin kanri is the X-Matrix. This is illustrated in figure 1 with an actual example. At first glance it appears complex and generally speaking simple is better. What it is trying to do on a single page is connect strategy, tactics, process, results and accountabilities. It does this admirably, but it is busy and often not terribly meaningful.
If you pick it apart in this particular case, you find it devoid of content. This is intended to be a three-year plan, so it is broad. One path through this maze looks like figure 2.
The strategy is to make better products Just-In-Time at target cost. Is this really a company strategy? A strategy should make clear what is unique about the company’s products and services from the customer’s viewpoint. This statement is really a collection of vague operational concepts: make products better, just-in-time, and at the target cost we set.
The tactics are supposed to convert the strategy to concrete approaches. What is a “lean machine?” What is an “extended supply chain” and how does one go about implementing it.
The process is really desired results: more inventory turns and supply effectiveness, whatever that means.
The results are only expressed in dollars.
What are the accountable managers likely to take away from this? Clearly they will feel pressured to save money, increase inventory turns, and score well on the supply effectiveness metric. But will this really help a company focus goals on a strategy that will distinguish them from the competition? Not likely.
This might be chalked up to one company that is doing a bad job of using the X-matrix, but I see similarly vague statements in many companies and rarely do they align the organization other than to put pressure on managers to achieve specific results—usually cost reduction. What is missing?
I believe at least three critical skills are missing from the leaders of most organizations that undertake hoshin kanri:
1. Skills to develop a well articulated strategy
2. Skills to develop clear business plans beyond financial plans for revenue growth and cost reduction, and
3. Skills to translate desired outcomes to actionable plans for improvement
The third skill can be developed using the methodology I wrote about previously in “How Small Steps Turn into Lean Manufacturing Game Changers” regarding Toyota Kata. There are two sets of routines (kata) that can be learned through deliberate practice: The improvement kata and the coaching kata. The improvement kata requires a clear, measureable challenge linked to the company strategy, something that hoshin kanri done right can provide.
Then the kata prescribes that each learner define what that challenge means in outcomes. But, it does not end there. It also requires defining successive target conditions that the learner will strive toward. As figure 3 illustrates the target conditions are not the results, but rather the operating pattern that will lead to the results.
The operating pattern provides something concrete to work on. The challenge might be to achieve equipment uptime of 90% or perhaps an assembly line building to the customer demand rate regardless of the mix of products on the line. These challenges are broken into smaller pieces, usually with 2-6 week due dates. For example, one target condition for equipment uptime might be to have all the tools needed at the machine prior to shutting down the equipment for preventative maintenance. The team will work on that daily, experimenting with various methods until they achieve the desired condition.
The alignment comes from coach-learner relationships within the management hierarchy itself. That is, each manager is expected to be a learner, coached by their boss, and a coach guiding the activities of learners, their direct reports. In this way, there is almost guaranteed alignment.
Hoshin Kanri is one of the most powerful approaches enabling an organization to become great, constantly adapting to a rapidly changing environment. But it requires a skill base of leaders who have learned the processes necessary for continuous improvement to achieve defined targets. The skills and collaboration required do not come from tools such as the X-matrix. They come from leadership, learning, and a lot of hard work.
Dr. Jeffrey Liker is professor of industrial and operations engineering at the University of Michigan and author of The Toyota Way. He leads Liker Lean Advisors, LLC and his latest book (with Gary Convis) is The Toyota Way to Lean Leadership.