an introduction to policy deployment ver 1

An introduction to Hoshin Kanri

(Policy Deployment)

June 2010

First the small print

• Don’t even think about implementing Hoshin

Kanri:

– until basic operational processes are sound and well managed;

– if the enterprise is ‘strapped for cash’; or

– if the management is not up for it.

• These are an essential foundation.

June 2010 Policy Deployment 2

Without Hoshin Kanri: what

generally happens

• Enterprises steadily improve the effectiveness of

their day-to day operations and expect to

improve their business performance.

– This is Kaizen, continuous improvement

• They might be doing this simply to stay

competitive.

– There is still the risk that others may be doing more; they may be overtaken by events outside their control

Hoshin Kanri is a framework for

doing better; it believes ..

• … that if an enterprise deliberately targets a

substantial medium-long term improvement in

business performance and relates this to:

– Short term performance goals; and

– The specific business processes which must be

improved to deliver them.

• It can be confident of robust and continuing

success.

What is a substantial medium-

long term improvement?

breakthrough performance

the situation today

company vision

So what exactly is Hoshin

Kanri?

• Hoshin Kanri is a process that facilitates the

development of

– results oriented business processes

• with

– sustained improvement

• that result in

– sustained competitive advantage in quality, delivery, cost and growth

• It’s also called Policy

Deployment

• Hoshin: a course, a

policy, a plan or an

• Kanri: administration,

management, control,

charge of or care for.

Why Use Hoshin Kanri?

• … to align targets and means throughout an

organisation.

Hoshin Kanri

And thereby to …

• … build sustainable competitive advantage.

1 2 3 4 5

base Kaizan Hosin Kanri

Hoshin Kanri vs traditional

management

• Traditional management can be

– Concerned with short term results; and

– Functional.

• Hoshin Kanri is …

– …concerned with the establishment of cross functional results-oriented business processes that

drive the desired long term results.

The critical thinking process

behind Hoshin Kanri

step 2: HOW FAR

annual breakthroughs

step 3: HOW

identify key driver processes

step 4: HOW MUCH/WHEN

determine measures and track

step 5: WHO

identify key resources and deploy

step 1: WHAT

breakthrough thinking

Before we get into this …

Step 0: get the vision right

• It never ceases to amaze me how many

enterprises lack a coherent view of what

business they are in.

– This is mission.

• This is generally compounded by the absence of

any ideas about the future.

– This is vision.

• Mission and vision generally get complemented

by values.

behind Hoshin Kanri

step 5: WHO

step 1: WHAT

step 2: HOW FAR

step 3: HOW

Step 1: what is a breakthrough?

• It represents a SIGNIFICANT change;

• It requires the organisation to stretch itself;

• It usually requires multi-functional efforts and

teamwork;

• Typically no standard or system exists for this

level of breakthrough; and

• It can generally be regarded as a big win.

Let’s try and illustrate it with an

example

• Our company is in good shape:

– it is in a competitive but growing market, it has good

products but it has a minor market share;

– there are strong competitors and some consolidation

is going on; but

– it realises that it needs to make the big jump to protect

its longer terms success.

• It has therefore articulated its vision.

A part of its vision is …

• … to be a leader in our industry in terms of sales

and profitability …

• This means increasing market share from 5 to

20% in 3-5 years.

Humour me; let’s show this as

indicated below

3-5 year

breakthrough

objectives

secure a market share of 20% by 2009

behind Hoshin Kanri

step 5: WHO

step 1: WHAT

step 2: HOW FAR

step 3: HOW

Step 2: the annual breakthrough

• Obtain fact based understanding of the current

situation.

• Identify how far to improve in the first year in

order to hit the 3-5 year objective.

• Qualify the gap between the current situation

and the annual objective.

• In our example this can translate into unit sales

and awareness targets.

The annual targets relate to the

3-5 year objectives

ness in

sell 1

annual

breakthrough

objectives

3-5 year

breakthrough

objectives

behind Hoshin Kanri

step 5: WHO

step 1: WHAT

step 2: HOW FAR

step 3: HOW

Step 3: effective top level

improvement processes

• Apply the 5 WHYs to the current situation and

identify the root causes.

• Use problem solving to find ways to bridge the

• Find key driver processes with the greatest

influence and identify improvement priorities.

• These should be:

– Clear and easy to communicate; and

– Measurable (but not a measure).

4 processes can be identified in

our example

process to increase sales person productivity

process to increase awareness in the market

process to convert opportunities into sales

process to generate new sales opportunities

ness in

sell 1

top level

improvement

priorities

annual

breakthrough

objectives

3-5 year

breakthrough

objectives

behind Hoshin Kanri

step 5: WHO

step 1: WHAT

step 2: HOW FAR

step 3: HOW

Step 4: identify targets to

improve for each priority

• Targets are measures of the effectiveness of a

given process.

• Think in terms of process capability.

• Improvements priorities tell HOW, targets tell

HOW MUCH and WHEN.

• They are typically a ‘from to by’ statement.

Each of the processes has an

improvement measure

ness in

sell 1

top level

improvement

priorities

annual targets

breakthrough to

objectives improve

3-5 year

breakthrough

objectives

ay fro

ll from

behind Hoshin Kanri

step 5: WHO

step 1: WHAT

step 2: HOW FAR

step 3: HOW

Step 5: identify key resources to

deploy

• Identify the resources with the greatest influence

or opportunity to impact the improvement priority

and target to improve.

• The largest or most available resources will not

always have the greatest impact.

Each priority has one owner;

other people may support

? ? ? ? ? ? ?

ness in

sell 1

top level

improvement

priorities

annual targets

breakthrough to

objectives improve

3-5 year

breakthrough

objectives

irecto

ll from

irecto

ay fro

In summary: this is how it works

? ? ? ? ? ? ?

? ? ? ? ? ?

? ? ? ? ?

version 1.0

date 24 Jan 05

primary

increase sales revenue by 50% secondary

irecto

rketin

irecto

iscoun

ts fro

tio fro

top level

improvement

priorities

annual targets

breakthrough to

objectives improve

3-5 year

breakthrough

objectives

improve sales productivity by 10%

improve average net prices by 2%

top level policy deployment

Once you’ve completed the

matrix, do it again

• Hoshin Kanri is about deployment.

• When you’ve done the top level you go down to

the next level:

– rotate the matrix by 90 degrees and carry on.

• In theory you can keep going but in practice you

don’t.

Points to remember about the

matrix

• As soon as a resource gets a solid dot he/she

will get a lower level matrix or action plan

• Clear circles indicate support resource. They do

not get a lower level matrix or action plan unless

they get a solid dot on another matrix

• The dots are to be used as a sanity check

Track progress using a bowling

target to improve

actual 2004 JOP 2005 plan 2005 YTD Jan-05 Feb-05 Mar-05 Apr-05 May-05 Jun-05 Jul-05 Aug-05 Sep-05 Oct-05

actual

Policy deployment: bowling chartMISS month HIT YTD

Create an action plan for every

improvement priority

original plan X progress at review

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Policy deployment action planImprovement priority: Department/location: Management owner: version:

Review team: Next review

Environmental situation summary:

status

red=late impact

Core objective: timeline

action step

bold=lead

planned

Summary

• Create a bowling chart for every top level and

second level matrix

• Create an action plan for every improvement

priority at the point of impact

– Without action plans there is no Hoshin Kanri

• Review performance monthly and take action

when targets are not being reached

Why is Hoshin Kanri so good?

• Firstly because of what it sets out to do:

– Hoshin Kanri is a process that facilitates the

development of results oriented business processes with sustained improvement that result in sustained

competitive advantage in quality, delivery, cost and

growth.

• But secondly it enables this to be condensed

down to a page of A4 which enables easy

communication, encourages transparency and

makes accountabilities clear!

A final thought: Moore’s law

• Gordon Moore, co-founder of Intel, said that the number

of components on a chip would double every two years.

• The has had dramatic effects:

– chip manufacturers knew what they had to do to be competitive;

– HW and SW designers knew how to develop products for the future.

• If you know what is expected of you and you can be

confident that everyone else is working towards the same end and can be depended upon then you can get

your head down and do likewise.

• This is exactly what Hoshin Kanri does.

Thank you

an introduction to policy deployment ver 1

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use hoshin kanri

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business performance

critical thinking process

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