The 7 Steps of Hoshin Kanri

Author – Jessica. 

A huge part of your business success is planning and the execution of that planning. The best business plans need to evolve and adapt to changing markets and setting big goals for your business is going to better prepare your business for growth. The process of deciding on these objectives and working through the process of completing them in a structured way that promotes employee buy-in can be done in many different ways. The Hoshin Kanri method is one of those ways.

What is Hoshin Kanri?

A mature organization is one that has a clear set of defined objectives, closely aligned to its mission statement, vision, and values. The Hoshin Kanri methodology of goal and objective setting and measurement is a lean management framework. The name comes from the Japanese words for direction and administration – as a phrase they mean “how do we manage our direction.” The method consists of seven defined steps and follows something of an annual process with monthly reviews.

Why Use Hoshin Kanri?

There are a good number of reasons why Hoshin Kanri is relied upon by organizations, and it is accurate to say that some organizations do a form of the process without even realizing it. That’s because it offers the organization a real opportunity to clearly define and widely communicate the objectives and overall direction of the organization. Many users of the process say that they see greater engagement from their staff, who get a clearer view of where their priorities should be.

Step 1 – Establish the Vision and Assess the Current State

This is the initial phase of the process where you’ll be examining what you have in place already. Things like the company’s mission statement, vision, and values will be under scrutiny and compared to your ideal state. You’ll also be asking if a review is strictly necessary to meet your future objective and what actually needs to be reassessed.

Step 2 – Develop Breakthrough Objectives

In this step, you’ll be deciding on the objectives that are going to be responsible for really testing the organization – those that will challenge you. Things like new services, markets, and products might be breakthrough objectives.

Step 3 – Define Annual Objectives

Annual objectives are just what they sound like. They’re short-term objectives that will help to enable those breakthrough objectives you defined in step two. If you need to implement a new content management system to enable e-commerce sales as a new revenue stream, that might be an annual objective to the breakthrough objective of e-commerce.

Step 4 – Cascade Goals Throughout the Organisation

Now that you’ve defined your goals in the first three steps, you’ll want to communicate them throughout your organization. You can also assign these goals to the relevant departments and people and put in place methods to measure them with key performance indicators.

Step 5 – Execute Annual Objectives

This is the action step, where you’ll put in place your planning and execute the annual goals working towards those breakthrough goals.

Step 6 – Monthly Reviews

As explained by Kanbanize, a flexible Kanban software solution, it doesn’t help just having annual Hoshin planning without consistent goal check-ins. The monthly reviews provide the stakeholders with frequent updates and allow teams to feedback on any problem areas. This helps projects stay on track and on budget. Using a great tool like Kanbanize to enable you to correctly manage your review process if you’re using Hoshin Kanri will make this process easy to implement and execute.

Step 7 – Annual Review

After the year planned out in step 3 has come and gone, you’ll want to do a comprehensive review of everything you planned and review whether more time is needed to complete them. This check-in allows you to re-evaluate everything, including resources that might need to be increased for each project.

Disadvantages of Hoshin Kanri

The big disadvantage that Hoshin Kanri might face is the unpredictability of external forces. It doesn’t take into account shifting landscapes of industry and your business position or the short-term trends in the industry. If you’ve spent a strategy day designing a 12-month plan under Hoshin Kanri and there is a large-scale shift in your business market, you might not have the tools to quickly adapt your plans.

It is for this reason that because your planning is being done annually, you might find that Hoshin Kanri isn’t as agile as you need it to be. This is why those who make use of more agile frameworks don’t make use of Hoshin Kanri.

If you’ve worked at a company that has defined objectives and structures them well, you’ve likely already been exposed to some of the principles of Hoshin Kanri, even if they weren’t called that or thought of under the specific process. As a baseline process for reaching company objectives, it’s a great system that has a reasonably quick adoption process.