Hoshin Kanri Strategic Planning
Hoshin Kanri is an approach to strategic planning that forms the foundation of Japanese-style Total Quality Management. As David Hutchins writes in his book Hoshin Kanri: The Strategic Approach to Continuous Improvement- Hoshin Kanri is predicated on "meticulous planning, targeted benchmarking, and the effective and systematic use of the tools for continuous improvement at all levels of the workforce."
The best studied and illustrated version of this in practice today is that of Toyota Motor Corporation. Unfortunately, this approach to strategic planning wherein leaders align business goals within and across the organization from the top leadership levels to the 'shop floor' cannot be effectively done without first developing a consistent and stable culture of Total Quality Management.
Hoshin Kanri is a 3rd order development in a Lean culture but is the glue that ties together Japanese-style Total Quality Management with its reliance on the human principles of respect for people and identification of individuals as experts in their job, who are motivated, accountable and recognized for their contributions that continuously improve the enterprise. This is the irony of the "Lean facade" described by Jeffrey Liker, when we talk about adopting Lean tools to mirror Toyota's success in continuous improvement without creating the supporting business structure and adoption of principles.
Hoshin Kanri, as a means of managing a business, according to Hutchins, is composed of 4 key elements: Vision, Policy Development, Policy Deployment and Policy Control. Hoshin Kanri is not separate from but is tightly linked as an integral part of that aspect of Japanese management that most people focus upon as Lean. In fact, the improvement elements that we know as Lean (read Total Quality Management) are the means by which the goals of the strategic plan derived from Hoshin Kanri are carried out. This culture is defined by voluntary and mandated team-based activities from top to bottom in the organization designed to continuously improve performance.
The components of the Japanese words Hoshin Kanri define 4 components that are continually revisited in PDCA style by leaders and managers who drive strategic planning:
- Ho- direction
- Shin- focus
- Ri- reason
Hutchins describes the 5 required elements from which Hoshin Kanri derives its power in transforming businesses into successful competitors, as follows:
- The goals, aims and future scope of the organization are derived from the Vision
- It requires the development of Strategy, Policy, Benchmarking, and Targets
- The deployment of the targets must be to all levels through a cascade process and the creation of policy at each level of management
- There must be a feedback loop of results to complete the Plan-Do-Check-Act Cycle (Shewhart cycle or Deming wheel)
- It has no value unless it also includes TQM (the Japanese version not the suspect version that fluttered for a while in the West in the late 1980s) which is not part of Hoshin Kanri but represents the Do part of the PDCA Cycle
The process whereby these elements relate to each other is shown in the figure below, adapted from Hutchins.
Henry Ford System Laboratory Adoption of Hoshin Planning
Our ability in Pathology and Laboratory Medicine to undertake Hoshin Kanri strategic planning awaited 5 years of learning and practicing a Lean management work culture and required integration of the laboratories of HFHS into a service line, composed of 5 acute care hospitals and 30 medical center laboratories. Our initial foray into Hoshin Kanri planning began in late Fall 2010 with the identification of major business goals for 2011 that would further our vision and mission of integration, revenue growth and deepening and broadening of the Lean culture. The next phase was the identification of key performance indicators (KPI) that would promote the major Laboratory service line business goals for each hospital-based laboratory service, each core laboratory supporting hospitals and the regional laboratories. Much thought was given to the development of these KPIs with corresponding specific measures of success and their alignment and mutual support horizontally across the service line.
The advantage to the Hoshin Kanri business management approach is to effectively integrate policy, strategy and tactics into the production processes that are in turn carried out in a coordinated manner throughout the enterprise by managers down through to the level of the 'shop floor' in order to achieve optimal performance. Combined with the leaders' focus on maintaining a functional culture of continuous improvement, the gaps between current and target performance are more readily closed with the clearly defined, quantitative goals outlined in the Hoshin process that are revisited frequently and even modified throughout the year as a guide forward.