In a fast paced and constantly changing world being able to set long-term strategy that results in everyone pulling in the same direction is almost impossible.
The traditional planning and communication approach is slow, leaves people disconnected and creates a lot of waste. Among many approaches promising miracles, Hoshin Kanri shows itself as an effective strategy for defining and achieving strategic objectives.
Unlike top-down approaches that often lead to misalignment and disengagement, Hoshin Kanri champions a flat management style. It empowers all levels to actively contribute to realizing the CEO's goals, encouraging alignment and fostering solid commitment.
Join me in the real-world success stories, the behind the scenes common mistakes and effective strategies learned from my years of experience.
What is Hoshin Kanri?
With its roots in the rebuilding of Japan after WWII, Hoshin Kanri has emerged as a a Lean framework that is used to:
- Define strategic goals.
- Achieve them through alignment and engagement across all levels.
- Create clear communication and consistent direction — In a world where the benefits of marginal gains can contribute significantly to improved outcomes, having every person in your organisation pulling in the same direction can be transformational.
Why do companies struggle with implementing and achieving strategic objectives?
a) Failing to establish clear alignment in company objectives
One of the challenges when defining strategy is ensuring that company objectives align with the broader vision. A common issue is a top-down approach, where the CEO's vision is communicated without incorporating insights from various levels. This can lead to objectives being disconnected from the organization's mission.
The lack of well-defined and limited breakthrough goals can also impede success. In my experience, it's crucial to maintain a clear strategy aligned with the vision, transparently communicated.
Defining a limited number of breakthrough goals and welcoming feedback from all levels is key to achieving objectives.
b) Misalignment in objective setting
Organisations are typically unfamiliar with the concept of cascading objectives. In many cases, when implementing an Objectives and Key Results framework or similar methodology, objectives are often tied mainly to the CEO's goals or the company's mission. However, this can pose challenges.
The objectives at the executive level may seem too ambitious and unrelated to daily operations. This makes it hard for lower management levels to connect and engage with these objectives effectively. As a result, lower-level objectives can end up being seen as mere checkboxes on a list.
c) Failing in turning the strategic objectives into action
In many cases, the absence of a structured process to bridge the gap between strategic goals and their practical execution can result in significant obstacles.
When managers across different organizational levels try to translate these objectives into action without a supportive methodology, the potential for failure becomes all too real.
d) Lack of frequent interactions and communication
Visual feedback plays a vital role in both Kanban and Lean mindsets. I've observed numerous companies struggling with the challenge of maintaining connectivity and unity. Often, this struggle arises from infrequent meetings and a lack of discussions about deviations from the plan.
For instance, consider a situation where your bank account balance is nearing the red zone. In such cases, waiting for a quarter to discover this critical financial predicament hardly seems prudent, does it?
Moreover, in my experience, the absence of regular interactions and the failure to visualize and discuss performance metrics are strong indicators that the strategic objectives are at risk of not being achieved.
My Journey with Hoshin Kanri
When Hoshin Kanri was introduced at TechCorp (fictional name), a medium-sized company with 300 to 500 employees, it faced low achievement in goals and objectives, and challenges in communication and engagement . As someone deeply committed to change and continuous improvement, I knew that Hoshin Kanri could be a game-changer.
Among TechCorp's mains issues we can list:
- Meetings discussing goals and objectives were limited to the C-level and Senior Management.
- The responsibility for achieving these goals rested solely with department heads, leaving their teams out of the equation.
- The commitment to these goals was expected from the Directors, leaving middle management and operational levels disconnected from the company's plans.
- The lack of a clear plan for execution made achieving strategic goals related to revenue, cost reduction and market share a daunting task.
The company had set a bold target: doubling its revenue in a short span. In collaboration with key stakeholders, we embarked on a journey to bring Hoshin Kanri to life.
We began with awareness-building sessions. These discussions quickly revealed the potential of Hoshin Kanri to redefine the way we set, execute and achieve goals. The insights gathered from all levels of the organization were enlightening. We decided to convene a multi-day workshop, where top management, tactical roles, and every layer in between came together.
This workshop marked a turning point. We collectively defined three thriving goals, and the first set of goals for Directors and department heads. The cascade process empowered teams to establish their measures to support these objectives. As a result, we had tiers of objectives and actionable plans. Hoshin Kanri became a reality with systematic performance tracking and regular meetings.
Within a few months, transformation was evident. Meetings evolved to include representatives of all levels, centered around the shared objectives. Each department now had a concise set of goals to work towards, fostering alignment and teamwork.
The company not only achieved but sustained improvements in revenue, cost reduction, and market share. The revenue soared by 60% in the first year, and, over five years, it jumped from R$ 30 million to R$350 million in revenue with the exciting addition of 20 new business units.
"Executives at the top of the company know what the business needs if it is to be successful, but the people in the trenches know what they can do to improve their processes"
From this experience, I learned the power of aligning executive vision with ground-level mastery in execution of the improvement plans. Also involving all levels in goal and metric discussions fosters commitment and ownership.
Finally, holding regular meetings for performance assessment, feedback, and evidence-based improvement creates a culture of continuous improvement.
My advice for other organizations:
- Focus on shifting the company's mindset, embrace transparency, and foster open communication through frequent meetings.
- Visualize your objectives and remember to celebrate both small and significant achievements.
It's a common misconception that relying uniquely on methodologies and frameworks will lead to miraculous solutions for our challenges. Hoshin Kanri, in contrast to this common mindset, offers a structured framework that promotes internal collaboration within your business.
So, the pivotal question is: if you find similarity with the situations outlined in this article, what should you consider next?
- Assess the current state of your strategic plan and its alignment and execution across your organization.
- Learn the Hoshin Kanri methodology and explore its proven success stories in various companies.
- Engage with professionals who have applied this method and achieved success, exchanging knowledge and experiences.
In essence, the path forward involves connecting with others and sharing experiences, ultimately fostering a culture of learning, continuous improvement and alignment.
Daniel CarraraDan Carrara is an experienced Enterprise Agile Coach with over 17 years of expertise in Lean, Logistics, Agile Ways of Working, Product & Project Management and Higher Education.