Hoshin Planning: What Is It & How Can You Use It?

What Is Hoshin Planning?

Hoshin Kanri is a strategic planning method derived from Japanese tradition, developed in the ‘60s and ‘70s.

It brings organizations together to manage their key strategic initiatives. Hoshin planning is meant to eliminate inefficiencies that can result from a lack of communication and direction among different departments within a company. Many organizations, especially manufacturers, have adopted Hoshin planning, which has made it popular.

Below, we’ll discuss how to use Hoshin planning, what to focus on if you’re looking for software to manage your Hoshin plan, and some similarities and differences between the Hoshin planning process and the Balanced Scorecard.

How To Use Hoshin Planning

If you’ve researched how to put a Hoshin plan to use in your organization, you’ve likely found a variety of answers. At its core, Hoshin planning starts with four steps:

1. Identify your key goals

The first step is to sit down with your leadership team and the necessary executives to establish your strategic plan. If you already have an approach to strategic planning, or are in the process of creating your strategic plan, you don’t need to start Hoshin planning at this step. You can take what you’re doing and adapt it to the Hoshin approach later.

2. Play catch(ball)

One thing that sets Hoshin planning apart from many other strategic planning methods is catchball. The term describes throwing ideas back and forth to reach alignment.

Your senior management comes up with the three- to five-year major goals for the organization. Then they discuss those goals with lower-level managers, who in turn discuss them with their teams. This feedback mechanism helps you get buy-in across the organization.

3. Get your gemba on

Unrelated to Zumba, another element unique to Hoshin planning is gemba. Gemba refers to getting out on the factory floor and tracking the execution of your key goals and initiatives.

The idea is that to stay connected to your Hoshin plan, managers must constantly review how the ideas are being integrated at the ground floor and catchball to gather feedback in the process.

Note: If you do not have a factory floor, consider what gemba means for your leadership team being out on the front lines. It could mean spending time with your sales representatives or your software development team or working closely with the team in your customer service department.

Define it for your organization, in terms both your leaders and front-line employees will understand. Everyone involved should know how gemba works in your company specifically, not only the concept in general, so adapt it to fit your organization.

4. Make the adjustments you need

All three of the previous steps deal, to some degree, with gathering feedback. Feedback only helps if you use it. This final step is where you do, making the adjustments needed to keep your short-term and long-term initiatives on track.

How To Read a Hoshin Matrix

A Hoshin matrix is laid out as an “X” with one section on each side. The four sections feed each other and show, on one page, how your action items, initiatives and annual objectives line up with your long-term goals.

• South: breakthrough objectives. The major, top-level goals set by the senior leadership team. Every annual objective, target and action item on the matrix should stack up to support them.
• West: annual objectives. Each breakthrough objective broken into yearly outcomes for your teams. If a breakthrough objective is a sales number to reach in five years, the first-year objective might be a fifth of it, or whatever your organization thinks is achievable in year one.
• North: top-level improvement priorities. The high-level to-do list for your team: the action items to achieve over the next few months.
• East: targets to improve. The initiatives and action programs that move you toward where you want to be at the end of the year and, ultimately, at the end of five years. Some team members may be frustrated when their project doesn’t make the cut; catchball keeps them bought in.

The Big Question To Ask About Hoshin Planning Software

If you’re doing Hoshin planning and you’re looking for software to manage it, you first need to ask:

Do you need your software to be able to handle a Hoshin matrix?

A Hoshin matrix is a one-page visual of your objectives, measures and targets, measure programs, and action items. Some strategic planning software like ClearPoint Strategy can handle the key components of Hoshin planning, but make sure you can structure your Hoshin planning inside the software you choose.

For example, Balanced Scorecard software like ClearPoint Strategy might be perfect for your Hoshin planning. Others might be too rigid or strictly structured around the BSC and not flexible enough for the way you do your Hoshin planning.

Look for software that fits your approach to planning. It may need a discussion board for online catchball, or it may just need to be able to track projects and measures that align to meet your goals.

Hoshin Planning vs. Balanced Scorecard: Similarities & Differences

Hoshin and the Balanced Scorecard (BSC) are both excellent strategic planning models with a lot of overlap, but they emphasize different things. Here are a few:

• The creation of key goals is different. Hoshin focuses you on your top 3-5 key goals, whatever those may be, while the BSC’s goals are balanced across four unique perspectives: finance, customers, internal processes, and learning and growth. So when your team gathers its top initiatives using Hoshin, they could focus on anything. In the Balanced Scorecard, they follow a logical order.
• Both use measures in an effective way. With either a BSC or a Hoshin planning process, you set your high-level goals and measure your progress toward them. If you’re doing either one right, you’re properly measuring your key strategic goals.
• Strategic execution is different. While the BSC focuses on quarterly or monthly meetings for execution, Hoshin relies on gemba (being out on the factory floor) so managers really understand the front lines of the business. Nothing stops you from doing both, but you might see a focus on one or the other depending on what materials you read.
• Both require regular reviews and adjustments as needed. Both processes tell you to review your results regularly (both monthly and quarterly) based on what you learn about your ability to execute strategy.

A quick word of caution before you get started: Don’t create a hybrid approach to managing your strategy. Merging a partial-Balanced-Scorecard, partial-Hoshin-planning approach will confuse your team members and steer you further away from your goals. You can make adaptations, but start with the core of one of these approaches in mind.

There are a lot of approaches to managing and executing your strategy, but it is much less about which one you use, and much more about selecting one and sticking to it. When you stick to one approach, you can better manage it, measure it, and have a systematic approach for executing on it.

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