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This presentation evaluates the Hoshin Kanri concept, what it is, how it works, what can go wrong and how to make Hoshin really work. Slide 3: Most people familiar with Hoshin Kanri will know that it translates from Japanese into a "Vision Compass". More importantly, Hoshin is gaining traction due to its recognition of the need to link direction (strategy formulation) with management (implementation). Slide 4: A key feature of Hoshin Kanri is the concept of Breakthrough Objectives. The concept encourages aggressive objectives together with a structured method for cascading these and breaking them down into manageable pieces. Slides 5 and 6 address common responses from executives one might encounter when trying to introduce Hoshin Kanri together with the symptoms suggesting that Hoshin Planning is required. The symptoms listed will strike a chord with many readers and represent the product of poor strategy execution. Slide 8 identifies some of the many leading organizations using Hoshin as their strategy execution methodology. The majority of organizations that we at i-nexus are talking to (particularly in the USA) are either considering implementing Hoshin Kanri or have already made a start. Slide 9 identifies the value of having a strong strategy execution system by tracking share price performance. Slides 11 and 12 introduce the link between Hoshin Kanri, and in particular the X matrix concept, and Balanced Scorecards. The traditional Balanced Scorecard clearly introduced value by looking at business metrics from more than purely a financial perspective. In contrast however, the X matrix is a far more robust tool for supporting strategy implementation. The various faces of the X matrix (South, West, North and East) detail the WHAT, HOW FAR, HOW and HOW MUCH of the strategy. Having said that, the X matrix is by no means universally popular as a Hoshin tool and is regarded by some CEO's as too complex. It is clearly a tool more likely to provide value in organizations that are more mature in their strategy execution journey. Slide 13 shows an example of how the i-nexus software supports both the Hoshin X matrix and Scorecards. Slide 15 identifies the critical role of the bowling chart in linking between the X matrix and action plans and its use a key management tool to track achievement and lack thereof against goals. Slide 17 identifies "culture change" as a key barrier to effective Hoshin. Many of our customers do find that the greater transparency achieved with i-nexus can be seen as a threat. This needs to be managed carefully with problems (red traffic lights) seen as discussion points rather than failure. Slide 22 provides an example of an A3 report. Many i-nexus customers find visual management of progress to be key to obtaining commitment to Hoshin. Finally slide 24 looks at the value of Hoshin countermeasures in enabling early identification and resolution of barriers to progress.
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Deploying Hoshin Kanri
as a Competitive Weapon!
Slide 2Copyright i-nexus 2012. All rights reserved.
What are we going to cover?
• What is Hoshin Kanri and what does it promise?
• How does it work (in theory)?• What can go wrong (in practice)?• What’s behind this?
• 4 key challenges to overcome
• Proven strategies to make Hoshin really work
• Key takeaways
Slide 3Copyright i-nexus 2012. All rights reserved.
Hoshin Planning – The Concept
方Ho
管KanShin Ri
針 理Direction Needle
ControlChanneling
ReasonLogic
Direction Needle, or Compass Management
Hoshin Planning is a systematic and disciplined process to align, communicate and execute strategy by focusing on those few breakthrough objectives that give you
competitive advantage.
A ‘Vision Compass’
Slide 4Copyright i-nexus 2012. All rights reserved.
Hoshin Planning – The Process
Hoshin Process in Concept
Slide 5Copyright i-nexus 2012. All rights reserved.
Reasons Not to Do This....
And the leaders will say....
• We already do this.• We do not have enough time to do this.• We can not possibly plan that far into the future.• We have tried this before.• Our corporate leadership (insert board if appropriate) will
never give up control.• The way we do it today is just fine.• We will not maintain this process.• Etc, Etc, Etc...
Slide 6Copyright i-nexus 2012. All rights reserved.
Recognise these symptoms?
And the organisation will see...• Too many bad projects in process.• Very long lead-times for improvements.• Constantly missed budgets and forecasts.• Senior management vision does not match organizational
activities.• Annual objectives rolled out in March instead of January.• Way too many good projects in process.• Year to year plans never seem to connect.• Most employees never seem to feel a part of the team.• Little connection between strategy and continuous improvement.
Slide 7Copyright i-nexus 2012. All rights reserved.
The Basic Model....
A simple model.....
Performance Management Systems are really designed to help organisations perform three basic tasks:
• Monitor… We have to examine our core activities on a regular basis. Collecting data.
• Learn…From that examination we have to better understand what is working and what is not. Turning data into information.
• Improve… Take the information and turn it into ACTION!
Slide 8Copyright i-nexus 2012. All rights reserved.
Hoshin is rapidly becoming the de facto strategy deployment methodology in Corporate America
Slide 9Copyright i-nexus 2012. All rights reserved.
Hoshin can clearly be a Competitive Weapon...
Slide 10Copyright i-nexus 2012. All rights reserved.
The 10,000 Foot View
Slide 11Copyright i-nexus 2012. All rights reserved.
Hoshin and the Balanced Scorecard...
Financial
Customer
Internal
Learning
Measure Target Initiative
Increase Profit
MaximiseUtilisation
RetainCustomers
LowCost Offer
FastTurnaround
MotivatedCrew
Objective
Achieve FastGround Turnaround
On Ground Time
On Time Departure
25 Minutes
95% Flights
ReduceTurnaroundTime
Strategy Map
Hoshin Plan
Slide 12Copyright i-nexus 2012. All rights reserved.
How Hoshin Works (In Theory) –The X Matrix
RESOURCES
AnnualBreakthrough
Objectives
Targetsto Improve
3-5 Year Breakthrough
Objectives
Top LevelImprovement
Priorities
= Primary Responsibility
= Secondary Responsibility
5- WHO
Use dots to show relationship of Targets and
Resources to the Improvement PriorityUse dots to show
relationship of Improvement Priorities to Annual
Objectives
2- HOW FAR
NOTE: Only Solid dots on a resource deploy to the next
level
OWNER
4- HOW MUCH
1- WHAT
3- HOW
Slide 13Copyright i-nexus 2012. All rights reserved.
Balanced Scorecard Strategy Map to X-Matrix Example
Slide 14Copyright i-nexus 2012. All rights reserved.
How Hoshin Works (in Theory)- Cascade and Action Planning
Slide 15Copyright i-nexus 2012. All rights reserved.
How Hoshin Works (in Theory) –Strategy and Performance Review
Slide 16Copyright i-nexus 2012. All rights reserved.
How Hoshin Works (in Theory) - Countermeasures
Action Plans are proactive – they address how to achieve a particular goal from the jump off point (JOP) to the stretch target
Countermeasures are reactive – they address how to get back to plan when a goal is missed for a periodMonthly
Miss
Jump Off Point (JOP) to stretch target
Slide 17Copyright i-nexus 2012. All rights reserved.
Some recent data...
Slide 18Copyright i-nexus 2012. All rights reserved.
Hoshin Planning in Practice –4 Key Cultural Challenges to Overcome
#1 – The “Commitment” Challenge#2 – The “Stretch Goal” Challenge#3 – The “Shoot the Messenger” Challenge#4 – The “Bureaucracy” Challenge
Slide 19Copyright i-nexus 2012. All rights reserved.
#1) The “Commitment” Challenge – How to ensure leadership stay the course...
Typical Mistakes....
• Not starting with/agreeing breakthroughs• Poor discipline in the cascade• Constant jerking of the chain• Lack of linkage to reward and recognition• Misalignment with the budget
Slide 20Copyright i-nexus 2012. All rights reserved.
Proven Strategies for Building Commitment...
Degreeof
Effort
ImprovedPerformanc
e
Valueof
Outcome
Perceived value of the
outcome
Perception that the effort will deliver improved performance
Perception that Improved performance will lead to the outcome
Three Pre-requisites for Sustained Commitment
• Clear line of sight to the breakthroughs• Clear evidence that Hoshin approach delivers better
outcomes• Reward and recognition is actually linked to
executing hoshin plan
Slide 21Copyright i-nexus 2012. All rights reserved.
CEO
Sales Lead
#2) The “Stretch Goal” Challenge – How to stretch whilst keeping the plan realistic and achievable...
We need to double sales by 2015
That’s a serious stretch boss. I’m not sure the team will buy it...
We’ve got no choice, the stock’s taking a battering and we need to project growth fast, plus the team can always do more...
Ok, we’ll give it a go, but don’t be surprised by the result...
The boss needs us to double sales in three years, I’d like achieve that in 2.
How? Best we’ve ever done in one year was 20% and that was with double the resources we have now...
Look, if we shoot for the stars, at worst we’ll hit the moon...
I’m not sure this makes sense, but ultimately it’s your call...
XYZ Achieved 200% of quota last year – it shows it can be done – so I’m setting quotas on this basis this year....
But nothing’s fundamentally different ... What makes you think we’ll get a different result this year?
Look we need sales people who can deliver... If that’s not you...
Time to dust off the CV...
SVP
VP, Sales
A Parody...?
Slide 22Copyright i-nexus 2012. All rights reserved.
The objective A3 provides a basis for a constructive dialogue on what can be achieved...
Slide 23Copyright i-nexus 2012. All rights reserved.
#3) The “Shoot the Messenger” Challenge – How to ensure the process remains constructive...
Who Screwed Up? I hope he doesn’t blame me...
Let me tell you what happened...
These numbers aren’t comparable
Better not raise the XYZ issue...
All we’re doing is alleviating the symptom...
Slide 24Copyright i-nexus 2012. All rights reserved.
Bowling ChartFocus on the ‘forecast’ reds
Proven strategies to ensure the dialogue stays constructive and focused on the future...
Are we likely to hit the future targets?
If not, why not?What’s the root cause and what can we do about it – short and long term?
Countermeasure PlanMajority of time shouldfocus on reviewing the countermeasure plan...
Slide 25Copyright i-nexus 2012. All rights reserved.
The “Bureaucracy” Challenge – Avoiding the administration getting in the way of the process...
X Matrix
X Matrix
X Matrix
X Matrix
Action Plan
Action Plan
Action Plan
Action PlanAction
PlanAction Plan
Action Plan
Action PlanAction
PlanAction
PlanAction Plan
X Matrix
X Matrix
X Matrix
X Matrix
Bowling Chart
Bowling Chart
Bowling Chart
Bowling Chart
Bowling Chart
Bowling Chart
Bowling Chart
Bowling Chart
Counter Measure
Counter Measure
Counter MeasureCounter
Measure
Counter Measure
Counter Measure
Slide 26Copyright i-nexus 2012. All rights reserved.
Let the right software take the strain....
X-matrices
Action Plans/A3sBowling Charts
Ideal Hoshin Platform Requirements
• Integrated - Brings together all X-matrices, Action Plans/A3s and Bowling Charts in one system.
• Simple - As easy to use as the spreadsheets it replaces.
• Right Functions - Offers functions that underpin the culture needed to sustain the Hoshin process.
• Hassle Free – Available 24x7, scaleable, installation free.
Slide 27Copyright i-nexus 2012. All rights reserved.
Key takeaways...
• Hoshin is rapidly becoming the de facto Strategy Deployment approach.
• Executed well, Hoshin can be a real competitive weapon.
• Development and reinforcement of a supportive culture is the primary challenge.
• Organisations typically achieve more, in less time, with the Hoshin process with external help.
• The right software can improve the probability of success by taking the “heavy-lifting” out of the Hoshin process.
Slide 28Copyright i-nexus 2012. All rights reserved.
Questions? Thoughts?
“It is not the strongest of the species that survives, nor the most intelligent, but the one most responsive to change.”
Charles Darwin
“There is great power in knowing where you are going and passion in knowing how as an individual you fit in!”
Anonymous
Find out more: www.i-nexus.com
