Hoshin Planning process, derived from Japanese policy deployment approach of Hoshin Kanri (Policy Deployment) has several salient features over conventional strategic planning process.
If you are accountable for organizing annual goal setting for your organization, it would be a good idea to learn about Hoshin Planning process.
Following are the top 7 salient features of Hoshin planning process:
Prioritization : Every organization, however big it is, works with limited resources – time, people and $$. One of the key reasons for derailment of business strategy execution is lack of prioritization at the time of creation of annual strategic plan. This is one such area where all organizations fail, immaterial of their size. Between the eagerness to achieve stretch goals and fear of not achieving them, most leaders compromise on the prioritization and end up doing everything. One of the fundamental principles of Hoshin Kanri (Policy Deployment) is prioritization. Some goals are more important than others, some strategies are more fruitful than others and some strategic projects create more impact as compared to others than created only trivial impact. So it is not possible to give equal priority to all goals, strategies and strategic initiatives. Thus Hoshin planning process forces the leadership team to prioritize organizational goals, strategies and strategic projects based on the parameters like organizational vision, internal and external environments and voice of customers.
‘De-selection’ : At the first sight, ‘Deselection’ might sound like the corollary of Prioritization. “Deselection” actually precedes prioritization. Hoshin Planning process encourages the leaders to deselect goals, strategies and strategic projects that aren’t important rather than selecting important ones. Thus ‘De-selection’ is the process of systematically eliminating or parking, goals, strategies and strategic projects that aren’t most important. In my experience most large organizations fail when it comes to deselection. They run too many strategic projects concurrently with gross overlap in scope by resources who are spread thin on various projects. These are clear indications that ‘deselection’ isn’t effective. The criteria for de-selection can vary. Usually following criteria work –
‘Must-do, can’t fail’ Attitude : Hoshin Kanri (Policy Deployment) approach emphasizes the organizational leaders to imbibe a ‘Must do, Can’t fail’ attitude when it comes to prioritized strategic projects. In spirit, it means that the organization believes that a ‘must do, can’t fail’ initiatve is critical for the success of the organization and hence the leaders need to do all it takes to make it successful because it failure directly impacts the organizational goals.
Joint Accountability : Hoshin process encourages sole ownership and joint accountability of the leadership team in deciding and achieving the goals. While individual leaders hold sole ownership of an organizational goal, the leadership team of the organization too holds joint accountability. ‘Catch-ball’ mechanism is a method adapted in Hoshin Kanri (Policy Deployment) approach to drive this joint accountability for goals. Again, this is one of the biggest areas where large enterprises fail.
Constructive Negotiation : Hoshin doesn’t encourage strong top-down approach. Instead it encourages leaders to negotiate goals, resources and ownership, both vertically and horizontally using ‘Catch-Ball’ mechanism. By doing so, leaders participate in their own goal setting rather than accepting goals given to them. Cross functional ownership of goals are also agreed in the similar manner. While this process does consume some extra time in finalizing the strategic plan, it brings in lot of clarity and acceptance among leaders.
Resource Optimization : Resources are very critical for the success of strategic plans. They can either be people, equipments, funds or other resources. But, in most organizations, its people who drive strategic plans. But when they are over utilized, it directly impacts the success rate of strategic initiatives and achievement of organizational goals. Embedded in Hoshin planning process is the resource allocation and optimal utilization to avoid failure due to skill mismatch or non-availability. There are inbuilt mechanisms that prevents a resource from being over utilized.
Integration of budgetary planning and performance management process : Hoshin planning process isn’t a stand-alone annual planning process. Organizations that have been successful with Hoshin Kanri (Policy Deployment) have integrated the budgetary planning and associate performance management process. The ensures that financial planning and associate incentives are aligned to organizational goals, strategies and strategic projects.
While there are few more features of Hoshin Planning process, the above 7 are compelling enough to pursue this approach if the organization wants to succeed in achieving its critical goals.
Nilakantasrinivasan aka Neil helps a range of large enterprises in services and manufacturing, with particular emphasis on execution of business & functional strategies using Hoshin Kanri(Policy Deployment). He can be contacted at neil@collaborat.com.
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