Before I start telling you what an X-Matrix is, let me give you some context. X-Matrix is a very popular visual tool traditionally used by Japanese companies, and now by many world-wide for planning their organization’s strategy. It is part of the approach called Hoshin Kanri (Policy Deployment)
X-Matrix is a one page document that links an organization’s strategies, metrics, tactics, results and responsible people.
Once the 3-5 year strategic objectives of an organization are decided, then the X-Matrix can be used break them down to tactics, metrics, assign responsibilities and track them.
It starts at an organization level where a primary X-matrix is created and for each of the key strategies, if needed, secondary X- matrices are drilled-down.
In my experience X-matrix has been very beneficial for enterprises of all sizes. For large corporations with multiple business lines and products, then I have found there may be multiple X-matrices and that leads to lot of confusion.
One of the biggest benefits of X-matrix is that it acts as a document that forges agreement among all stakeholders on the strategies, tactics and metrics. Hence the ‘catch-ball’ happens when this document is completed. Usually this format is printed in A0 size and used for filling up the different sections.
The second benefit is that it acts as a good communication tool for management to share their plans with rest of the organization. It can be displayed in a common place for employees to see and understand the organization’s priorities
How to fill the X-Matrix?
- Start with the ‘Strategies’ – Fill in the 3 or 4 broad strategies for the organization for the next 3-5 years.
- Move to Annual Objectives – List down those objectives which will be accomplish by the team
- Establish correction between Strategies and Objectives. Link up each of the ‘strategies’ to the ‘objectives’ in the intersection place with cross signs. Some recommend high(H), medium(M) and low(L) to denote the strength of correlation. This exercise can be done by the team through brainstorming or by data collection, if relevant.
- If there are orphan strategies or objectives, then go back to second 1 and 2 and review them.
Repeat steps 1 to 4 by populating the following one after the other:
- Strategies
- Annual Objectives
- Metrics
- Tactics
- Team members
If you like to know what goes into tactical plans, how metrics are decided and how accountability and targets of metrics and goals are assigned, I’d recommend that you read my articles in ‘Strategy & Hoshin’ section
Accountability is nothing but the correlation of Tactics to Team members This entire exercise involves a lot of concentration and team effort and hence is unlikely to be completed in a single sitting. Many times, the functional heads may require inputs from their team members and hence may need more time.
For best results and especially if you are doing it the first time, I recommend you have an expert run this for you. He can educate the leadership team and at the same time get this important annual goal setting accomplished.
A Hoshin Kanri (Policy Deployment) X-matrix is a one page document strategic plan of any organization that includes goals, strategies, strategic projects (initiatives) and owners. It is also known as Policy Deployment (PD) document.
It is a X-shaped matrix diagram linking the aspects mentioned above. One wouldn’t miss the big X at the middle of this document.
The organizational X-matrix is owned by the CEO/President but it is jointly constructed by the leadership team of an organization and with the guidance of a Hoshin Kanri (Policy Deployment) expert. It is one of the key deliverable of the Hoshin planning session. Many organizations are used to voluminous strategic plan, but in Hoshin Kanri (Policy Deployment) approach, even for large conglomerate, strategic plan is a single page document. A X-matrix is a very good example of how Hoshin Kanri (Policy Deployment) uses visual management style. Being simple one page document, a X-matrix doesn’t go into a filing cabinet but instead, it is prominently (yet confidentially) displayed in the board room. Many Japanese organizations have the culture of conducting their monthly strategic review meetings around the displayed X-matrix.
X-matrix is created in the beginning of the financial year and updated every month. Once in a year, the X-matrix and its contents are revisited by the leadership team.
Any strategic plan has to be cascaded to the entire organization. In Hoshin Kanri (Policy Deployment), the X-matrix created at organizational level is cascaded to various functions or business units as child X-matrices. There are clear linkages that are established between the parent and child X-matrices.
There are several variations of X-matrix. Some organizations focus on strategy deployment while others focus on metrics deployment. When an organization over emphasizes on metrics deployment, Hoshin Kanri (Policy Deployment) approach tends to replace balance score card approach.
If you are new to Hoshin Kanri (Policy Deployment), I’m sure your curiosity to learn about Hoshin Kanri (Policy Deployment) would have left you more confused about X-matrix.
This article attempts to clarify the construct of a Hoshin Kanri (Policy Deployment) X-matrix. If you haven’t already read my article, ‘What is Hoshin Kanri (Policy Deployment) X-matrix?‘ I recommend you to do so before proceeding to understand the purpose of Hoshin Kanri (Policy Deployment) X-matrix.
To briefly summarize, X-Matrix is a one page document that links an organization’s goals, strategies, metrics, strategic projects and responsible people.
First of all, there are several variations of Hoshin Kanri (Policy Deployment) X-matrix and there are no standards. Here I’m going to explain to you, a variation that most of my clients find useful.
Business/Organization Goals
At the 9 clock position of the X-matrix, the organizational goals are entered. Usually not more than 5, but preferably just 3. It is a general practice to include the targets for next 3 years for all the goals. In Hoshin Kanri(Policy Deployment), prioritization plays a critical role. So the goals are prioritized based on their importance to the organization. The most important goals are placed closer to the X. The goal on the extreme left would be least important while one on the extreme right would be more important.
Many organizations don’t prioritize goals as they feel all the goals are equally important.
Organizational Strategies
Organizational Strategies are placed in the 12 clock position. Usually not more than 7, but preferably just 5 strategies. I’m not covering the details of the how organizational strategies are arrived here, but you will find information regarding this in resources page. Strategies are also prioritized. The most important strategies are placed closer to the X. So the strategy on extreme top is least important and the one at the bottom (closer to X) is the most important one. There needs to be consensus among the organizational leaders on these strategies and their priorities.
Some organizations consider inorganic growth as a strategy by default and include it as the last strategy. But this isn’t mandatory.
Owners for Goals
Hoshin Kanri (Policy Deployment) approach prescribes individual ownership and joint accountability(IOJA). Hence each of the goals at the organizational level are owned by individual leaders. In achieving some of these goals, there will be inter dependencies. That’s where joint accountability comes into play. In the X-matrix, owners names are mentioned in the extreme right side after strategies. I’ll later mention how these are linked to the goals.
Strategic Projects
Strategic Projects (Initiatives) are be added in 6 clock position. Some organizations call strategic projects as ‘Hoshins’. Few other synonyms are Strategic Initiatives, Critical Strategic Projects, etc. These are strategic thrust areas where the leadership believes the organization has to do something different in order to achieve 1 or more goals using 1 or more strategies. There is no restriction on the number of strategic projects, but it is critical to limit the number to something that the organization can concurrently manage. Most organizations falter here. Similar to goals and strategies, strategic projects are also prioritized.
Establishing relationship between Goals, Strategies, Owners and Strategic Projects
The most common way to establish these relationship is using symbols in the intersection area of each of the above. Generally, two different symbols are used to represent strong and weak relationships. But I prefer to use numbers of a 3 point rating scale (9,3 & 1). 9 represents a strong relationship, 3 for moderate relationship and 1 for weak relationship.
So in the 10 clock position will be used to represent the relationship between goals and strategies and 2 clock position to represent the relationship between strategies and strategic initiatives.
For the relationship between goals and owners, the interaction matrix appearing next to 2 clock position will be used.
Once created, the X matrix will be a live document and needs to be reviewed and updated every month.
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