Background of Strategy Deployment or the History of Hoshin Kanri
Dr. Yoji Akao and Dr. Shigeru Mizuno are attributed as being ones who initial developed Hoshin Kanri. They did this by analyzing the best practices (which included the Deming Cycle of Plan, Do, Check, Act) used by companies who won the Deming Prize such as Bridgestone Tire Company, Nippon Kayaku, Toyota, Komatsu and Matsushita. The progress of Hoshin Kanri was simply astounding; in 1965 Bridgestone Tire Company published a report on "Hoshin Kanri" practices. By 1975, Hoshin Kanri had become accepted in Japan as a standard practice.
In 1976 Dr. Yoji Akao and Dr. Shigeru Mizuno worked with Yokogawa Hewlett-Packard (YHP was founded in 1963 and was as a joint venture between Yokogawa and HP) to help them compete for the Deming Prize. Six years later in 1982, Yokogawa Hewlett Packard achieved their goal and won the award. Hewlett-Packard realized the advantages of Hoshin Kanri and introduced it to the rest of the company in 1985. Hoshin Kanri had finally arrived in the US. In 1984 the Deming Prize was opened to non-Japanese companies, In 1989 Florida Power and Light Co, won the award. They had collaborated with and benchmarked a previous Deming prize winner, Kansai Electric Power Co.
By the 1990's many US companies had adopted Hoshin Kanri as a standard practice. In the US, Hoshin Kanri has been translated into many different names: Strategy Deployment, Policy Deployment, Managing by Results, Hoshin Planning, Strategic Planning
Why Strategy Deployment?
An analogy for Strategy Deployment is to think of your company on a journey toward a specific destination. Strategy Deployment is a tool that helps to determine the final destination and define how to get there!
An important part of preparing to reach this final destination is creating breakthrough experiences. They allow the executive team to shift through and beyond their current business paradigm and create a new one that embraces beneficial change. It's important to start your change process by aligning everyone and making sure they are all heading in the same direction.
Strategy Deployment is a great tool to help you create change by strategically aligning your Continuous Process Improvement with your business goals and objectives. In doing this, you give a clear message, purpose and create leverage for everyone to fully engage in the change process. If a CPI implementation is not aligned with business goals and objectives it will be very difficult to sustain. Without a plan, there is no clear destination to head towards. This quote tells it all:
"If you don't know where you're going, any road will take you there." - Lewis Carroll, Alice in Wonderland
Strategy Deployment Model
As stated earlier, Strategy Deployment ensures all levels of an organization are in alignment with the business goals and objectives. This process is often referred to as "Aligning with the North Star" or "Calibrating to True North".
It is not unusual to find one department moving West, while another department is moving East and both convinced they are doing the right thing. It is vital to the success of the organization to introduce a method to align the entire organization to their "True North". Once in place, this allows everyone to have a clear understanding of what's needed and their role in fulfilling these needs. Many companies today do some type of Strategic Planning, however the problem occurs when trying to convert executive level business strategies into tactical activities.
There are 6 major levels in the Strategy Deployment model:
- Vision - Where do you want to be?
It is crucial to figure out where you want your organization to be in the next 3 - 5 years. To achieve this successfully it is important to know 'where you are today' and 'where you must be tomorrow'. The difference between these two points is your strategic gap. The way you bridge this gap is to define your Mission!
- Mission - How are you going to get there?
What actions are you going to focus on every day? What must you do to move from your current reality, towards your Vision? A Mission Statement is a declaration of your intent to pursue a specific process to
strive towards the requirements of your Vision. If you create the right Mission, it will continuously move you towards your Vision! The Vision and Mission Statements should clearly demonstrate the core values, beliefs and culture of a company!
- Breakthrough Objective - What must you do different to get there?
If everything as perfect, you would not need to change! Well, it's not perfect and change is a constant in life. Where do you need to change your organization to meet the challenges of the 21st century?
Remember Einstein's quote "You cannot solve a problem, with the same thinking that created the problem." It is important to define where you must create breakthrough to strengthen and improve your organization. What strategic level business processes must change over the next 3 to 5 years to meet your Vision?
- Annual Improvement Priorities - What must change first to get there?
Once you have defined your Breakthrough Objectives (BTO), its important to start to chunk them down into smaller operational pieces. One BTO could spawn several key processes and each has to be
prioritized based on its impact to fulfill the upper level BTO and Vision ove the next 12 months. Each prioritized smaller operational unit will become an Annual Improvement Priority (AIP).
- Target Improvements - What specific processes will need improving?
Within each AIP there are usually several tactical level processes which will need to be improved. Each process is prioritized based on its impact to fulfill the upper level AIP, BTO and Vision. These prioritized
processes are targeted for improvement and called "Target Improvements (TI)". Each TI is time bound and a proposed date for completion is entered onto a calendar.
- Tasks - What actions items must be completed?
Each TI will require a series of specific actions (or tasks) to be completed within a given timeframe, e.g. Project Charter, Training, Improvement event, Follow up, etc. Each Task is time bound to a given
completion date in sequence to meet the proposed completion date of the TI.
All 6 levels of the Strategy Deployment process work simultaneously. Each level of the organization will be given the responsibility to record and collect data about the process. Once the data has been analyzed and compiled into Key Performance Metrics, they will show the current status of the Strategy Deployment system. This information will be fed back to those responsible for defining policy and this feedback will help them to determining if the system is working successfully or not. With this information, they will be able to define any corrective actions necessary to improve the process.