Classic Strategy Tool | Hoshin Planning System

Execution is a critical part of strategy. Without execution, strategy is all talk, just hot air. Unfortunately, turning strategy into execution is often the hard part. However, there are several strategy tools to help you connect the dots between your plans, objectives and resources. One great strategy tool to help you with this is the Hoshin Planning System.

The Hoshin Planning System was popularized from the 1960s by Professor Yoji Akao. Akao’s over-riding concern was quality control and how to ensure high standards within large organizations. It is perhaps best to think of the Hoshin Planning System as a way of integrating the top down and bottom up approaches to management issues. It provides for management to set goals and ‘visions’ while at the same time expecting those whose job it is to implement the plans to be the best ones to do their jobs. With this mindset, the executors of the plan are not pawns to be micro-managed but vital actors, whose unique input is vital to the success of the project. It is a process of cascading top-level vision down to the more granular level. The Hoshin approach might have been around for a while, but we’re confident that it will continue to have value into the future.

Hoshin Planning has seven steps, each of which contributes towards defining your goals and joining them up with your resources.

1. Define your vision

To define your vision, you need to understand where you are now. What is your current organizational vision? What are the critical issues facing your business? This step is all about creating a solid foundation for your strategy by locating your present position.

2. Make quantifiable objective measures

Once you have established your organizational vision and understood the issues facing your firm, you need to set measurable objectives to achieve. These objectives should aim to drive past your previous organizational vision and be set on a timescale of three to five years.

3. Decide what that means this year

Once you have a longer term vision, it’s really important that you set what that means in the shorter and medium term. What does it mean this year? What are your annual objectives. How will you know whether you are on course to meet your objectives?

4. Hand down to department level

This is where the rubber starts to inch towards to road. Your vision gets cascaded down to the department level where they are tasked with setting targets and means of achieving their specific functions. This step really relies on the fact that you are able to trust your departmental management teams.

5. Implementation

Once you have your departmental annual targets and means you can start implementation of the objectives and means already created by your departmental teams.

6. Monthly or quarterly review

The review process is extremely important. It’s the interface between the leadership team and middle management. It’s a vital way of keeping the top down and bottom up aspects of your business strategy in sync. The monthly review process ensures good communication between management and leadership.

7. Annual review

At the end of the annual cycle a thorough review is necessary in order to measure how far ahead or behind the original objectives the company is. It is at this stage that some of the next year’s objectives may need to be re-calibrated.

As you can see this approach ensures that leadership and management are aligned at every stage. It has inbuilt feedbacks which enable it to modulate the objectives as the situation changes. Many practioners still find this an extremely useful tool, and we hope you will too!