Toyota’s Hoshin Kanri (Strategy Management)
Hoshin Kanri is Japanese (Strategy Management). Hoshin Kanri as a method was initiated by Toyota in the 1960s and has spread worldwide. This article explains how Toyota does the Hoshin Kanri and what the difference between Hoshin Kanri and Goal Management.
What is Toyota’s Hoshin Kanri?
Hi, this is Mike Negami, Lean Sigma, Black Belt.
Today’s topic is from this request:
“Mike, would you please teach about ‘HOSHIN KANRI Planning?”
Sheraz, thanks for your request. If any of you have any questions or video requests, please ask me too.
The word, Hoshin Kanri, is Japanese. The direct translation is ‘Policy Management’. Some people call it ‘Compass Management’, but I think the best translation is ‘Strategy Management’. You’ll see why I said that in this video.
Hoshin Kanri as a method was initiated by Toyota in the 1960s and has spread worldwide. That word, ‘Hoshin Kanri’ became an English phrase now. Let’s see Toyota’s statement about it on their web site:
While clarifying as a ‘Company Plan’ consisting of three parts: ‘Basic Plan’, ‘Long-term Plan’ and ‘Annual Plan’, we established a system, ‘Hoshin Kanri’, to expand the Company Plan and follow up with each department.
Toyota started using Hoshin Kanri company-wide in 1963 and has continued using it.
In a company, the top makes a strategy on what the organization will do in the future and the employees are supposed to follow those plans. However, in many companies, those plans lack substantial follow through by employees.
Toyota’s Hoshin Kanri is a method for how to manage strategy well and achieve it.
Toyota’s Hoshin Kanri starts from having all employees make their own strategies.
So how does Toyota do that in practice? I would like to introduce one great web site, but that is in Japanese, so I’ll translate for you.
The author is Mikiharu Aoki, Toyota’s former manager.
In Toyota, company plans are made every year. The president’s plan is issued, department plans are created based on it, and sub-department plans are created based on their department plan. From the front-line managers to all employees, they make improvement objectives and goals.
You have to make plans in a way that if all employees in a department achieve their goals, the department’s goal can be achieved.
When finalizing plans, they have to receive approvals from their supervisors.
From Mikiharu Aoki’s Blog Site (in Japanese) translated by Mike Negami
From higher managers and downward, everyone plans for their department or themselves based on their one-higher level’s plan, so no one can be passive.
This method makes sense because people are much more motivated with the plans they made on their own than those given. This literally makes all employees work in the same direction.
Those plans have flowed from the top to downwards, but the flow will be reversed in the next step. It’s important to organize all plans along the way. If all front-line employees have achieved their plans, all sub-departments and departments’ plans should be achieved and eventually the company achieves the president’s plan. (See the image below.)
Toyota’s Hoshin Kanri is based on the PDCA Cycle.
All employees work with their own plans. Toyota’s Hoshin Kanri is based on the PDCA Cycle.
At mid-year and the end of the fiscal year, all employees write their progress on an A3 size paper and report it to their supervisors. This is the famous A3 Report. I made a post and template about it, so please take a look at this: ⇒ “A3 Report that Toyota Created, Template and How to Use it【Excel Template】”
In the English-speaking LSS world, there is a word ‘Hoshin Kanri Catch-ball’. At meetings, the supervisors not only listen to the reports, but should also give feedback and advice, and exchange ideas with each other so that they can improve the frequency and quality of meetings. We should do it in both directions like playing catch with a ball.
They also set up presentation meetings to share improvement ideas and best practices. They will be used for the Hoshin Kanri of the next year.
Difference between Hoshin Kanri and Goal Management
Lastly, let’s talk about the difference between Hoshin Kanri and Goal Management.
Please look at this image below. I quoted this from the web page of Toyota Foundation. The horizontal axis is the passage of time, and the vertical axis is the degree of progress in performance.
From the Toyota Foundation’s web site (in Japanese) translated by Mike Negami
We set goals and make improvements through PDCA cycles every day. This is Goal Management and they call it Daily Management. This will strengthen quality assurance.
Additionally, it’s Hoshin Kanri to direct the PDCA Cycles strategically. By that, your company can create totally new value and quality for your products and services.
Toyota is a great company. They disclose such know-how to the world without hesitation, so they are very respected from all over the world.
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