What is Hoshin?

In common with traditional strategic planning processes, Hoshin starts by establishing the direction the organisation wants to go. Whilst the initial steps in developing the strategy (understanding at the external environment, assessing internal capabilities, identifying from this where the organisations want to compete) follow a traditional path, what happens next i.e. how this strategy is then translated into tangible objectives and executed, does not.

With Hoshin, the emphasis as strategy is developed is on focus and clarity. Strategic ambitions are translated through informed and facilitated discussion into an unambiguous definition of the destination the organisation is aiming to get to (what is known in Hoshin terms as the True North) and the critical few breakthroughs the organisations needs to make in the next 3-5 years to get there.

Focus for most leadership teams is difficult. Leaders, in particular, frequently overestimate what can be done – what might be perceived as a relatively small number of items at their level rapidly becomes a much larger number of things to do at the frontline. The challenge in setting up for successful execution is to decide what to do but also to make active decisions about what not to do. Hoshin creates focus by forcing us to choose one or two critical breakthroughs we will work on.

As the strategy is then deployed or cascaded, a second critical difference is in how drives alignment by promoting engagement. Strategies are not executed by leaders. Unless the plan is realistic and has been developed in conjunction with the team that will implement it, the plan is unlikely to be successful. Hoshin drives engagement through the ensuring there is both vertical, and horizontal, dialogue as goals are deployed and actions defined – a process known as “catch-ball”.

Finally, Hoshin brings rigour and discipline to both the planning and review of execution that ensures leaders stay focused on moving dials not just progressing actions. Hoshin reviews focus quickly in on the root causes for any deviations from expected outcomes and the clear expectation is that managers come to reviews prepared to share their mitigation actions.

The foundation of Hoshin Planning is a systematic 3 stage process that first translates strategy into measurable outcomes, converts these specific actions and then drives the execution of these actions, course correcting where necessary, until the desired outcomes are achieved.

The goal of this first stage in the Hoshin process is to establish consensus around where the organisation wants to be in the mid-term (next three to five years) and then identify key breakthroughs needed to get there.

In most organisations, whilst time has typically been spent by the leadership team developing a strategy, this strategy and critically the choices it implies, often lacks the clarity needed to identify meaningful breakthroughs. As a consequence, the first step in the strategy refinement is to take all the available inputs, test alignment and identify gaps in thinking and from this develop a clear shared vision of the longer term direction of travel (known in Hoshin terms as the “True North”) and from this a clear unambiguous three to five year mid-term destination that can be defined in quantitative terms.

Having confirmed the mid-term destination, the second step of the strategy refinement process is to “look back” from this destination to identify the one, or two, game-changing breakthroughs that were needed for the organisation to move towards this destination.

The second stage of the Hoshin process is focused on translating these breakthroughs into measurable outcomes at all levels (in the form of leading and lagging indicators) and identifying the right actions (in the form of programs and projects) needed to achieve these outcomes.

In this stage of the process, our experience is that the key to success lies in both the quality of the causal thinking and the degree of participation and engagement in the goal deployment and action planning process. It’s here that the Hoshin concept of “catch-ball” comes into play. Through a facilitated “catch-ball” process the team members with the best insights into the constraints and possibilities are systematically involved in the cascade of objectives. The result is not just a plan which is more robust and executable but also a high degree of buy-in and belief in the plan.

Typically synchronised with the annual budgeting cycle, the key output of the Strategy Deployment stage of the process is clarity on the actions that need to be initiated, who is accountable for their execution and how the success of those actions will be measured.

Stage three of the Hoshin process focuses on driving systematic execution of the plan that was formulated and deployed in the previous two stages. The key to success in this phase is establishing a monthly “execution” cadence in which the progress towards key outcomes is tracked, the root causes for any divergence from targets understood and corrective actions initiated where necessary to ensure the targeted outcomes are achieved.

Establishing this discipline in the face of urgent operational priorities can be difficult, but our experience is that without this review cycle in place, execution outcomes are rarely, if ever, achieved.

Taken together, the three stages of the Hoshin process can be thought of as a closed-loop process, the feedback from execution and environmental changes driving on-going course-correction, and where necessary, refinement of the strategy.