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Hoshin Management at Toyota

Hoshin management (a.k.a. policy deployment) is an effective tool for aligning an organization toward the achievement of broader goals or objectives and allowing that organization to react quickly to a changing environment. In a lean organization, hoshin kanri is generally an annual planning tool that aligns the organization’s long-term vision with its shorter-term activities while also aligning the efforts of people in the organization with the goals of the organization.

There are six primary components to hoshin. The first of these is company vision – the long-term vision of where the company wants to go, what it is, and what it wants to become. The annual hoshin complements company values. There are four phases to hoshin at Toyota:

  1. Strategic planning. Strategic planning has different levels in a broad sense, it can mean developing a ten-year strategic plan identifying the specific target market for the entire company. Hoshin is not used for this except as a vehicle for considering a set of short-term steps to achieve the long-term vision. Like other strategic planning approaches, hoshin identifies problems and opportunities based on company performance and other environmental data (including shortcomings from previous hoshin). This, in turn, can be used to develops a near-term, future-state vision based on these factors.
  2. Hoshin deployment. Deployment statements must be based on facts and data, be operationally viable, and be aligned with the six primary hoshin components. At each level of deployment, the participants go through a goal-negotiation process called catchball. This catchball process allows participants to develop a clear understanding of the hoshin and enables the hoshin recipient to “enroll” in the objectives.
  3. Controlling through metrics. Both results and means are measured and reviewed on a regular basis in a PDCA methodology.
  4. Check and act. During the year, managers measure actual progress against the goal and make necessary adjustments. In most cases, managers are required to develop a fallback plan that they can implement if the difference between the goal and reality is too great

A key to using hoshin effectively is to close the loop through rigorous reviews at each level. Each pair of levels must first agree on the critical few objectives for the year and how they will be measured. Although problems are addressed during this performance review, the meeting focuses on the hoshin – the specific objectives of the individual to meet the high-level strategic objectives.

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