Hoshin Planning is one of the titles commonly
used in the Western world to describe Hoshin Kanri. This is a system of planning and
deployment which evolved in Japan from
Management by Objectives (MBO) and now used around the world by many leading
Hoshin Kanri involves every part of an organization:
first in selecting and defining a small number of key corporate goals; and then in
contributing to the accomplishment of these. It is one of the pillars of Total Quality
Control as practised in Japan, and similar approaches have been developed by a number of
the Western companies which are pioneers in the field of quality management.
Hoshin Kanri differs from other systems of planning in
that it makes extensive use of quality management principles and techniques. It may be
thought of as quality management applied to the process of corporate planning.
The original development of Hoshin Kanri is
inextricably entwined with the spread of quality management principles and practices
within Japanese industry. These principles were first introduced by the Japanese Union of
Scientists and Engineers in 1950, in an eight-day course with Dr. Deming as the guest
lecturer. This led to the widespread use of the PDCA cycle (plan-do-check-act) and the
'seven QC tools' for the management of virtually any operation. This phase might be called
Statistical Quality Control (SQC).
The idea of an integrated company-wide management
system, bound together by a planning system, began to develop in Japan during the 1950's
and 1960's. This was heavily influenced by:
- the Deming Prize, established in Japan in 1951, which from the outset
called for a system of planning
- Peter Drucker's book The Practice of Management, which proposed
Management By Objectives (MBO). This was published in Japanese in 1954
- General Motors' divisional system, which was a novel concept at that time
- Dr. Juran's lectures on general management.
By the late 1960's many Japanese companies had
implemented MBO, and a number of leading companies � Bridgestone Tire, Toyota,
Komatsu Manufacturing, and Matsushita � had developed their own innovative
approaches, going far beyond the original concept. These innovations, which would form the
basis for Hoshin Kanri, sprang from the formidable expertise in SQC which these companies
had established, which at that time existed only in Japan.
The term 'Hoshin Kanri', referring to this new approach,
became widely accepted in Japan in the mid-1970's. By the late 1970's the experience
accumulated in industry had been distilled into a formalization of the principles, and the
first books on the subject appeared. The first symposium on Hoshin Kanri was held in Japan
in 1981, and in 1988 the Japanese Association of Standards published a series of works
dealing with Hoshin Kanri practices.
In the USA, a few leading companies began to implement
their own versions of Hoshin Kanri during the late 1980's, including Hewlett-Packard,
Procter & Gamble, Florida Power & Light, Intel, and Xerox. Many of these companies
have shared their experiences in the public domain, but Western literature on this subject
started to become available only in the early 1990's.
Various names for this approach have been used in the
West such as 'Hoshin Planning', 'Management by Planning', and 'Policy Deployment'. These
are approximate translations of the Japanese phrase. None of them captures the subtleties
of the original meaning, and all are slightly misleading in some way. However, none of
these terms is in very wide circulation, even in those companies implementing Hoshin
Planning. Most employees are simply aware of the workings of the system in use, and only a
few specialists need to know more than this. The common English name 'Hoshin Planning' is
used in this paper.
Benefits of Hoshin Planning
The benefits of Hoshin Planning include:
- communicating the organization's vision as the starting point for all
planning; as well as communicating business goals, major shifts in direction, and
important new initiatives
- emphasis on a thorough analysis and understanding of problems which
occurred during the previous cycle of planning/deployment. This helps ensure that new
goals are based upon a sound understanding of the organization's current capabilities and
opportunities for improvement
- involvement in planning of those who will carry out the implementation.
This helps ensure that the goals are understood, achievable and 'owned' by those who have
to achieve them
- alignment of departmental and individual efforts throughout the
organization, all in support of the vision and the business goals. In this way many small
achievements can complement each other in key areas of performance � to sustain
improvement trends, or to create a step improvement (a 'breakthrough')
- a built-in continuous improvement cycle � to refine each annual
iteration of the plans, as well as to improve the planning/deployment process itself.
What is Hoshin Planning?
One way of understanding Hoshin Planning is to
picture a typical well implemented Management By Objectives system, and then to explore
the possible differences between this and a Hoshin Planning system.
MBO as we know
The MBO system might include the following
- a review by top management of information about: the company, including
past financial results, market share trends, product margins and costs; the activities and
performance of competitors; trends in the economy and in the chosen marketplace;
technological developments; and so on
- examination of various strategies and prediction of outcomes; selection
of a few key strategies; and quantification of the goals � the corporate outcomes
sought, both long-term and short-term
- deployment of the chosen goals and strategies throughout the
organization, so that each department undertakes to achieve some portion of the whole (for
example a certain reduction in costs), and the sum of these individual goals equals the
total goal. Each department will have a plan for achievements of these goals on (say) a
- a thorough system of review and follow-up so that the performance of each
department is reviewed (say) on a monthly basis against its plan, any shortcomings can be
identified and investigated immediately, and corrective action can be instigated.
Contrast with Hoshin Planning
A mature Hoshin Planning system has, in addition, the
following characteristics. Some or all of these may represent significant differences from
the MBO system just described.
- the system encompasses both control and breakthrough. It is founded upon
a system for control, often called the 'daily management system'. This is the day-to-day
management of processes throughout the organization, with measurements reviewed
frequently, and reported upwards and consolidated to show overall performance related to
business objectives. This system also indicates where the current capabilities fall short
of the needs of the organization, and this is one of the important inputs to the selection
of the top-priority goals (Hoshin items). Once Hoshin items are chosen, additional
resources and attention may be devoted to these, and the accomplishment of these goals is
monitored by the Hoshin system. This can be pictured as a set of improvement projects,
chosen to achieve a few top-priority goals, overlaid on the routine management of the
- the system makes effective 'connections' all the way from the
organization's long-term vision and business objectives to the day-to-day activities of
supervisors and front-line employees. From the long-term plan flows the annual plan, with
the priority goals for the coming year. This in turn is supported by many lower-level
plans which are progressively more detailed and more short-term. And with these different
planning horizons go different review cycles. Routine or detailed activities are reviewed
daily or weekly, while overall progress is reviewed by different levels of management
monthly and/or quarterly
- the system is conceived as a PDCA cycle, but with the sequence changed to
CAPD � i.e. the 'check-act' phases comes first. The first phase is a thorough review
of the previous year's plans and outcomes, and a thorough analysis of where, how and why
the outcomes differed from expectations. Standard quality techniques are used, such as the
'seven QC tools' and root cause analysis, to identify the fundamental causes of problems.
Over-achievements are analyzed in the same way, since these are also unexpected results
which may contain some valuable nugget of learning.
- most of the items in the plans are related to process improvements of
some sort. Since process improvement is a continuing activity, and since the gains are
cumulative, a thorough analysis of last year's efforts provides a lengthy list of possible
activities, any of which will yield further gains. Analysis of failures will reveal the
root causes, and thus a course of action more certain to succeed next time. Analysis of
successes highlights courses of action which proved successful, and which can be
reinforced, repeated, and standardized. Even external events completely beyond the control
of the organization are scrutinized during the review, to determine whether the planning
process could have enabled the event to be foreseen, or the risk hedged in some way. With
this type of information available, much of the groundwork for planning is already done,
and the remaining task is to select and prioritize actions.
- the planning/deployment process itself is subject to the same type of
thorough review and analysis, so that it can be improved. This built in improvement cycle
is one of the reasons that Hoshin Planning, although sprung from MBO, is now very
- the process by which the corporate goals are arrived at is a
participative one. Discussions of possible targets (and means of accomplishing them) take
place at every level in the organization. The intent is to give everyone the opportunity
to provide input before the goals which affect them are finalized. This process is known
as 'catchball' � for the game in which a ball is thrown repeatedly from one person to
another in a group. The outcome is that everyone in the organization can understand how
their own efforts contribute to the grand scheme of things, and no individual or group has
imposed on them goals which they do not feel able to achieve
- the various aspects of the plan (goals, the components of the goals, the
relationships between them, responsibilities, milestones, etc.) are captured and
documented in considerable detail, using formats which are standardized throughout the
organization. These formats also show how senior management goals are translated into more
specific goals at the next level, and so on
- the goals deployed are of two types � quantified targets, and the
actions required to achieve these � and these are closely intertwined. No
be adopted unless the means of achieving it have been agreed, and both
become part of the plan. A series of matrices is often used to capture both of these
dimensions of the plan. This matrix also helps to verify consistency � all targets
should be supported by appropriate courses of action, and no course of action should be
adopted unless it supports one or more of the targets. Annual targets are translated into
trends or anticipated periodic results which can be tracked during the year, and actions
are assigned milestones for tracking completion of intermediate tasks. The final plan is
therefore a complete interlocking fabric: of scheduled activities which can be pursued to
completion; and of the quantified outcomes which should flow from these actions during the
- when a unit is not meeting its targets, then help is provided. This is
not the type of so-called 'help' provided in many organizations: in which senior
management interfere or take over, reverse local decisions, and leave local management
tarnished with blame. The aim is to gain an understanding the underlying causes and to
deal with these.
Relationship to Other Methodologies
No system of continuous improvement can be
complete or fully effective unless it embodies an effective planning and deployment
system. Without such a system there is a tenuous connection between business goals and
employees' daily activities, many corporate management decisions lose their force, and
purposeful change of any sort becomes difficult. This system is also the 'glue' which
helps bind together all kinds of activities in an organization, including the various
other quality management methodologies and techniques which may be in use.
Although some basic system of planning and deploying
goals is essential to the successful launch of a quality improvement initiative, Hoshin
Planning is unlikely to be on the agenda of most organizations during the first iteration
of their improvement plan. Changes leading towards this type of planning system may be
worth considering during later iterations.
Hoshin Planning cannot be simply 'installed' in
an organization. The potential benefits can only be won by trying to understand and apply
the principles to the organization's particular situation, and by progressively learning
from this experience.
The following considerations should be taken into
account in deciding when and how to apply Hoshin ideas and methods to improve your
- Virtually every organization already has some kind of planning and review
system. This cannot be scrapped or replaced overnight � it must be evolved from what
exists today. This evolution may be in large or small steps, but it should be purposeful
re-engineering, rather than tinkering.
- Since introducing continuous improvement involves change, a planning and
review system which works is essential from the outset. Without planned action and
persistent follow-through, sheer inertia will usually maintain the status quo.
- Even a fairly rudimentary planning and review system � if diligently
applied � can suffice to deploy the start-up phases of an improvement
initiative. (Such a basic system will not, however, support the achievement of ambitious
- Improving the annual planning system is an inherently slow process,
compared with improving a system which repeats on a daily or hourly basis. There are fewer
opportunities to make adjustments to the system, to observe the effects, and for the
people involved to gain experience of the modifications. The time required to develop a
mature Hoshin Planning system is generally five years or more, starting from the base of a
sound, fully deployed (MBO) system.
- Some of the concepts of Hoshin Planning cannot be applied until other
elements of continuous improvement and quality management have been learned. For example,
in a mature Hoshin Planning system, plans are based upon a thorough understanding (and
measurement) of current capabilities, and an analysis (with root causes) of current
problem areas. This type of information is simply not available until the organization has
developed some competence in process management. Another example is the use of matrices to
record targets and means, to check consistency, and to deploy goals to lower levels in the
organization. Much of this will seem strange and unwieldy to management teams which do not
have experience with some of the 'seven planning tools'.
Together, these considerations David Hutton suggests the following
- If the current planning and review system is simply 'broken', then this
needs to be addressed as soon as possible. For example, if corporate management decisions
often go unrecorded, or if there is not enough follow-through to ensure that decisions are
translated into action, then there is an urgent need to improve the system. Since only a
few changes can be made in any one year, only the most serious shortcoming(s) should be
tackled at first.
- Since improvement has to be evolutionary, each revision of the system
must be workable, and each change must be perceived as a step forward by those who use the
system. Feedback from users can help identify those changes which will make the system
more effective and improve it in the eyes of users.
- Because it takes a substantial amount of time to develop an effective
planning system for your organization, this system it should not be ignored until it
becomes a problem. It may be better to start work early on a long-term improvement
strategy, and thus have adequate time to implement this in small, easily managed stages.
- Make sure that the planning system is designed to help achieve the organization's business goals.
- Do not copy slavishly another organization's system.
- Start with the system that exists now. Do not introduce a new system in parallel with the existing one.
- Introduce change progressively, in easily assimilated steps.
- Strive to ensure that each change is seen as a step forward by users, and
that each set of changes results in a practical and workable system.
Units of Change
In planning this evolution, the following are typical
'units' of change which might be made each year, perhaps a few at a time. The list below
is not comprehensive, nor in any particular sequence:
- Ensure that plans are documented and linked to the review process in such
a way that every item is pursued to 'closure' (i.e. plans completed and commitments met,
or the reasons understood and changes accepted).
- Ensure that financial planning is coordinated with the planning cycle for
improvement (e.g. budgets are not fixed before other forms of planning begin).
- Introduce mechanisms to capture feedback on the planning system itself
� from users of the system at various levels.
- Broaden the scope of inputs, to include relevant information about
customers, employees, suppliers, performance of competitors, trends in technology, etc.
- Introduce a requirement for some quality improvement goals (e.g. for
achievement of some kind of process improvement), to complement financial goals, output
goals, personal development goals, etc.
- Reinforce the distinction between quantified outcomes (targets) and
actions required to achieve these (means). Provide a process for developing and recording
goals of both types.
- Introduce a self-assessment process to analyse historic data (e.g. to
identify the root causes of past variances from plan) and to recommend actions.
- Broaden participation in the process, to obtain the input, involvement,
and 'buy-in' of everyone involved before the plans are finalized.
-From the article written by David Hutton.
This paper provides only a brief overview of a
complex topic. The following materials provide starting points for further study and
- *"Hoshin Kanri � Policy Deployment for Successful TQM."
Yoji Akao, Author and Editor-in-Chief. 1991, Productivity Press, Cambridge, MA 02140.
- "Hoshin Planning � The Developmental Approach." Bob
King. 1989. GOAL/QPC, Methuen, MA 01844.