What is Hoshin Kanri?
Hoshin Kanri, often translated as Policy Deployment or Strategy Deployment, essentially means “North Star”. These are the things you're leading the team to achieve to improve your business.
Essentially, it’s the vital few things you've got to do over the next year to turnaround a difficult situation or stay ahead of the competition. As you already experience as a lean leader, all eyes look to you when it comes to strategy.
You personally often lead, create, and execute the lean strategy whilst still having to run the business at the same time. So, a simple Hoshin process with the right volume of activity on is critical for it to be manageable.
With Hoshin Kanri, less is more or as Jim Womack put it once; "Hoshin is the discipline to de-select". The aim of this blog is to show you how less can be more.
Why does Hoshin Kanri / Strategy Deployment matter?
Let’s say the large arrow on each side is the direction we’ve decided the business needs to go in strategically. The smaller arrows inside are people’s improvements. On the left, without alignment to a focus, peoples’ kaizen efforts are useful but less effective. We’ll move slower. Consider the 2 arrows in the image at the top of this blog, the right hand side of the picture is a good place to be. On the right hand side, creating the single clear focus gets people making improvements in the same direction, and we’ll move quicker.
The business still has to be run while we improve it. For a leader it’s tempting (and quicker initially) just to do the thinking for people and tell them what needs to be done by cutting out the catch ball bit. This does nothing to grow capability and leads to groundhog day.
Let’s turn to a story to emphasise the point. "Zen in the Martial Arts" is one of our favourite books and contains 28 concise, wisdom filled chapters with titles like: "Empty your cup" "Process not product" "Even the masters have masters" "Lengthen your line" "Go with the current"... ...all resonant for lean thinkers. Here's a typical story from the book related to “crisis”:
A Chinese Zen master and a student are out for a walk one day. The master points out a fox chasing a rabbit. 'According to the ancient tale, the rabbit will get away from the fox,' the master said. 'I disagree,' said the student. 'The fox is faster.' 'But the rabbit will evade him,' insisted the master. 'How can you be so sure?' asks the student. 'Because the fox is running for his dinner and the rabbit is running for his life,' came the answer. Our take - in essence, if you are running for your life, you tend to post a pretty good qualifying time. There is a strong chance that a team fighting a common crisis will outperform a team that is not (strong leadership is something of a pre-requisite here). The tricky thing is to successfully frame a crisis as a good thing to spark change for the better. However we phrase it – backs against the wall, backs against the water, when the going gets tough, the tough get going – there is an opportunity to rally around a common need.
3 types of lean leader - it’s easier if you have a crisis!
If you're a Managing Director or a CEO you have an active choice to be 1 of 3 types of strategic lean leader - to form a strategy based either on…
Type 1 - Actual Pain (a crisis – see the rabbit and fox above)
A leader who grasps a real crisis as a silver lined opportunity to drive the business to a leaner state.
Type 2 - Potential Gain (an opportunity)
This is an ‘easier’ place to be but still needs effort – you’re doing fine as a business (at the moment!) but an opportunity is there for the taking. Perhaps the chance to win new business in a new sector that needs you to up your game a little.
Type 3 - Created Pain (an artificial crisis)
This place is occupied by impressive leaders. Leaders prepared to break things that are working. Leaders with a hansei outlook on life. These leadership teams are never satisfied and artificially create a crisis, Toyota style, to rally the troops and focus all efforts in a common battle.
I guess there’s a “do nothing” 4th option as ever. You’ll quickly realise the foolhardiness of this route however, as over time, your competitors edge past you.
Toyota’s Journey and the Toyota Way
Toyota morphed over time (Sudden Unintended Acceleration 2009 issue to one side) from Type 1 to Type 3. In the early years of 1945-65 they fought to survive, including near bankruptcy in 1949/50 due to a prolonged labour union strike.
Lean people tend to romanticise about the roots of lean. Taichi Ohno's "last fart of the ferret" explanation, below, puts that myth to the sword. The quotation comes from a great article by Jinichiro Nakane and Robert W. Hall called "Ohno's method". Nakane and Hall, in a section entitled “An excellence culture is a survival culture” wrote;
“When TPS was in the making, Toyota, constantly near bankruptcy, was motivated by survival. (Late in his life, a British journalist for The Economist asked Ohno why TPS developed. Ever a crusty shop man, he said it was "the last fart of the ferret." When a ferret is cornered, it emits a powerful stench, something like a skunk.)
More than money motivated people. With survival at stake, within Toyota the inspiration to develop TPS has been described as "fighting a war."
Everywhere, when collectively in deep trouble, old ways obviously not working, and no point left in protecting anyone's status quo, people set aside their differences.
Ohno's assertion was that crisis, whilst painful, is a tremendous catalyst in the right leader's hands to fundamentally change a business for the better.
In more recent years they’ve embraced “Conditional challenges” designed to encourage managers to test the threshold of the organisation’s capability, by forcing them to starve the business of something in an incremental way. Simple example, reallocating 1 operator off a strongly performing line to introduce the need to surface and implement kaizen more quickly i.e breaking things before they’re broken.
Interestingly, at a higher level there is always a grand vision Toyota goal, something like “to make the air cleaner than it is already”
The power of storytelling in Strategy Deployment
My favourite ex-boss, the now-retired Manufacturing Director of a global manufacturer, had the advantage of being both knowledgeable and entertaining. Not unicycle-and-bucket-of-glitter-entertaining, but he was a storyteller. I knew when he had an important point to get across as he would start a story and, sure enough, I would pin back my ears and try to pick the bones out of what he was saying. Take forklift trucks, for example. We had been in one of our factories the previous day and were talking about it.
'I didn't sleep so well last night,' he said.
Politeness dictated my response: ‘Oh, why?’
'I had a nightmare,' he volunteered.
He proceeded to tell me, without smiling, that his biggest nightmare was being hit by a forklift truck in one of our factories. He then added:
'Do you know what my second biggest nightmare is?' 'That its forks will be empty when it hits me,' he said, without the hint of a smile.
These two sentences were all I needed in terms of direction. We needed to improve the safety of the forklift truck (FLT) driving across our 17 factories urgently, then improve their drop-offs and pick-ups – think Eddie Stobart – in the short term. Long term we’d work towards getting them off the factory floor altogether, with right sized packaging, delivery quantities, etc. I derived all this from a small verbal exchange, such is the power of storytelling.
This ability to focus people’s improvement efforts is an underrated skill, lost amongst the technical speak of Hoshin Kanri / Strategy Deployment.
Yet, in current times, who has the time to coach individually? The example below shows that it’s possible to set the direction quickly and involve the team.
Setting Direction quickly and elegantly
“Zero paper on the floor”
This company ran a large number of injection mould machines feeding a large number of assembly areas inside the factory. Between the two was a significant inventory area of moulded parts ready for the Assembly lines. The assembly and mould areas built to different schedules so they weren’t connected through a pull system – sell one, make one. This led to the usual wastes of overproduction & inventory.
Each trolley of moulded parts had a paper label, referred to as a ‘kanban’, which served no signalling purpose and was basically a label to identify the trolley contents. How to get the team to tackle the disconnect and inventory waste between the mould and assembly areas? You could talk about pull systems and start putting a plan together to Value Stream Map and establish pull throughout. This is jumping to solutions and the team should do this hard thinking, the leaders’ job is to see the problem and frame the challenge.
Now imagine the MD starting with the comment “I think we should target zero paper labels on the floor in the mould stock area” Apart from spurring discussion about why this matters, the only way to achieve this is to eliminate paper and have something that recirculates. To avoid these circulating labels ending up on the floor you have to limit the amount and, hey presto, you’re halfway to setting up a Kanban system.
Three takeaways
THE WHAT
if you're an MD/CEO lacking a crisis OR the desire to change the status quo, don't pay for consultancy help. Save the money, create a small crisis to align people around and get learning, or perish eventually.
THE HOW
I’m urging you to define the business need in a simple “zero paper on the floor” style, then set the task for the team to decide how to achieve it and help out along the way.
THE HOW MUCH
Don't be the leader who packs 50 things onto your Hoshin Kanri because you believe that, if they achieve half of them, then that's 25 things achieved, which is more than if you just started with 20. THat twisted logic defies human behaviour - it just doesn't work that way. People have to run the business, as we've said, and an overstuffed hoshin will lead them to do the minimum to tick the box to get you off their back. You're prioritising Quantity over Quality.
To truly engage our people, we’d also do well to follow the advice of Pascal Dennis when goal setting; “give something for the head, something for the heart”.
We’ve distilled 20 years in lean manufacturing working with some of the best manufacturers in the world into a simple, proven way to manage your Hoshin Kanri process.
Hoshin Kanri 3 Step process
We've got a simplified 3-step process that will help you tackle the most vital tasks and achieve greater success with Hoshin Kanri. We’ve distilled 20 years in lean manufacturing working with some of the best manufacturers in the world. Download your copy here.