It's Strategic Planning Time - Are you Ready?

The Hoshin Kanri Strategic Planning process is one of the many crucial and truly underutilized tools available to every organization. I recently commented on a post from the Harvard Business Review about CEOs that felt that it was important for a business to be more than just making money, it has to have a purpose. The fact that we are still acting like this is a new concept is surprising, but simply just motivates us to push harder to educate organizations. An organization is run by a group of employees. These employees are a team, and a team without a common mission that they all believe in passionately is a team that is vulnerable to being lost and divisible.

Hoshin Kanri Strategic Planning and how it creates a uniting mission

Hoshin process developed in Japan during the 1960s from Quality Management practices in Bridgestone Tire company, Toyota, Nippon, Denso, Komatsu and Matsushita. It was strongly influenced by the Plan-Do-Check-Act (PDCA) of Deming and Management by Objectives of Peter Drucker.

The Japanese words hoshin kanri can be generally interpreted as direction (setting) often translated to “compass needle direction”. The words nichijo kanri can be interpreted as daily management. Daily actual versus plan. The blending of these two methods is key to the success of the hoshin process. The following provides a brief hierarchy of how this entire process is put together, cross functionally, with participation from every employee in your organization.      

Mission

Why are we here? If I ask an employee at a new consulting partner facility what the long term mission of their company is I will get a variety of answers including the most common "I guess I am not sure".

I asked a Whole Foods employee several years ago what their mission was and they said very clearly and passionately, “Whole Foods, Whole People, Whole Planet”.

In expanded form, the company’s vision statement is as follows: “Our motto – ‘Whole Foods, Whole People and Whole Planet’ – emphasizes that our vision reaches far beyond just being a food retailer. Our success in fulfilling our vision is measured by customer satisfaction, team member excellence and happiness, return on capital investment, improvement in the state of the environment and local and larger community support. Our ability to instill a clear sense of interdependence among our various stakeholders (the people who are interested and benefit from the success of our company) is contingent upon our efforts to communicate more often, more openly and more compassionately. Better communication equals better understanding and more trust.”

Simply and accurately, you need a strategic planning process to produce a true mission for your organization that all of your employees can rally around and just as importantly understand how they impact the organizations ability to achieve this mission.

Vision

What will it look like when you have accomplished your mission? This is the visual portrait that you use to paint a picture clearly explaining to your employees, customers, suppliers, and community what the organization will look like and how it will impact all the previously mentioned parties. This is the "ahhh" moment that translates a defined mission into a visual image. This is what must inspire your extended team to work passionately to accomplish something they understand and believe to be compelling enough to commit their careers to!

Goals

In order to win, an organization needs to understand what goals must be accomplished to fill in the brush strokes that paint the picture of the vision. These are not yet measurable, they are high level goals that align with the Mission and Vision previously developed. For example, "our goal is to provide the best product and service to our customer by":

1. being the lowest cost producer (not lowest price) of our product and service
2. Providing the highest level of quality consistency to align with our customer's needs
3. Providing the shortest lead time matching our customer's Takt (rate of customer consumption) time
4. Highest ratio of promotion from within the organization, retention rate, and employee satisfaction

And so forth until you are confident that the goals you have chosen, when reached, will match the vision allowing you to accomplish your mission.

Strategies

Well, the goals are not going to accomplish themselves. You are going to need to actually change your business processes in order to accomplish them. Strategies are typically high level process changes to your business. For example, in order to accomplish the goals shown above you may choose to deploy the following strategies in order of impact:

1. Deployment of visual scoreboards allowing for cross functional daily assessment of actual versus plan performance allowing the process users and their cross functional teammates to improve processes and solve problems and confirm the impact through the visual metrics contained in those scoreboards.
2. Deployment of process variation reduction systems allowing predictive and preventive measures to be implemented for new processes and understand the relationship between process inputs and outputs (regression analysis) to implement controls ensuring more consistency over time in the outputs of your processes.
3. Theory of Constraints deployment tools to ensure you are focused on your process constraint ensuring inputs and information flow faster through your systems.
4. Employee satisfaction surveys to be used as a method to adjust your overall business system to increase engagement, environment, sense of team, and other critical inputs in your organization.

These are just a few examples, the biggest thing to remember here is that many organizations attempt to deploy too many strategies simultaneously resulting in short term change followed by those strategies dissolving and leaving a legacy that "change is bad" within the culture. The reality is that it was the right change without the focus, time, and resources required to ensure its success. Be realistic about how many strategies you can deploy and error on the side of being conservative with the number.

Objectives

Simply put, the measurable version of the Goals. Using the visual scoreboards strategy discussed above, now employees can see where they started, where they are today, and how much further they need to go to reach their objective for the month, quarter, year, ....

Deployed correctly, the employees now can see how far they need to move the needle in order to accomplish the objectives, using defined well planned strategies, which move them closer to the goal, closer to seeing the vision, closer to accomplishing the all important mission.

Deployed correctly, the employees feel they have the support of the organization to make the changes that they know will move the needles. Deployed correctly, the process users are viewed as the process experts and have the respect of the organization as such. Deployed correctly, this is the fun part of the job for the employees and their cross functional team. There is a reason I keep saying deployed correctly, because it rarely is. When deployed correctly, it is a thing of beauty and drives constantly increasing levels of ownership, pride, accountability, and enthusiasm into your culture.

Actions

If you go to any department, you should see a visual scoreboard with all of their objectives discussed earlier. At the top, Row one, daily actual versus plan performance. Row two, performance over time (are we moving the needle in the right direction, how much, and is it consistent). Row three, Pareto analysis (what are the categories that still drive undesirable results?). Row four, actions.

Actions are all of the changes being made by all the employees, all aligned toward the common mission. Remember "compass needle direction" means your employees actions have to be aligned! You will start off with some actions at the end of your strategic planning process but this will NOT be all of the actions implemented throughout the year or even the majority. Continuous improvement is the constant study of how the work is done triggering creative improvements by the process users and their cross functional companions. "Row 4" discussed in the previous paragraph is going to churn constantly. "New, in process, complete, new, in process, complete." Plan Do Check Act (PDCA), the continuous improvement cycle that is so valuable but so misunderstood.

Most of the actions had better be coming from your process users and for many companies these are individual contributors. If this not the case, you are doing it wrong. If you are doing it wrong, it's ok, never too late to course correct. Remember, it isn't that people don't like change, they don't like being changed. Respect the people that do the work as the process experts, they do the job every day. Once the objectives section is complete, flow the plan down to them using structured communication. Ask them what they need to move the needles that far, allow those needs to flow back up for review. This allows you to adjust your final plan and have one that everyone has participated in and everyone will have a stake in.

Don't be surprised when you actually accomplish it!