The X-Matrix: Don’t Start 2024 Without This Strategic Planning Tool (Includes Free Template)

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Today marks the last Sunday of 2023, a time of year when, like the ancient Roman god, Janus (for whom the month of January is named), many of us as leaders find ourselves facing the past while also facing the future.

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Reflections on past operational and financial performance, combined with economic trends, can help us forecast and prepare for the future growth of our companies.

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This is why strategic planning is important. It gives you and your leadership team the ability to formally document business growth plans. However, documenting a strategic plan and actualizing that plan are two different things.

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And this is where the trouble can begin. I recall reading in an old Harvard Business Review article that one of the primary problems with strategic plans is that they are long on planning and short on execution.

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That’s where Hoshin Kanri can save the day.

What is Hoshin Kanri?

The Gemba Academy defines Hoshin Kanri as...

?“…a systematic process for tackling long-term strategic goals through day-to-day operations, built-in review processes, and training activities that support continuous improvement.”

The two Japanese words, “Hoshin” and “Kanri” loosely translate to “policy” and “direction,” respectively. This is why it’s also known as Policy Deployment. Specifically, it’s a Lean Six Sigma tool used to help companies link overarching strategic goals with the specific activities required to accomplish those goals.

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As the above picture shows, the Hoshin Kanri strategic planning process involves seven steps:

1. Establish the Organization's Vision.
2. Identify Breakthrough Objectives.
3. Develop Annual Objectives.
4. Deploy Annual Objectives Throughout the Organization.
5. Implement Annual Objectives.
6. Perform Monthly Reviews.
7. Conduct Annual Review; Discuss Lessons Learned

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Hoshin Kanri encourages a level of transparency and cross-departmental communication that may not currently exist as a part of your company's culture. One of the best ways to facilitate this transparency and communication is via an X-matrix.

What is an X-matrix?

The X-matrix is a one-page document (usually an Excel spreadsheet that has a large X in the center of the page) designed to summarize your company’s long-term strategic goals and link them to specific annual objectives, projects, and metrics that, when implemented and tracked, ensure those long-term strategic goals are ultimately met.

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It also includes a RACI-like component in that it identifies the people responsible and accountable for driving results. This tool single-handedly takes a traditional strategic plan and, through the Hoshin Kanri process, shows a holistic approach to achieving growth and scale that can easily be shared with stakeholders. Although it may not be shared with everyone in your company, it certainly provides a foundation for communicating operational priorities.

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?? People get more done when they know how their work aligns with and contributes to the company’s overall growth.

Look at the above, color-coded X-matrix image. Here's how it works:

1. Green Section: Start in the bottom quadrant of the X-matrix. Identify breakthrough objectives that your organization wants to achieve in the next three years. These tend to be financial in nature (i.e., "achieve double-digit growth in three years").
2. Blue Section: Move about the X-matrix in a clockwise position. In the right quadrant, identify the annual objectives that can realistically be accomplished that correlate to the breakthrough objectives.
3. Pink Section: Move to the noon position or top quadrant of the X-matrix. This is where you will list the specific projects or initiatives that ensure your organization meets the annual objectives.
4. Orange Section: Move horizontally across the X-matrix from the pink section and list all of the people who will either be responsible or accountable for the projects and initiatives listed in the pink section.
5. Yellow Section: Go back to the left quadrant of the X-matrix (the 3 o'clock position). Identify all the Key Performance Indicators (KPIs) and other metrics that, when monitored, will determine the success of the identified projects and initiatives.
6. Show the correlation between the information between all sections of the X-matrix by checking a box or placing some other marker. This is what the checkbox shown in the above image represents. It shows how certain projects in potentially different departments "roll up" under a larger annual objective, which in turn aligns with an even larger, breakthrough objective.
7. Complete specific action plans to track performance against the information identified in the X-matrix.
8. Follow the remaining steps of the Hoshin Kanri process to conduct review meetings to track performance.

Remember, the goal of the X-matrix is to provide a high-level summary so keep the list of objectives and priorities to a manageable number, usually anywhere between three and five. The image below shows an example of a completed X-matrix.

Why Hoshin Kanri Matters - A Short Case Study

Kenya Moses, an executive at NSI Industries, has used Hoshin Kanri and the X-matrix for the past 19 years. He credits both the process and the tool for being able to quickly link accountability and execution for an organization to achieve its strategy.

As someone with deep operations experience who has worked in companies of various sizes in his career, Kenya's seen transformative results firsthand. Below is a sample of some results he and the management teams he's been a part of were able to achieve as a result of using the Hoshin Kanri strategic planning process. It includes representation in different functional areas across three different companies with revenues ranging from $30 million or less to over $10 billion:

• Sales: a division’s revenues increased organically by over 20%.
• New Product Development: a company’s product vitality index increased from 8% to over 30%.
• Operations: a division’s operational productivity increased by greater than 10% year over year.

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All of the above examples contributed to an increase in each company’s EBITDA, a common financial metric that is used to measure cash profit generated by operations.

It's Time to Link Thinking with Doing

In the previous article, you discovered ways to channel boredom into developing your next innovative idea. Well, now it's time to make that idea come to fruition. Download a free X-matrix template here. Note that there are usually several other pages included with an X-matrix to document action plans and progress reports.

There is a real concern about falling victim to spending valuable time completing an X-matrix but little or no follow-up. When asked about this, Kenya advised, "...the process should be championed by the executive team with a primary person responsible for facilitating the monthly reviews."

If this primary person doesn’t exist in your company or if you think that person's ability to be objective can be compromised, then consider hiring a third-party consultant who can facilitate the review sessions, offer a neutral position, and hold you and your leadership team accountable.

That's where my team and I can support you. If you want to learn more about the Hoshin Kanri strategic planning process and how to use the X-matrix to link your organization's strategy with execution, then schedule a free 15-minute discovery call with me.

Start 2024 with a plan that will catapult your organization and its operations to the next level! Sign up for a free 15-minute discovery call now!

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About the Author

Alicia Butler Pierre is the Founder & CEO of Equilibria, Inc. – an operations management firm specializing in increasing enterprise value for fast-growing small businesses. She’s a software inventor, a two-time Amazon bestselling author, and producer of a top 2% podcast.

Alicia is also an adjunct instructor of Lean Principles at Purdue University and serves as the USA Chair of the G100’s Micro, Small, and Medium Enterprises. The Process Excellence Network recognized her as a Top 50 Thought Leader in Operational Excellence. A chemical engineer turned entrepreneur, she’s designed and optimized processes for small businesses, large enterprises, non-profits, and government organizations alike.