Where to start with Hoshin Kanri (Business Strategy Deployment) in a not-yet-lean company?

This post comes again from participating in the dialogue at theleanedge.org by Michael Balle'.

The question of the week is:

Joel Stanwood: Where to start with Hoshin Kanri in a not-yet-lean company?
A mid-sized manufacturing company is finalizing its strategic plan and believes that it is time to begin Hoshin Kanri. The company is not currently operating as a Lean Enterprise -- functional silos create significant amount of waste which results in poor product/service quality and high cost to serve. Additionally, different departments and regions of the company are "pulling in different directions." What advice, resources, and lessons learned can you provide to the managers of this company to successfully organize and deploy Hoshin?

Thanks Joel for your question, I think it is one that many can benefit from. Based on my experiences with various industry I feel that this is a key area that is often discounted, and somehow organizations think through osmosis that the people just somehow know what they should be doing on a daily basis that cascades upward to “something” but not always a defined strategic business plan. I often ask the organizations I visit what their true north is and/or business indicators and to my surprise a common response is the”deer in headlight” look. If they do respond, most have a different interpretation of what it is, and how it pertains to their particular department and their role in it. Most people, unfortunately, react each day and all the standard work they know is to create a “work-around”.

For me personally, I’m not sure there is a specific “secret recipe” that meets the needs of every organization instructing them in a “standardized-linear- or a “cookie cutter” approach, as to when the different aspects of Lean thinking should take place within their journey. Many would like me to wave a wand and I truly wish it was that simple, I do tell them “it is simple, it’s just not easy”. I personally feel that each company has to create what is best for them, translate each business goal and ensure there is buy-in and understanding along the way as to why we are implementing certain tools that allow us to think and do business differently that meets customer need. The more direction you can give your people “vertically and horizontally” across the organization sets people up for success because it creates a line of sight that cascades the business goals from a 500 foot level up (process) to the 50,000 foot level (company true north). So vertically cuts upward to the CEO level to the process level and horizontally cuts across all the functional areas, this thinking is how you begin to bring the directional arrows upward to a true north versus the power point slide we have all seen with arrows going aimlessly in many directions with no rhyme or reason. I tend to call it “seeing through the same lens”. this process can drastically change the way you do business and create an internal infrastructure that fosters the develop of people and their role in the company. When you have these “quote” – silos, you tend to hear the words “we and they” versus “US”, US implies teamwork and direction that allows the value stream from order to customer flow with the best success for value added processes and development of people.

It has been my experience even within Toyota that all functional areas naturally have silos, it was an accepted aspect of our culture because we all had different roles and expertise we were asked to perform. As long as we knew the expectation and tried each day to work towards better processes of our internal and external customers then there was no problem with silos. Where it becomes dysfunctional is when there is an internal competition for blame when something isn’t meeting expectations or a cohesiveness within the silos to find root cause as a group. I jokingly refer to it as the “5 who’s and the root blame”. For example, manufacturing, engineering, accounting, and human resources are all natural silos and have their specific processes that “should” support the greater good of the organization. Again by nature this will happen and this is perfectly acceptable as long as each functional area has a directional goal towards a “true north” or vision that has cascading key performance indicators (KPI’s) such as quality, safety, productivity (delivery), cost, and human resources training and development. (Q, S, P, C, S, HRTD). So if there was business goals such as improve cost by 10% across the organization then I was taught to look at it in the following way at my time at Toyota and also how I try to guide organizations to think in regard to your question above. If this process is explained and rolled out properly with buy-in it avoids the dysfunction described above.

So the process I was taught by my trainers was the plant (TMMK) was given the Hoshin Kanri goals from our North American headquarters which was driven by Japan’s (TMC) goals (KPI’s) for us. Each plant in the U.S. was then given their yearly KPI’s (Q, S, P, C, HRTD); once the plant got those then it began to cascade downward with an understanding within each department how to meet those needs in order to meet the plant needs. I often thought of it or refer to in my sessions as “getting a finger on the pulse” in any area at any time through visualization/visual management of what should be happening versus the current state. More simply put- Plan versus Actual. So if cost was a focus each department looked at their cost and cascaded that downward to each group within that department, so for me that was the Plastics department cascading it down to my headliner group. Once I had the goal for my group I cascaded it downward to the teams within my group and then by process. So to try to visualize this based on how we were taught to cascade the goals in a “catch ball” viewpoint- take a look at the example:

50,000 foot level – Global goals
25,000 foot level – North American goals
10,000 foot level – Plant goals
5,000 foot level – Department goals
2,500 foot level – Group goals
1,000 foot level – Team goals
500 foot level – Process goals

This is what creates the line of sight to the Strategy deployment (Hoshin Kanri) based on what the customer needs us to be and how we raise the bar on ourselves at each of these levels 1-3-5 yrs out. I often ask several questions along the way from the process to the company goals that help me and others “link” themselves to the KPI’s.

1. What is my role in the organization?
2. What is my direct work responsibility with that role?
3. What is my jobs purpose?
4. What are the business goals that guide my jobs purpose?
5. What is the company’s goals (true north) that I’m contributing to?

This is kind of a individual check and balance process to ensure that people understand that they are an integral part of the process that allows the silos to work together as a team understanding how each are a very important piece of the entire pie that creates the recipe for success. If my true north states (an example) – Customer first attitude, with the highest Quality, at the lowest Cost, with the shortest lead-time (P), in the Safest Manner, all while respect all their people (HR). Notice this encompasses all the KPI’s and allows each person in regard to their area (or silo if you prefer that), know where they are in regard to the expectations. If you truly look at the value stream to the order to customer process and align the horizontal and vertical aspects of your organization then its a perfect countermeasure for creating an infrastructure (culture) that breaks down the silo thinking and can truly align the organization if you have the discipline and accountability to focus on processes versus 100% just results. I truly do not believe you have to be totally Lean to implement this thinking, if anything it will begin to guide you to asking specific questions and start to develop problem solvers at each level because processes start to become defined. It is a slow trickle effect that can give you small successes to gain consensus that this is a successful way to think and do business. It’s ALL about people and fostering their ability to think we just have to give them guidance, and coaching daily reminding them of their line of sight to the business goals. Simple huh? 
Until next time,

@tracey_san

Tracey Richardson