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Hoshin What? Strategy Deployment and VSM

March 7, 2023

“What I love is when an organization embraces strategy deployment, also known as Hoshin Kanri, also known as policy deployment as its annual planning cycle methodology because that's what drives all improvement if you follow that philosophy. And so, you wouldn't go off, and improve another value stream that wasn't deemed high priority for that annual plan.” - Karen Martin - The Flow Sessions Episode 1

  • Hoshin Kanri is a Lean management method that ensures a company's strategy is carried out throughout the organizational hierarchy.
  • A key part of Hoshin Kanri is the continuous pursuit of improvement through tools such as PDCA and Catchball.
  • When Hoshin Kanri is implemented properly, it forces the leadership team to develop a vision and list of breakthrough goals, creates a series of complementary goals that ensure alignment, and provides the necessary leverage for successful execution.
  • The VSMC Implementation Roadmap is similar to a Hoshin Kanri execution, but Hoshin Kanri is meant to be specific to a single unique organization and time.
  • Hoshin Kanri must be adapted to the dynamic world we live in today by shortening communication cycles and creating a more fluid way of information sharing.

Watch Episode 1 of The Flow Sessions

What does Hoshin Kanri mean?

People frequently ask what the words Hoshin Kanri mean when translated literally. Hoshin is Japanese for ‘course’ or ‘compass needle’, Kanri means ‘to manage’ or ‘to control’. Therefore, Hoshin Kanri can be interpreted to mean navigational management, course management, or strategy and policy deployment. Hoshin Kanri can be described as: the methodology you use to set a destination and navigate your path toward it.

The VSMC Implementation Roadmap can be seen as a generic form of Hoshin Kanri, comprising a target vision and the path to it from a current state starting position. However, you can never simply copy and paste. Hoshin Kanri lays out a formula for taking goals and deploying them as clear initiatives while gathering valuable feedback and realigning as new insights arise. You can use the VSMC Implementation Roadmap (below) to inform your own Hoshin Kanri process by following along.

The VSM Implementation Roadmap

History and Growth

Hoshin Kanri, or Hoshin planning, was created in the 1960s and implemented at companies such as Bridgestone, Toyota, and GE. Nowadays, the methodology has been adapted and used by many organizations across the globe.

 

 

Source: Hoshin Kanri at HP

Top Down and Bottom Up

Hoshin Kanri makes it explicit that leadership needs to clearly define a vision and communicate it, but it also dictates that feedback and results flow back up to leadership so they can effectively adapt to changing conditions. This addresses a chronic corporate culture concern of leadership and contributors being out of sync, and the adversarial conditions that perpetuate. Imagine everyone involved in an organizational initiative was on the same page!

How does Value Stream Management apply to Strategy?

To define an effective strategy, a leader needs to map the territory. This ensures that vital information is incorporated into identifying opportunities and crafting the highest-leverage plans. Value Stream Management is the practice of understanding the flow of work and information in an organization so that those opportunities are revealed.

When you understand the data behind a value stream, you see:

  • Where the waste is
  • Where the collaboration gaps & challenges are
  • Where quality is compromised
  • Where value margins can be increased

This brings strategy from the traditional, historic practice of: “This worked last time” or “I have a good feeling about this” into true data-driven high definition

By seeing the flow of work in your value stream, you can focus on where efforts will be most effective, and understand what it will take to craft your vision.

Feedback 

What’s most important about Hoshin Kanri is the communication feedback loop from leadership to operations and back up in a continuous cycle. The goal of Hoshin Kanri is to establish unity that results in everyone pulling towards the strategic objective together. It supports this by aligning the goals of the company (Strategy) with the plans of middle management (Tactics) and the work performed by all contributors (Developmental & Operational).

Catchball (Adaptive feedback)

Catchball refers to a practice of sharing and responding to feedback from the very top-level goal down to the execution of objectives. The emphasis on communication and alignment here is valuable because defining strategy is just the beginning. Once the strategy is shared with others, their knowledge of the terrain should be considered before proceeding. Without a collaborative dialogue, valuable information may be missed, and poor decisions could be made on bad assumptions. Beyond that, navigating the terrain as an organization takes constant re-alignment and response to new information.

How does Value Stream Management apply to Feedback?

Value Stream Management is built on the practice of assessing a current state and revealing gaps, opportunities, and waste to focus effort. This begins with data collection and conversation through Value Stream Mapping but with Value Stream Management platform software the feedback on ‘how things are going’ can be collected and synthesized in real-time, which shortens the Plan-Do-Check-Act (PDCA) cycle dramatically. This allows for faster feedback, and ultimately, faster adaptation of the strategy.

Ideally, teams executing strategy are stream-aligned, meaning they all work closely together to move work effectively. This often involves breaking or mitigating dependencies which also shortens feedback loops and accelerates decisions, development, and delivery.

How does Value Stream Management apply to Organization-scale Improvement?

A valuable aspect of Value Stream Management is that the same principles and practices can be leveraged at the very top of the organization, all the way down to each individual contributor. This provides a mechanism for delivering Hoshin Kanri in organizations where strategy has to connect to operations and everything in between. Strategic, tactical, and operational all connect through your value stream network, and Value Stream Management allows you to connect all the dots. That means you can see the effects of your efforts, generating valuable feedback for all levels of the organization.

How does Value Stream Management apply to Adaptation?

There are many advantages to Hoshin Kanri, but one notable disadvantage is that it traditionally runs on an annual cycle. That may be too infrequent to adapt to change, so it makes sense to deliberately revisit and adapt strategy periodically - as long as you communicate any changes to everyone affected! Value Stream Management makes this much easier by providing performance data continuously to teams and leaders.

In short, Value Stream Management provides an effective ‘how’ for Hoshin Kanri, allowing you to go from definition to execution without having to figure it all out yourself. Value Stream Management tooling and practices can effectively facilitate strategy deployment. That means easier navigation and improved odds of success.

Steve Pereira

Steve Pereira

Steve is obsessed with making tech human, and leveraging it to deliver continuous value. For the past 20 years, his focus has been guiding ambitious and struggling teams towards their true north. He's a former startup CTO, agency consultant, systems and release engineer, finance IT manager, tech support phone jockey, and pizza maker. All focused on the flow of value, all the time.

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Principles of Value Stream Identification

VSM and Industry Frameworks: TOGAF