an introduction to policy deployment ver 1
TRANSCRIPT
An introduction to Hoshin Kanri
(Policy Deployment)
June 2010
First the small print
• Don’t even think about implementing Hoshin
Kanri:
– until basic operational processes are sound and well managed;
– if the enterprise is ‘strapped for cash’; or
– if the management is not up for it.
• These are an essential foundation.
June 2010 Policy Deployment 2
Without Hoshin Kanri: what
generally happens
• Enterprises steadily improve the effectiveness of
their day-to day operations and expect to
improve their business performance.
– This is Kaizen, continuous improvement
• They might be doing this simply to stay
competitive.
– There is still the risk that others may be doing more; they may be overtaken by events outside their control
June 2010 Policy Deployment 3
Hoshin Kanri is a framework for
doing better; it believes ..
• … that if an enterprise deliberately targets a
substantial medium-long term improvement in
business performance and relates this to:
– Short term performance goals; and
– The specific business processes which must be
improved to deliver them.
• It can be confident of robust and continuing
success.
June 2010 Policy Deployment 4
What is a substantial medium-
long term improvement?
June 2010 Policy Deployment 5
breakthrough performance
the situation today
company vision
So what exactly is Hoshin
Kanri?
• Hoshin Kanri is a process that facilitates the
development of
– results oriented business processes
• with
– sustained improvement
• that result in
– sustained competitive advantage in quality, delivery, cost and growth
• It’s also called Policy
Deployment
• Hoshin: a course, a
policy, a plan or an
aim.
• Kanri: administration,
management, control,
charge of or care for.
June 2010 Policy Deployment 6
Why Use Hoshin Kanri?
• … to align targets and means throughout an
organisation.
June 2010 Policy Deployment 7
Hoshin Kanri
And thereby to …
• … build sustainable competitive advantage.
0
50
100
150
200
250
300
1 2 3 4 5
base Kaizan Hosin Kanri
June 2010 Policy Deployment 8
Hoshin Kanri vs traditional
management
• Traditional management can be
– Concerned with short term results; and
– Functional.
• Hoshin Kanri is …
– …concerned with the establishment of cross functional results-oriented business processes that
drive the desired long term results.
June 2010 Policy Deployment 9
The critical thinking process
behind Hoshin Kanri
June 2010 Policy Deployment 10
step 2: HOW FAR
annual breakthroughs
step 3: HOW
identify key driver processes
step 4: HOW MUCH/WHEN
determine measures and track
step 5: WHO
identify key resources and deploy
step 1: WHAT
breakthrough thinking
Before we get into this …
Step 0: get the vision right
• It never ceases to amaze me how many
enterprises lack a coherent view of what
business they are in.
– This is mission.
• This is generally compounded by the absence of
any ideas about the future.
– This is vision.
• Mission and vision generally get complemented
by values.
June 2010 Policy Deployment 11
The critical thinking process
behind Hoshin Kanri
June 2010 Policy Deployment 12
step 5: WHO
identify key resources and deploy
step 1: WHAT
breakthrough thinking
step 2: HOW FAR
annual breakthroughs
step 3: HOW
identify key driver processes
step 4: HOW MUCH/WHEN
determine measures and track
Step 1: what is a breakthrough?
• It represents a SIGNIFICANT change;
• It requires the organisation to stretch itself;
• It usually requires multi-functional efforts and
teamwork;
• Typically no standard or system exists for this
level of breakthrough; and
• It can generally be regarded as a big win.
June 2010 Policy Deployment 13
Let’s try and illustrate it with an
example
• Our company is in good shape:
– it is in a competitive but growing market, it has good
products but it has a minor market share;
– there are strong competitors and some consolidation
is going on; but
– it realises that it needs to make the big jump to protect
its longer terms success.
• It has therefore articulated its vision.
June 2010 Policy Deployment 14
A part of its vision is …
• … to be a leader in our industry in terms of sales
and profitability …
• This means increasing market share from 5 to
20% in 3-5 years.
June 2010 Policy Deployment 15
Humour me; let’s show this as
indicated below
June 2010 Policy Deployment 16
3-5 year
breakthrough
objectives
secure a market share of 20% by 2009
The critical thinking process
behind Hoshin Kanri
June 2010 Policy Deployment 17
step 5: WHO
identify key resources and deploy
step 1: WHAT
breakthrough thinking
step 2: HOW FAR
annual breakthroughs
step 3: HOW
identify key driver processes
step 4: HOW MUCH/WHEN
determine measures and track
Step 2: the annual breakthrough
• Obtain fact based understanding of the current
situation.
• Identify how far to improve in the first year in
order to hit the 3-5 year objective.
• Qualify the gap between the current situation
and the annual objective.
• In our example this can translate into unit sales
and awareness targets.
June 2010 Policy Deployment 18
The annual targets relate to the
3-5 year objectives
June 2010 Policy Deployment 19
? ?
esta
blis
h a
60%
aw
are
ness in
2006
sell 1
000 u
nits
in 2
006
annual
breakthrough
objectives
3-5 year
breakthrough
objectives
secure a market share of 20% by 2009
The critical thinking process
behind Hoshin Kanri
June 2010 Policy Deployment 20
step 5: WHO
identify key resources and deploy
step 1: WHAT
breakthrough thinking
step 2: HOW FAR
annual breakthroughs
step 3: HOW
identify key driver processes
step 4: HOW MUCH/WHEN
determine measures and track
Step 3: effective top level
improvement processes
• Apply the 5 WHYs to the current situation and
identify the root causes.
• Use problem solving to find ways to bridge the
gap.
• Find key driver processes with the greatest
influence and identify improvement priorities.
• These should be:
– Clear and easy to communicate; and
– Measurable (but not a measure).
June 2010 Policy Deployment 21
4 processes can be identified in
our example
June 2010 Policy Deployment 22
?
?
?
?
? ?
process to increase sales person productivity
process to increase awareness in the market
process to convert opportunities into sales
process to generate new sales opportunities
esta
blis
h a
60%
aw
are
ness in
2006
sell 1
000 u
nits
in 2
006
top level
improvement
priorities
annual
breakthrough
objectives
3-5 year
breakthrough
objectives
secure a market share of 20% by 2009
The critical thinking process
behind Hoshin Kanri
June 2010 Policy Deployment 23
step 5: WHO
identify key resources and deploy
step 1: WHAT
breakthrough thinking
step 2: HOW FAR
annual breakthroughs
step 3: HOW
identify key driver processes
step 4: HOW MUCH/WHEN
determine measures and track
Step 4: identify targets to
improve for each priority
• Targets are measures of the effectiveness of a
given process.
• Think in terms of process capability.
• Improvements priorities tell HOW, targets tell
HOW MUCH and WHEN.
• They are typically a ‘from to by’ statement.
June 2010 Policy Deployment 24
Each of the processes has an
improvement measure
June 2010 Policy Deployment 25
? ?
? ? ?
? ?
? ?
? ?
process to generate new sales opportunities
esta
blis
h a
60%
aw
are
ness in
2006
sell 1
000 u
nits
in 2
006
top level
improvement
priorities
annual targets
breakthrough to
objectives improve
3-5 year
breakthrough
objectives
process to convert opportunities into sales
process to increase sales person productivity
process to increase awareness in the market
incre
ase
ca
lls/d
ay fro
m 2
to 4
secure a market share of 20% by 2009
incre
ase
ne
w le
ad
s/w
ee
k fro
m 1
00
to 2
00
red
uce
lea
ds p
er u
nit s
ale
s fro
m 1
0 to
5
incre
ase
ad
reca
ll from
10
to 2
0%
incre
ase
ma
il sh
ot re
sp
on
se
from
2 to
5%
The critical thinking process
behind Hoshin Kanri
June 2010 Policy Deployment 26
step 5: WHO
identify key resources and deploy
step 1: WHAT
breakthrough thinking
step 2: HOW FAR
annual breakthroughs
step 3: HOW
identify key driver processes
step 4: HOW MUCH/WHEN
determine measures and track
Step 5: identify key resources to
deploy
• Identify the resources with the greatest influence
or opportunity to impact the improvement priority
and target to improve.
• The largest or most available resources will not
always have the greatest impact.
June 2010 Policy Deployment 27
Each priority has one owner;
other people may support
June 2010 Policy Deployment 28
? ?
? ? ?
? ?
? ?
? ? ? ? ? ? ?
process to increase sales person productivity
process to increase awareness in the market
process to convert opportunities into sales
process to generate new sales opportunities
esta
blis
h a
60%
aw
are
ness in
2006
sell 1
000 u
nits
in 2
006
top level
improvement
priorities
annual targets
breakthrough to
objectives improve
3-5 year
breakthrough
objectives
secure a market share of 20% by 2009
Sa
les D
irecto
r
Ma
rke
ting
Dire
cto
r
incre
ase
ne
w le
ad
s/w
ee
k fro
m 1
00
to 2
00
red
uce
lea
ds p
er u
nit s
ale
s fro
m 1
0 to
5
incre
ase
ad
reca
ll from
10
to 2
0%
incre
ase
ma
il sh
ot re
sp
on
se
from
2 to
5%
IT m
an
ag
er
HR
Dire
cto
r
Su
pp
ly C
ha
in D
irecto
r
incre
ase
ca
lls/d
ay fro
m 2
to 4
In summary: this is how it works
June 2010 Policy Deployment 29
? ? ? ? ? ? ?
? ? ? ? ? ?
?
? ? ? ? ?
version 1.0
date 24 Jan 05
primary
increase sales revenue by 50% secondary
ma
jor a
cco
un
ts d
irecto
r
supp
ly c
ha
in d
irecto
r
HR
dire
cto
r
sale
s d
irecto
r
ma
rketin
g d
irecto
r
redu
ce a
vera
ge d
iscoun
ts fro
m 5
to 3
%
impro
ve w
in lo
ss ra
tio fro
m 2
to 2
.5 to
1
rais
e s
ale
s c
alls
/da
y fro
m 3
to 3
.5
incre
ase
sale
s re
ve
nue
by 1
2%
top level
improvement
priorities
annual targets
breakthrough to
objectives improve
3-5 year
breakthrough
objectives
improve sales productivity by 10%
improve average net prices by 2%
top level policy deployment
Once you’ve completed the
matrix, do it again
• Hoshin Kanri is about deployment.
• When you’ve done the top level you go down to
the next level:
– rotate the matrix by 90 degrees and carry on.
• In theory you can keep going but in practice you
don’t.
June 2010 Policy Deployment 30
Points to remember about the
matrix
• As soon as a resource gets a solid dot he/she
will get a lower level matrix or action plan
• Clear circles indicate support resource. They do
not get a lower level matrix or action plan unless
they get a solid dot on another matrix
• The dots are to be used as a sanity check
June 2010 Policy Deployment 31
Track progress using a bowling
chart
June 2010 Policy Deployment 32
MISS
HIT
target to improve
2003
actual 2004 JOP 2005 plan 2005 YTD Jan-05 Feb-05 Mar-05 Apr-05 May-05 Jun-05 Jul-05 Aug-05 Sep-05 Oct-05
plan
actual
plan
actual
plan
actual
plan
actual
plan
actual
plan
actual
plan
actual
plan
actual
plan
actual
plan
actual
plan
actual
Policy deployment: bowling chartMISS month HIT YTD
Create an action plan for every
improvement priority
June 2010 Policy Deployment 33
original plan X progress at review
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Policy deployment action planImprovement priority: Department/location: Management owner: version:
date:
Review team: Next review
Environmental situation summary:
status
red=late impact
Core objective: timeline
action step
owner
bold=lead
mile
stone
planned
dates
2005
Summary
• Create a bowling chart for every top level and
second level matrix
• Create an action plan for every improvement
priority at the point of impact
– Without action plans there is no Hoshin Kanri
• Review performance monthly and take action
when targets are not being reached
June 2010 Policy Deployment 34
Why is Hoshin Kanri so good?
• Firstly because of what it sets out to do:
– Hoshin Kanri is a process that facilitates the
development of results oriented business processes with sustained improvement that result in sustained
competitive advantage in quality, delivery, cost and
growth.
• But secondly it enables this to be condensed
down to a page of A4 which enables easy
communication, encourages transparency and
makes accountabilities clear!
June 2010 Policy Deployment 35
A final thought: Moore’s law
• Gordon Moore, co-founder of Intel, said that the number
of components on a chip would double every two years.
• The has had dramatic effects:
– chip manufacturers knew what they had to do to be competitive;
– HW and SW designers knew how to develop products for the future.
• If you know what is expected of you and you can be
confident that everyone else is working towards the same end and can be depended upon then you can get
your head down and do likewise.
• This is exactly what Hoshin Kanri does.
June 2010 Policy Deployment 36
Thank you