ALL

TOGETHER
NOW
by Kim Rochetti

In 50 Words
Or Less
A method for better
To overcome re-
ghting routines and
more effectively deploy
strategy deployment,
strategic plans, many
organizations use the
hoshin kanri method
aligning staff
and X matrix tool.
These help better align
organizations long and
priorities with
short-term objectives,
prioritize projects, and
fulll their visions faster
organizational goals
with a more organized
and focused staff.
 STRATEGY DEPLOYMENT

HOW DO YOUR employees respond when you ask them to describe

your organizations operations? If they make statements such as Its cha-
otic, Workloads are unbalanced, Theres no focus on top initiatives, or
Strategies are disjointed and miscommunicated, its a red ag indicating
the organization lacks some critical high-performance attributes.
Most organizations struggle to consistently achieve the results they truly
desire. Becoming proactive and strategic to help them reach their perfor-
mance goals is challenging because theyre busy ghting res and reacting
to problems. Thats how several organizations Ive worked with described
their operational situations. Id always tell them: Lets stop the insanity for
one day and get you organized.

April 2016 QP 21
 Hoshin kanri is a simple and quick method of strate-
gic planning and deployment that can break this cycle.
The method adds focus, clarity and efciency to an or-
ganizations daily routine. It also can drive performance
excellence, increase customer satisfaction and produce
higher levels of margins and revenue.
Hoshin kanri is a policy-deployment method that
has been used in Japan for more than 60 years. Its cor-
nerstone tool is the X matrix, and the methods deploy-
ment process is set up in a plan-do-check-act format
(see Figure 1) to ensure organizations plan, execute,
measure and implement improvements each year.
An X matrix is a one-page strategy tool (see Figure
2) that aligns and details your vision (where youre
headed), long-term objectives (what you must do),
short-term objectives (how far you have to go each
year), initiatives (how youre going to do it), metrics
(how much you must accomplish) and high-level re-
sources (those who are responsible for implementing
the strategy).
A two-day strategy-deployment event can be used
to:
Chart an organizations course for aligning its re-
sources to critical projects.
Establish key metrics to ensure objectives are met.
Facilitate rapid achievement of objectives, which ul-
timately achieves the vision.
Organizations that use hoshin kanri, such as Toyo-
ta, have become known for their quality products and
PDCA cycle / FIGURE 1
Dene vision, strategy and initiatives.
Plan Design strategic project, resource and metrics plans.
Prioritize critical business projects.
Map high-level processes and identify opportunities.
Do Charter critical business projects.
Kick off and manage projects.
Evaluate results of projects.
Check Check metrics improvement.
Assess performance to plans.
Make adjustments in continuous improvement process.
Act Standardize new processes.
Repeat the PDCA process.
PDCA = plan-do-check-act
22 QP www.qualityprogress.com
long-term planning. This is because the method helped
them realize signicant performance improvements.1
Danaher Corp., a global science and technology
company based in Washington, D.C., is an organiza-
tion that adopted this method and reached the highest
level of performance in its history. Danaher doubled its
growth in just four years and its stock outperformed its
competitors by a large margin (see Figure 3). Danaher
attributed the breakthroughs to the policy deploy-
ment (also known as hoshin) process.2
Whats your 100-year plan?
Its imperative that organizations have structures and
overarching plans in place to optimize their businesses.
Without these, theyre inclined to experience business-
as-usual, lackluster performance and declining sales.
Being a short-sighted thinker and planner can lead
to poor decisions, but most U.S. organizations have
been forced into short-term thinking because of pres-
sures to achieve quarterly nancial goals.3 This comes
at the expense of long-term value creation.
Some Japanese organizations are known for pro-
ducing 100-year plans. The Toyota Production Systems
philosophy is to base management decisions on long-
term objectives, even at the expense of short-term -
nancial goals.4 American organizations must start ap-
plying long-term thinking to plan for greatness, and it
doesnt happen overnight.
Hoshin kanri and the X matrix
The rst step in long-term thinking is to create your
vision, strategy and execution plans. By developing a
strategy and subsequent project, communication and ac-
countability plans, you are developing a roadmap to fo-
cus your resources. This puts them in the right projects
at the right time with the right metrics and resources.
The goal of this step is to eventually communicate
your vision, strategy and plan to employees at every
levelgetting everyone on the same page, working
on prioritized initiatives and achieving results more
quickly.
To do this, top leadership sets the direction and cre-
ates the execution plans. Afterward, the mid-level manag-
ers get involved through the catchball communication
process: an open dialogue to understand the strategy,
gain buy-in and required resources, and make necessary
adjustments. After the strategy is nalized, its cascaded
to mid-level managers to develop their X matrixes.
 STRATEGY DEPLOYMENT

Planning process
This process provides the next level of
X matrix example / FIGURE 2

leadership with clear objectives because

it relates to those leaders level and func-
tion in the organization. The cascading
How
of objectives can continue down to any
level the organization chooses, including
the individual-contributor level. Organi- High-level, short-term
zations that are using hoshin kanri for improvement
initiatives
the rst time could stick to higher levels
of leadership in the rst year of planning. Where
This years Critical
Who and
The planning process includes eight How annual Vision metrics to How
steps. far objectives improve
1. Develop the organizations
much
strategic intent: mission, vision and Long-term
strategies: objectives
Missionyour organizations dened (3-4 years out)

reason for being.

Resources
Visionyour ideal scenario of where
you want the organization to be in Primary
What
ve to 10 years. Its what you aspire Secondary
to achieve.
Strategyyour long-term plan or

Danaher stock value after implementing hoshin kanri / FIGURE 3

$5,000

$4,500

$4,000

Danaher
$3,500
Tyco
$3,000 Illinois Tool Works

Emerson
$2,500
S&P 500

$2,000 Dover

Snap-On
$1,500
Cooper

$1,000 Merck

Johnson & Johnson

$500

$0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Note: The stock value shows that an investment of $100 in Danaher stock on Dec. 31, 1990, with dividends reinvested was worth $4,501 on Dec. 31, 2011.
Source: Valuewalk.com. For more information visit http://tinyurl.com/danaherimprovement.

April 2016 QP 23
 roadmap of how you will fulll your mission and
vision.
Inputsthe process of dening your strategic in-
tentions, which has inputs such as: competitor as-
sessments; environmental and regulatory scans;
strengths, weaknesses, opportunities and threats
analysis; current and future customer needs; product
mix; technology; and business and market trends.
2. Develop the vital few long and short-term ob-
jectives:
Long-term objectivesThese are objectives an orga-
nization can achieve in three to ve years that direct-
ly support its vision statement. They are lofty goals
that may seem unachievable at rst glance, but dont
forget theyre up to ve years away. These are the few
breakthrough goals an organization must realize to
achieve its vision.
Short-term objectivesThese are the annual objec-
tives that directly support the organizations long-
term objectives. You want only one to two of these
for each long-term objective to prevent the X matrix
from becoming too large. They must be specic,
measurable, achievable, relevant and time-bound
(SMART). SMART goals must be quantiable and
easily measured.
3. Dene the breakthrough opportunities that
will deliver the objectivesThese are the business-
critical initiatives that must be completed to achieve
your goals. Value stream mapping (VSM) is one of the
best methods for identifying these opportunities. VSM
denes the current state of the enterprise, envisions
and develops the future state, and analyzes the gaps
between the two.
The gaps are the initiatives that must be worked on
to achieve the desired future state and vision. These
initiatives are larger in scope, typically take one to

Adding initiatives and resources to the X matrix / FIGURE 4

Develop a mentoring program
Introduce all employees to lean concepts
Invest in ISO 9001 or another quality management system
Automate product A, B and C production lines
Implement a continuous improvement system and culture
Initiate a customer survey process
Develop growth strategies
Develop a delivery improvement system
Develop an an affordability initiative
Increase employee engagement to 75%
Improve the customer satisfaction score

Increase customer satisfaction to 85%

Increase employee engagement to 40%

Achieve $100,000 cost of production

High-level, short-term
Decrease cost of production by 10%

initiatives
Increase prot margins to 15%
Increase market share to 25%
Train employees in continuous

Increase market share to 25%

Increase prot margin by 5%

Premier
This years widget Critical
improvement methods

Director, supply chain

annual manufacturing metrics to

Director, engineering

objectives company in improve

Director, nance

Director, quality

NorthAmerica
Plant manager

Director, HR

Long-term
objectives
to 85%

(3-4 years out)

Increase prot margins by 20% Resources

Gain market share to 40% Primary
Improve the customer satisfaction score to 95% Secondary
Decrease cost of production by 25%
Create a continuous improvement culture

24 QP www.qualityprogress.com
 STRATEGY DEPLOYMENT

Counter-clockwise ow of strategy matrix / FIGURE 5

3. Rotates
4. New projects
1. Long-term objectives are dropped off. Develop a mentoring program
2. Annual objectives and initiatives Introduce all employees to lean concepts
rotate counterclockwise. Invest in ISO 9001 or another quality management system
Automate product A, B and C production lines
3. Lower level metrics and resources Implement a continuous improvement system and culture
replace high-level ones. Initiate a customer survey process
4. New site projects are entered. Develop growth strategies
Develop a delivery improvement system
5. New metrics and resources are Develop an affordability initiative
developed.
Note: Watch the color coding. 5. New metrics
Improve the customer satisfaction score to 85% and resources
Train employees in continuous improvement

High-level, short-term

Increase employee engagement to 75%

initiatives

Increase customer satisfaction to 85%

Increase employee engagement to 40%

Achieve $100,000 cost of production

Decrease cost of production by 10%

Premier

Increase prot margins to 15%

Increase market share to 25%
This years widget Critical
Increase market share to 25%
Increase prot margin by 5%

annual manufacturing metrics to

objectives company in improve

Director, supply chain

2. Rotates NorthAmerica

Director, engineering

Director, nance
Long-term

Director, quality
Plant manager
objectives

Director, HR
(3-4 years out)
methods

Increase prot margins by 20% Resources

Increase market share to 40% Primary
Improve the customer satisfaction score to 95% Secondary
Decrease cost of production by 25%
Create a continuous improvement culture

1. Drops off

three years to implement and can be broken down into align to the strategy:
many supporting projects. MetricsThese strategy measures will track the
For the X matrix tool, you want only one to three gains made toward your vision. This is why they
initiatives to support each short-term objective. You should be directly tied to the vision and long-term
may have more, but include only the most critical ones. objectives.
This keeps your plan simple, focused and easy to com- ResourcesThese are individuals responsible for
municate. leading the initiatives. Its important to ensure the
There must be a system to prioritize projects. An or- workload is evenly spread out. Also, make sure you
ganization often has too many opportunities. A cause have only one primary resource assigned to each ini-
and effect matrix is popular tool used in hoshin kanri tiative, with secondary resources added as needed.
to prioritize efforts: It uses a scoring method to rank Resources must manage the progress of their areas
projects according to how they affect weighted busi- work.
ness criteria. Projects with the highest scores are 5. Show relationships or alignment in the X ma-
worked on rst or in an order that makes sense for the trix: An important nal step is to link initiatives to
organization. Future projects also are added to the ma- one another. You must see the alignment and show it
trix to assess their priority, which creates a prioritized with a primary relationship (solid dot), secondary rela-
project hopper that can be used to assign tasks. tionship (open dot) or no relationship at all (see Figure
4. Determine the metrics and resources that 4). Every initiative, objective and metric should have

April 2016 QP 25
 Example of a completed strategy and
deployment matrix / FIGURE 6
Set up mentoring program for top candidates
Train executives in SD, leadership roles, change management
Train all levels in Intro to Lean
Obtain ISO certication
Automate line C
Automate line B
Automate line A
Roll out strategy and annual deployment and resource plans
Train 25% of employees in lean concepts and kaizen
Develop survey and data collection system
Expand product and service offerings
Increase new customer base
Deploy strategic kanban systems
Implement new MRP system
Implement product redesigns on products A, B, C
Invest in ISO 9001 or another quality management system
Train employees in continuous improvement methods

Top site-level
Implement a continuous improvement system
Automate product A, B and C production lines

improvements
Develop a delivery improvement system

Increase employee engagement to 40%

Increase customer satisfaction to 85%
Achieve $100,000 cost of production
Initiate a customer survey process

Top level short-term Critical

Develop an affordability initiative

Manager, business development

Increase prot margins to 15%

improvement metrics to
Develop a mentoring program

Increase market share to 25%

initiatives improve
Develop growth strategies

Manager, supply chain

Manager, engineering

This years Manager, nance

Manager, quality
Superintendent

annual

Manager, HR
objectives

Increase prot margins by 5% Resources

Increase market share to 25% Primary
Improve customer satisfaction score to 85% Secondary
Decrease cost of production by 10%
Develop employees in continuous improvement
Increase employee engagement to 40%
SD = sales and distribution
MRP = material requirements planning
ISO = International Organization for Standardization

26 QP www.qualityprogress.com

a solid dot assigned to it and be linked to one another,
and ensure each initiative only has one solid dot adja-
cent to the resources.
6. Review matrix and play catchball:
Review matrixMembers of top leadership will vet
the matrix rst to ensure understanding, achievabil-
ity and organizational buy-in. They also will make
any necessary adjustments to nalize it.
Play catchballAfter top leaderships approval is
complete, the X matrix is owed down to mid-level
managers to educate them on the strategic plan
and their role in it, and receive their feedback. The
term for this process is catchball, and in Japanese,
the term is nemawashi, which means to prepare
the soil for planting. In essence, you are preparing
leadership for a new way of managing the business.
There should be many validation questions asked,
such as: What could get in the way of making this
a reality? or What are the issues with this plan?
Figuratively, you are tossing the strategy to members
of mid-level leadership. They review it, make recom-
mendations and toss it back, which is why the term
catchball is used. This iterative process continues
until a nal strategy is agreed upon.
7. Cascade strategy to next level of manage-
ment: The next step in the process is to create strate-
gies at the next level of leadership. Ideally, cascading
each level of strategy happens until the point of action
occurs. This means every level of the organization with
leadership responsibilities will have hoshin kanri
plans.
At the end of the process, you should have alignment
and clarity in critical items that must be completed in
each department and at the management level. To ow
the high-level matrix to the next level, the top-level
matrix goes through a counter-clockwise rotation (see
Figure 5, p. 25).
The long-term objectives drop off, and the short-
term objectives slide in. The same type of rotation is
used with initiatives rotating into the annual objectives
spot. The metrics and resources are updated to reect
their level of responsibility.
Figure 6 illustrates how the matrix will look after
these steps are completed. Note that the pink and blue
colors rotated in a counterclockwise fashion, and a
new colorpurplewas added. The purple items are
the lower-level projects that align with the initiatives
from the top-level matrix. The metrics and resources
STRATEGY DEPLOYMENT
also are updated to represent the roles and responsibili-
ties at that level.
8. Develop your execution plans:
Resource planThis claries employees roles at ev-
ery level. The goal is to get clear responsibilities, en-
gagement and alignment on the strategy throughout
the organization.
Project planThis will focus everyone on the critical
initiatives, milestones and responsibilities needed
for timely project completions. Project charters also
will be produced for each project.
Communication planA critical element of a suc-
cessful strategy is to communicate it and set clear
expectations for every employee. Their roles
throughout the organization are vital to its success.
Everyone must agree with and support the strategy.
This plan denes the audiences, message, timing and
how the strategy is communicated.
Risk plansEvery organization manages risks. The
important aspect of this plan is to identify, quantify
and mitigate those risks. The more you proactively
manage risks, the more obstacles you remove that
prevent employees from achieving better results.
Accountability planAn essential part of the hoshin
kanri method is setting up a system to manage the
resources, projects, delays, issues, schedules and
budgets. There must be regular reviews of the strate-
gies and the execution of plans to measure progress
toward goals. Many organizations post their X ma-
trixes, project charters and measurements on hoshin
kanri management boards. This makes them visible
and keeps them at the front of staff members minds.
Metrics planThe measurement system helps you
determine at designated intervals where you must be
according to the goals, and it helps keep you on track.
Overcoming challenges
Using the execution plans, setting up a visual display
area and having regular meetings to measure progress
will go far to streamline this process and develop a work-
ing system. Organizations are also likely to face challeng-
es such as:
Instilling discipline and setting staff expec-
tationsAfter the strategy is developed, set up
daily, weekly, monthly and annual meetings that in-
clude agendas for every stakeholder thats driving the
program. Explain that this method will be followed,
and meeting attendance is mandatory. Leadership
April 2016 QP 27
 STRATEGY DEPLOYMENT
must have accountability to enforce the behaviors it
desires. Create a daily huddle with an agenda to keep
team energy high and focused.
Gaining buy-in at all levels for accountabil-
ityThis is possibly the most important component of
the hoshin kanri method. Individuals who are not on
board with this process could sabotage your organiza-
tions best efforts. Create a culture of open and hon-
est dialogue to develop more trust and dispel any staff
concerns.
Staying focused on critical objectives and ini-
tiativesThis is the most challenging aspect of the
execution process. There are job assignments, custom-
er needs, project work, regulatory changes, training,
various re drills and other issues coming at employees
throughout their day. Prioritizing their work is a chal-
lenge, and this method helps them understand which
projects are most critical in their daily tasks.
After using hoshin kanri for 30 years, I can honestly
say its one of the most powerful and effective tools an
organization can use. You see evidence of this in the
2016 WORLD CONFERENCE ON
QUALITY AND IMPROVEMENT
MAY 16 18, 2016 | MILWAUKEE, WI
Knowledge ... Connections ... Inspiration
Join ASQ in our hometown of Milwaukee, WI, and discover how
quality enthusiasts like you can expand the practices of quality in
new and innovative ways.
28 QP www.qualityprogress.com
success of organizations that have adopted it, such as
Pzer, Bank of America and AT&T.
Their success is why the method has become so pop-
ular in the United States during the last several years.
Hoshin kanri can help any organization fulll its vi-
sions faster, get to the next level of performance and
gain a competitive advantage in the marketplace. QP
REFERENCES
1. Jeffrey Liker, The Toyota Way, McGraw-Hill Education, January 2004.
2. Core Values, Danaher.com, www.danaher.com/our-culture/core-values.
3. Michael E. Porter, Capital Disadvantage: Americas Failing Capital Invest-
ment System, Harvard Business Review, September-October, 1992, http://
tinyurl.com/capitaldisadvantage.
4. Thomas L. Jackson, Hoshin Kanri for the Lean Enterprise, Productivity Press,
PAP/CDR edition, August 2006.
KIM ROCHETTI is president and founder of Strategic
Operating Systems in Florissant, MO. She has an MBA
from Webster University in St. Louis. An ASQ senior
member, Rochetti is a certied Master Black Belt from
Strategy Breakthrough Transformation Innovation, and
is an ASQ-certied Six Sigma Black Belt and quality
engineer.
Visit asq.org/qp-wcqi
for more information
and to register today.