The Hoshin methodology provides:

Breakthrough objective focus. Development of plans that adequately support the objective. Review of progress of these plans. Changes to plans as required. Continuous improvement of key business processes. A vehicle for organizational learning.

In the current and future economic, political and sociological scenario, where business cycle are highly unpredictable, customer preferences change rapidly and the political stands of state are volatile and vacillating, any organization that wishes to exceed customer expectations and stay competitive needs a long-range forward-looking, visionary and achievable strategic plan., while at the same time organizations need to be striving toward continuous improvement of the organization’s key business processes. The organization must, in effect, keep “both hands on the wheel” to move forward successfully.

The hoshin process is, first of all, a systematic planning methodology for defining long-range key entity objectives. These are breakthrough objectives that typically extend two to five years with little change. Second, the hoshin process does not lose sight of the day-to-day “business fundamental” measures required to run the business successfully. This two-pronged approach provides an extended period of time for the organization to focus its breakthrough effort while continuously improving key business processes day to day.

Hoshin ensures that everyone in the organization is working toward the same end. The plan is hierarchical, cascading down through the organization and to key business-process owners. Ownership of the supporting strategies is clearly identified with measures at the appropriate level or process owner within the organization.

The hoshin process fits under the umbrella management philosophy of total quality management. The plan-do-study-act process improvement cycle enters repeatedly in the plan’s development, implementation and review.

Using the PDSA cycle in strategic planning ensures that:

• Plans are developed more systematically.
  
• Progress on plans is carefully monitored.
  
• Changes to plans are made where necessary.
  
• Breakthrough objectives are attained.
  
• The planning process itself is standardized.
  
• The planning process is continuously improved.
  
• Organizational learning occurs.

The basic premise behind the hoshin plan is that the best way to obtain the desired result is to ensure that all employees in the organization understand the long-range direction and that they are working according to a linked plan to make the vision a reality.

The second aspect of the plan is that there are fundamental process measures which must be monitored to assure the continuous improvement of the organization’s key business processes. In essence, all are heading in the same direction with a sense of control.

The process includes:

1. Identifying critical business issues facing the organization.
   
2. Establishing business objectives to address these issues.
   
3. Setting overall goals.
   
4. Developing supporting strategies.
   
5. Determining goals for each strategy.
   
6. Establishing process performance measures.
   
7. Establishing business fundamental measures.

The review of the plan’s progress follows the PDSA cycle, and it applies to all levels of leadership within the organization. In the hoshin process, there are two kinds of planned organizational activities:

• Breakthrough activities
  
• Business fundamentals or key process-monitoring activities, also known as the business fundamentals table.

The organization should have a clear statement of purpose. In other words, what added value do customers receive via the products or services offered? Also necessary is a long-range vision: Where is the organization headed in the next five to seven years? 1. Breakthrough activities
Breakthrough activities are those directed at achieving significant performance improvements or making significant changes in the way an organization, department or key business process operates. These activities are typically directed at overcoming the critical business issues the organization will face in the next two to five years. In the broadest sense, these issues may relate to profitability, growth or market share; toward a specific issue such as a quality problem; or in support of a new product or service introduction.

To articulate clearly what needs to be done, the organizations should develop a mission statement. The statement should address what is to be accomplished (the business objective) with a measure of accomplishment (the overall goal) within a given time frame (when). The mission statement describes what the hoshin plan needs to accomplish.

2. Business fundamentals
Realistically, however, most of the organization’s time must be devoted to keeping the business running, i.e., carrying out the value-added activities of the key business processes that fulfill the organization’s purpose. The monitoring of these day-to-day value-added activities needs to occur in all parts of the organization. This is how the process owners are able to take real-time corrective action for continuous process improvement (known by the Japanese as kaizen). These selected monitoring points are the business fundamental measures, and together they comprise the business fundamentals table.

The BFT information is collected using process performance measures that reflect the progress of individual process activities (or steps). The PPMs are placed at steps within a key process to ensure that the value-added steps of that process are indeed being performed at the correct time and rate, as well as with the required quality level. These are essentially the performance measures of the organization’s key business processes.

Balancing activities
Breakthrough activities can only really be carried out when the business fundamental activities are under reasonable control. If the BFT is under control, some of the time still available should be devoted to continuous process improvement. After achieving this state of continuous process improvement, the organization has time to perform breakthrough activities.

To some extent, the amount of time spent on breakthrough activities is self-regulating. If an organization is struggling to bring key business processes into control, the key business issue for which a breakthrough is needed may be to “bring the BFT into control.” This will result in delaying or postponing a more lofty hoshin objective but is an essential first step for long-range success (the vision). As the BFT is brought into greater states of control, more of the organization’s time is spent working on the strategies to reach the hoshin objective.

The hoshin methodology
In the hoshin process, strategic planning is systematized: The format of the plans is unified via standards. The standardization provides a structured approach for developing and producing the organization’s strategic plan. The structure and standards also enable an efficient linkage of the strategic plan through the organization. This ultimately leads to an organization wide understanding of not just the plan but also the planning process.

This also holds true for the methodology used to review and track the plan’s progress. This built-in standardization enables the organization to evaluate decisions made by the organization’s leaders and to gauge the effectiveness of selected strategies. Because the review process emphasizes not only results but how decisions are reached, the organization can identify successful decision-making methods and practices. The review methodology is essentially a built-in benchmarking process for the organization’s decision making.

As an additional benefit, the review methodology can help identify areas of opportunity for the future. These opportunities can be used to modify failing strategies or point to the next hoshin objective to be pursued. This identifies the next mission to be accomplished as the organization strives for the vision.

These opportunities for the future, coupled with the benchmarking aspect of the review methodology, are the vehicles for organizational learning at all levels.