In an increasingly complex and information-saturated business environment, the business organization consulting becomes a critical support as many companies struggle to translate their ambitious visions into concrete, aligned actions. This strategic disconnection creates a deep and dangerous gap between the direction of the Top Management and team operations, a gap that risks wasting resources, energy and growth potential.
In this scenario, theHoshin Kanri proves to be a powerful method and an enlightening management philosophy, a true strategic compass. It is the approach to aligning each individual and each business process toward a common goal, ensuring that everyone from top to bottom is moving in the same direction. As the famous management guru Peter Drucker argued:
"The best way to predict the future is to create it."
And Hoshin Kanri is the process of turning this maxim into a tangible reality.
Business organization consulting and Hoshin Kanri: identifying the causes of the disconnect between strategy and operations
To grasp the value of Hoshin Kanri in business organization consulting, it is useful to analyze the most common causes why a strategic plan fails. The problems are almost never related to a lack of bright ideas or expertise in defining a vision, but rather to critical inefficiencies in the communication and in theimplementation. The main causes include:
- Strategies dropped from above without involvement: often, strategic direction is defined in a top-down manner, far removed from operational reality. Without input from those who work in the field on a daily basis, plans may prove unrealistic or unsuitable. Teams, having not been involved, do not fully understand the "why" of goals and do not feel vested with the responsibility to achieve them.
- Ineffective communication and dispersion of goals: a strategic idea may travel from the CEO's office to the production department, but along the way its meaning may be distorted, misunderstood, or simply forgotten. This phenomenon, known as the "strategic disconnect," turns goals into a confused and weak "word of mouth" that loses strength and clarity with each step.
- Misaligned daily activities: operations teams continue to perform their tasks, often efficiently, but without these being directly linked to the long-term goals of the company. For example, a company that aims to become a market leader in quality, but whose production teams are incentivized only on the quantity produced. The result is frenetic but not strategically productive activity.
- Lack of monitoring and adaptation: strategic plans are defined at the beginning of the year and then, in effect, shelved. The lack of a regular review system and a mechanism to correct the course of action makes the organization slow and unable to react to market changes.
Hoshin Kanri, as part of a business organization consultancy, acts directly on these critical issues, creating a virtuous flow of information, responsibility and action that bridges the gap between the "thinking" of management and the "doing" of teams.
What is Hoshin Kanri: beyond the simple definition
To fully understand the power of this approach, it is essential to start from its roots. The term Hoshin Kanri Is derived from Japanese: Hoshin does not simply mean "direction" but literally "shining compass needle" or "focal point," suggesting a precision and clarity that exceeds the mere indication of a path. Kanri means "management" or "control." Together, they point to a system for managing the company, setting a clear and non-negotiable direction.
But the Hoshin Kanri is not a mere tool or annual planning exercise. It is a real participatory and systematic process, a way of thinking that integrates strategy into the day-to-day operations of the organization. Its distinctiveness lies in its ability to translate long-term goals into concrete, measurable activities, which are then distributed widely: vertically along the hierarchical structure (from top management to operational teams) and horizontally among different business functions (production, sales, marketing, R&D). Unlike other methods, Hoshin Kanri does not simply set goals, but creates a clear path and an ongoing verification system to achieve them.
The 7-Step Method: a step-by-step journey
The implementation of Hoshin Kanri, follows a structured process, which integrates seamlessly with the continuous improvement cycle PDCA (Plan-Do-Check-Act) by W. Edwards Deming. Each step is fundamental and built on the previous one.
- Vision and Values Definition - The process starts from a fixed point: a Vision clear, inspiring, and shared that answers the question, "Where do we want to be in 3-5 years?" The Vision is not just a slogan, but the ultimate horizon toward which the entire organization moves. It is complemented by corporate values, which serve as a guide for every decision.
- Strategic Planning: The Breakthrough Objectives - At this stage, management identifies the areas of radical change needed to fill the "hole" between the current situation and the Vision. These breakthrough goals are ambitious, long-term (3-5 years) and require significant, interdisciplinary effort. They are not simply improvements, but real transformations. For example, "Increase the market share of 20% in the B-segment within 5 years" or "Reduce the delivery time of 50%."
- Annual Goals and Priorities for Improvement -. Turnaround goals are "broken up" into more manageable and concrete annual targets. For each annual goal, priorities for improvement and metrics of success are defined. It is at this stage that the SMART (Specific, Measurable, Achievable, Relevant, Time-bound), ensuring that each goal is clear and measurable.
- Development of plans by function: the process of Catchball – This is the beating heart of Hoshin Kanri. It is not just a simple top-down cascade, but a true "throw and receive" (the meaning of Catchball). The leadership strategy is "rolled out" to Middle Management, which in turn processes it, translates it into more specific goals, and "rolls it back" to the operational teams. At each step, there is two-way dialogue, discussion, and negotiation to clarify expectations, overcome obstacles, and ensure that all levels fully understand the strategy and feel accountable for it. This process eliminates a sense of imposition and fosters authentic participation.
- Operational Implementation - Concrete actions are put into practice. One of the most powerful tools at this stage is the X Matrix. This visual and interconnected diagram links the Vision, strategic goals, annual objectives and operational projects, clearly assigning responsibilities. A single matrix summarizes the entire strategic plan and related actions. The X Matrix is a true scoreboard that visualizes the consistency between each individual project and the corporate Vision.
- Monthly Review - The strategy should never remain static. Hoshin Kanri includes regular monthly reviews, during which progress is monitored using key performance indicators (KPI). The focus is on the "exceptions," i.e., the points that deviate from the intended goals. This is not a time to search for culprits, but an analysis of the root causes (root cause analysis) to quickly develop and implement effective countermeasures. This proactive approach ensures agility and responsiveness.
- Annual Review - At the end of the cycle, an annual strategic review takes place. It is a time of deep learning, in which one evaluates not only "what" was achieved, but also "how" and "why." Lessons learned and successes to be replicated are identified. The data and knowledge gained in this phase become the starting point for the next PDCA cycle, closing the circle of continuous improvement.
The Benefits and Integration with Lean: the map and tools
Adopting Hoshin Kanri brings tangible benefits that go far beyond simple efficiency:
- Strategic Alignment - It reduces the dispersion of energy and resources by focusing all efforts toward the most important goals.
- Clarity and Understanding - Each employee understands his or her role in the larger strategic picture, increasing a sense of belonging and motivation.
- Improving Communication - The process of Catchball breaks down cross-functional "silos," fostering collaboration and a common language.
- Increased Agility and Reactivity - The continuous review system makes it possible to adapt quickly to market changes, overcoming the rigidity of annual planning.
- Culture of Continuous Improvement - Hoshin Kanri, based on the PDCA cycle, establishes a habit of monitoring, analysis and learning that becomes part of the company's DNA.
The effectiveness of Hoshin Kanri is multiplied when it is supplemented with the Lean Transformation. The Hoshin Kanri provides the "map" and strategic direction, answering the question "where are we going?"
The tools of Lean methodology (such as the Kaizen, value stream mapping or the 5S) provide the "tactics" and means for operational improvement, answering the question "how do we get there?" This virtuous pairing transforms each improvement project into an essential part of a larger strategic design, preventing initiatives from remaining isolated or ineffective.
Conclusion: the Hoshin Kanri as a philosophy of growth
Hoshin Kanri is not a passing fad or a complex management method. It is a management philosophy that promotes transparency, consistency and participation. It is the compass that guides organizations in an ever-changing world, helping them to remain focused, responsive and cohesive.
If your company feels the need to find its North and turn ambitions into concrete results, Hoshin Kanri can be the turning point. It is an investment not only in strategy, but in the cultural growth of an entire organization.
To learn more about this topic and find out how Hoshin Kanri can transform your business, download our White Paper: Hoshin Kanri: how to translate strategy into daily actions.