Lean Corner

Digitize Hoshin Kanri for More Effective Strategic Planning

Overview of the Traditional Hoshin Kanri Method
Digitalization of the Hoshin Kanri Process

For a company, translating values and strategic objectives into concrete actions on site is often a complex task. There are many risks when leaders engage in such an exercise: lack of strategic alignment between teams, dispersion of resources, stagnation, or even loss of agility.

The Hoshin Kanri method addresses these issues with simple tools and operational processes that involve all the stakeholders of a company. This iterative and collaborative model has proven itself in various industrial environments. In this article, we will explore how digitalization can enhance the Hoshin Kanri method, making it an even more indispensable tool.

Overview of the Traditional Hoshin Kanri Method

Definition and Objectives of Hoshin Kanri

First and foremost, let’s clarify what the Hoshin Kanri method entails. Like many Lean Management tools, Hoshin Kanri comes from Japan. It refers to a set of processes and tools designed to align the company’s strategy, defined by management, with the operational actions implemented on site by spreading these objectives through all hierarchical levels.

Its implementation follows the PDCA (Plan, Do, Check, Act) cycle and can be summarized in a few steps, often based on a cycle:

Define the long-term strategy and identify a few objectives over 3 or 5 years.
Set the objectives to be achieved in the current year.
Translate these annual objectives into operational actions.
Establish KPIs and metrics to measure progress toward these annual objectives.
Allocate resources to each identified operational action.
Monitor the indicators throughout the year and apply corrective actions if the results do not meet the set objectives.

The Hoshin Kanri method also relies on a process called “catchball.” Strategic objectives are broken down into local contributory goals that should support the achievement of strategic objectives, through exchanges between the different hierarchical levels of the company.

Catchball then enables you to maintain feedback loops at all levels of your organization’s hierarchy through a two-way sharing of information

The most commonly associated tool with Hoshin Kanri is the “X-Matrix,” which groups long-term objectives, annual objectives, operational actions to be implemented, KPIs for monitoring, and the responsible individuals for each task on a single platform.

Why Digitize Hoshin Kanri?

Today’s industrial environments are increasingly digitized, thanks to various tools that significantly boost productivity or accelerate processes. Hoshin Kanri is no exception and can also benefit from digital tools to increase its efficiency.

Digitalization can first improve data and information management by giving all organizational levels access to the company’s strategic objectives through a dedicated tool or platform.

Digital monitoring tools can provide real-time tracking indicators, which increases agility and responsiveness in case of deviations from the set objectives. Some platforms even offer personalized report generation based on the organization’s different needs, allowing everyone to have a very clear view of their performance.

Lastly, digitalization improves communication and coordination between different teams, thanks to collaborative tools that enhance cross-functional communication, thereby reducing silos.

Digitalization of the Hoshin Kanri Process

Determining the Criteria for Selecting the Right Digital Tools

As with any digital transformation project, the tools chosen must meet the specific needs of the organization and the requirements of Hoshin Kanri. The tool should enable the definition, tracking, and real-time adjustment of strategic objectives as well as tracking KPIs. The ability to monitor real-time performance and progress should be one of the main criteria to consider, making it essential to choose the right tool based on the nature of the indicators to be monitored and the volume of data to be processed.

The tool must also be user-friendly and simple to use since it will be used by various stakeholders (directors, managers, operators, etc.). It should enable effective and intuitive collaboration among users: everyone should be able to provide comments, feedback, or share information at any time.

The last aspect to consider is, of course, cybersecurity, as this tool will handle potentially confidential data, such as strategic objectives or performance indicators. Some companies opt for a solution hosted on protected local servers rather than cloud-based solutions that may pose security risks.

Integration with the Existing Information System

The implementation of performance indicators requires setting up interfaces with existing systems (such as ERP or MES) to retrieve key data. It is, therefore, necessary to choose tools that can easily interface with other solutions and ensure secure and efficient data exchanges. Most solutions on the market today offer API connectivity, which facilitates data flow and ensures automated information exchanges.

Formalizing Strategic Objectives

The formalization of objectives is the starting point of the Hoshin Kanri process and ensuring that this phase is conducted correctly is essential if management wants to successfully translate its strategic vision into clear, quantifiable operational objectives. This is where a digital solution can add real value by making this step more structured, transparent, and collaborative.

A digital tool can indeed allow faster and easier access to all types of data (if it is correctly integrated with the company’s existing information system), as well as give access to past performances or external data like market trends. All this information helps provide more visibility to management, allowing them to set a strategic course that is both ambitious and realistic.

The formalization of strategic objectives requires the involvement of multiple hierarchical levels, and having a digital tool that fosters collaboration can be a real plus. Everyone can share their ideas without losing information, making the “catchball” process more efficient and constructive.

Real-Time Monitoring and Adjustment of Objectives

The ability to implement personalized KPIs updated in real-time is where a digital solution can truly enhance the Hoshin Kanri process.

With a digital tool, performance and indicator visualization is significantly improved. Some tools offer automatic, custom dashboards for all hierarchical levels, allowing everyone to have better visibility of their situation relative to the set objectives.

A properly configured tool can, for example, send alerts when it detects that a target may not be met, or at least when an indicator seems to deviate too much from its target. This gives managers or the leadership team the ability to react almost immediately, thus preventing issues from becoming critical.

Managing Change and Solution Adoption

Every digital tool often brings significant changes to its users, both in terms of work methods and the company’s operational processes. Addressing these changes is crucial to ensure the solution is well adopted and, more importantly, that the tool is capable of delivering its full potential.

The first step is to consider everyone’s expectations regarding the tool being implemented: establish clear communication between operational staff, managers, and leadership to allow everyone to express their concerns or worries, explain the purpose of the tool, and highlight the benefits it will bring.

Training and support are also essential to guarantee a good adoption rate. Continuous support should be available to address questions, resolve potential technical issues, or assist users.

Artificial Intelligence in the Service of Hoshin Kanri

Artificial intelligence (AI) is a powerful tool that, when used correctly, can bring considerable value to the Hoshin Kanri process. All stages of the process can benefit from it: generative AI, for example, can be used during the definition phase of strategic objectives, proposing targeted goals after analyzing various internal and external data.

Finally, KPI or indicator analysis can be enhanced through predictive modeling systems, allowing for increased reactivity in case certain indicators deviate from the initially set objectives. Some generative AI models can also suggest action plan adjustments based on internal or external events to ensure that the implemented actions remain aligned with the organization’s strategic objectives.

The digitalization of Hoshin Kanri represents an interesting lever for organizations looking to improve their efficiency in translating strategic objectives into operational actions.
Every step of the process can be optimized through digital tools, notably by fostering better team collaboration, enhancing the monitoring of certain indicators, and boosting reactivity.

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