March 1, 2012

By Darren Dolcemascolo

So far this year, we have talked about lean leadership in the first two newsletters and articles. This month, I am going to continue that trend in talking about a very important concept in lean thinking that is often shrouded in mystery: strategy deployment, sometimes called policy deployment, hoshin planning, or hoshin kanri. It is particularly shrouded in mystery when it is called hoshin kanri. In Japanese, hoshin means shining metal, compass, or pointing the direction, kanri means management or control. This is in line with the idea of "True North" that Toyota people often speak of.

Strategy deployment is the method by which company leadership can get everyone in an organization working toward the major goals of the organization. It is designed to ensure that people are working on the right things while continuously improving. Let's take an example:

A hospital system wants to reduce preventable deaths as one of its major goals. How can that system get everyone in the organization working toward that goal? Simply by measuring preventable deaths at each hospital in the system? Obviously not, so with the concept of strategy deployment, one would identify the major opportunities or value streams that can affect this goal. For each one of these, a specific goal might be set with specific objectives. For example, if perhaps it is determined that one opportunity to eliminate or reduce preventable deaths might be reducing re-admittance to ICU. We might investigate that further and determine that the top cause of re-admittance to ICU is pneumonia. Thus, we can have people working toward the goal of preventing patients from contracting pneumonia. As you can see, this process of strategy deployment would involve many different branches from one key goal. We've only touched on one small branch in this example.

What about a manufacturing example? Let's suppose that a company that develops and manufactures capital equipment has as one of its key goals to increase operating margins. One way it would like to achieve this is to improve productivity. In order to accomplish this, it could consider each of its value streams and identify opportunities for improvement to productivity within each. It might focus its efforts on specific opportunities within each key value stream. Projects and continuous improvement efforts might be focused on these areas and metrics would be put in place at each level.

Why would it be important or helpful to do this exercise in strategic planning for a lean organization engaged in everyday kaizen? Isn't it just good enough for everyone to be continuously improving? Well, having everyone work toward improvement is a necessary but not sufficient condition. This is the culture that needs to be in place to be successful, but this idea of strategy deployment or hoshin planning is what develops the strategy and effectively gets everyone working toward the goals. As you might imagine, these two things (strategy deployment and a culture of continuous improvement) are together a very powerful force..

Click here to subscribe to our free e-newsletter Learning to Lean and receive three articles like this one each month.