Hoshin Kanri: what is it? How to do strategic planning

1. Definition of vision, mission and values: why this plan?
   Many companies simply write down their corporate vision and mission without a structured link to the company’s actual strategy and culture. Through the “Envisioning“ process, on the other hand, people’s aspirations are given body and substance to transform them into a vision and mission that truly creates cohesion. When the vision, mission, and values are aligned and linked to corporate strategy and culture, people work together in a cohesive way and make decisions in a common direction. The Envisioning process, linked to strategic planning, leads to increased enthusiasm, team energy, decision-making speed and motivation to face challenges.
   
2. Long-term strategic objectives (3-5 years): what do I want to achieve over time?
   Vision, mission and values must be translated into strategic directions and breaking goals for the company, taking care not to waste energy on too many fronts. Key questions in this phase include the markets to be addressed, problems to be solved, solutions to be proposed, product lines, distinctive features, industrial and technological levers and business management systems. The long-term objectives, typically 3-5 years, should also summarize the answers to the questions just seen, to clarify the strategic guidelines to be followed in all key business areas: innovation, technologies, Leadership model and corporate culture, organization, key processes to be improved, key competences to be developed.
3. Short-term strategic objectives (12 months): what do I want to achieve in the short term?
   From vision to execution: the transition is to translate long-term goals into short-term goals, usually within one year. Quantitative and measurable objectives are defined as guides for the company’s annual improvement activities. For example, if the long-term objective is international expansion, this phase defines precisely the goals to be achieved in the next 12 months: country, products, target turnover. In this phase of strategic planning, a set of quantitative and measurable targets is defined as “pull” all the annual improvement activities of the company.
4. Selection and definition of strategic projects: how to achieve it?
   The focus of this phase is to understand how to achieve the goals defined in the previous steps, developing the set of projects necessary to reach the annual objectives and therefore priority for the entire company. Each project will have its own evaluation metrics and KPIs will be those of the project team or department that will run that project. This is the stage where organizational alignment takes place, where each team and department integrate with the strategic business plan, with a full understanding of their contribution. The projects to be developed must never miss those related to the construction of strategic skills and management systems necessary for the achievement of objectives.
5. Definition of metrics and KPIs to be improved: how much and when?
   This is the operational phase in which the contents of each strategic project are developed, using the A3 Management method. It is important that each team shares operational actions and project-specific metrics, so they have a clear framework for future monitoring. Given the huge availability of data and potentially available KPIs, it is important to have a close look at what we have chosen as priorities for the entire company.
6. Resource allocation: who will do what?
   Strategic projects, both in the setting and implementation phase, are a fabulous weapon for taking off agile working and organizational methods. The work teams that are created must be small, with high autonomy, clarity of objectives that have helped to calibrate in the setting phase and flexibility in finding solutions to achieve the targets set. When choosing the resources to be allocated to projects, we must pay more attention to the resources that we consider suitable than to the company’s organizational chart. We need to be aware that the right resources will work on the right things for the company.
7. Monthly and annual review plan with analysis of deviations and countermeasures
   This is the stage where teams check whether they are reaching the goals of each project and if there are any obstacles along the way. The monthly review represents the meeting point between operational project teams and business management, in such a way as to prevent any problem from becoming an insurmountable obstacle if not addressed immediately. At the end of each year, the entire cycle is fully reviewed and processed for the next 12 months. This annual meeting reviews the objectives of the year that is closing, new objectives are defined in response to changes in the context and, above all, they reflect on improvements to be made to the overall process of planning and implementing the strategy.
   

The use of hoshin kanri brings several benefits:

• Defines strategic objectives aligned with the company’s vision for the medium-long term
• Identifies tactical objectives in the current year, with quantification of expected results
• Links the objectives of each department to strategic objectives
• Identifies operational projects necessary to achieve the objectives
• Specifies the key indicators by which progress will be monitored
• Communicates and aligns goals clearly across the organization
• Facilitates conflicts management
• Provides the elements for the team spirit and collaboration
• It shares responsibilities with the individual people involved for each of the projects and objectives

The Hoshin Kanri should be an important moment of business reflection before any budget is drawn up, as the budget represents the economic and financial detail related to strategic plans.