With the Indian economy becoming increasingly globalised, being and remaining competitive, highly productive and customer-oriented is critical. These objectives can be achieved if the entire organisation is mobilised to work towards a common goal of strategic importance.
This process of aligning the organisation goals is called Hoshin or policy deployment or policy management. Hoshin is a combination of "Ho" (method or form) and "Shin" (shiny needle or compass) and means a way of setting the direction or management for objectives.
The Hoshin process and the action points decided at every level are crucial for the success of policy deployment. The five phases are:
- President's diagnosis of previous year
- Strategic planning and setting the policy (proactive)
- Policy deployment
- Implementing the policy; control ling with metrics
- Check and act (reactive)
While setting the Hoshin or direction for the organisation, the CEO decides on a few strategic issues on which the organisation must focus. These are based on the organisation's mid-strategy. At times, there is a need for rapid response to a changing environment.
For instance, economic, political and technological changes force an organisation to change. Thus, the top management team studies the organisational and environmental events of the past year, such as economic factors, competition, market growth, market productivity and societal changes as well as organisation-specific factors.
Based on a reflection on what has been done in the past, strength/weakness analysis of the prior year's plan, environmental factors and medium-term plans, the CEO decides the objectives or the policy for the organisation.
Setting the Hoshin also includes an analysis of medium-term, long-term and noble goals. It requires taking into account the company's vision and mission. Based on these parameters, the CEO defines the guidelines under which the softer aspects of the organisation are defined.
For instance, whether the organisation should use more IT, if more training is needed, improvements in HR practice and so on. The MfO consists of statements of the desired outcome for the year (objective and target), the strategy for selecting means, plus the means of accomplishing the desired outcome (action plans).
The organisation objectives having been defined, the Hoshin process is set into motion. MfO aligns the activities of people so the company can achieve key goals and react quickly to the changing environment. It uses indirect rather than direct enforcement by creating a sense of urgency.
It involves all the managers in a co-ordinated way in the company's annual planning cycle. It provides an important strategy for total participation as well as fulfilling its obvious purpose of company alignment.
Thus, even workers are influenced to choose activities with strategically important objectives. It aims to align all jobs and tasks, whether routine work or improvement work, focusing and co-ordinating efforts and resources toward the key company goals in order to create breakthroughs.
Hoshin, if implemented effectively, can bring the company's goals and activities quickly and effectively into alignment with rapid societal or environmental changes.
The top-level MfOs are deployed downward through the organisation using a common language of effective change:
- Facts: using measurable data.
- Process: using Ishikawa and Tree diagrams to understand what is really happening.
- Focus: using Pareto diagrams to be sure to address the vital few.
The X-matrix methodology works well in executing Hoshin. It is used at the time of formulation to see and check that deployed objectives by each division will result in the realisation of the company's policy; when deploying action plans in each division; during consolidation of actions; management of progress in the year's policy, monthly and quarterly to check the gap of target and actual of policy realisation in terms of the progress of actions in each division, as the method of C in PDCA (plan, do, check, act) cycle.
The advantage is that while it takes some time to plan, it also ensures that the plan works well. Hoshin allows and requires you to review the plan once a month.
Thus, the manager has the opportunity to change or adjust the action plan. It is not the result that is incorrect but the action plan that is not aligned to yield the desired results.
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Dr Surinder Kapur is chairman, CII Mission for Manufacturing Innovation, and chairman and managing director, Sona Koyo Steering Systems
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