When U.S. researchers went to Japan to learn about Total Quality Management (TQM), they found that the one thing that all world-class Japanese organizations had in common was their approach to strategic planning. A major component of Japanese strategic planning is Hoshin Kanri. This is a process that has been loosely translated in the U.S. to mean Business Strategy Deployment, the intent being to distribute the corporate direction to everyone in the company. The corporate goals permeate downward; and the realities of carrying out these goals are rolled upward and integrated into the plan.
Hoshin Kanri is an established planning process to identify and execute strategic organizational breakthroughs and for confirming a clear corporate direction. It is a daily and dynamic planning process, one that allows organizations to accommodate changing business conditions, helping them to squarely and habitually hit constantly moving targets. The process enables the organization to focus on a finite number of issues, ensuring that goals are achievable and realistic. Everyone in the company is riveted on these issues, concentrating their efforts; and unlike many traditional American strategic planning efforts, the results are outstanding.
Agreeing to drive the planning process from a customer satisfaction perspective is a key prerequisite; therefore, the requirements that are necessary to satisfy the customer are woven into the corporate plan. Similarly, quality is considered supreme.
QUALITY
World-class rivals of U.S. companies have created a sudden and widespread outbreak of quality and management reform. W. Edwards Deming is one of the pioneers in the quality revolution. His chain reaction theory states that improvements in quality always and automatically result in reductions in schedules and cost, increases in productivity, increases in market share, and consequently increases in profits and more jobs for everyone. It is important to understand that choosing quality as an organizational goal does not trade off against profits. It is a fundamental basis of this approach that the two are not mutually exclusive! If comparable improvements are not realized in both areas, then the organization did not understand the concept of quality or they did not work on the right processes.
As an example, if increasing the speed of new product development becomes a strategic goal, then practitioners must look for the jobs (inside a project schedule) that are taking the longest to complete—and shorten them. As part of reducing job durations, practitioners must learn to eliminate all need to repeat any incorrectly completed steps within the job by ultimately doing each of the steps properly the first time. Of course, this causes corresponding increases in quality and decreases in costs.
CATCHBALL
Hoshin Kanri requires more effective corporate communications: the distribution and coordination of all plans across all departments and all functions—up and down, back and forth. Called catchball, this deployment is done in order to ensure that reality and ownership are integrated into the planning process. Catchball is a strategic planning approach of give and take for buy-in and communication developed by Kenzo Sasaoka, president of Yokogawa Hewlett-Packard. Similarly, it prevents cross-functional/departmental conflict and counterproductive and misdirected individual activities across projects and functional departments.
Catchball involves several-to-many iterations of (1) the cross-functional sharing and horizontal integration of the organization's strategic business goals and objectives at the executive and senior management levels and (2) the coordination and vertical deployment and alignment of these continuously improved strategic goals and objectives. Not only is the information from the strategic plan distributed downward in the company; but it is deployed to the entire organization. Furthermore, recipients are encouraged to provide their reactions, criticism, and suggestions for improving the plan, back UP the corporate ladder.
Vertical deployment is followed by another round of horizontal integration, an exercise that is designed to align the strategic plan with the feedback rolled up from the bottom of the organization. Of course, not all feedback is accommodated. For example, a bank is not likely to start selling hamburgers simply because of an employee's suggestions to that effect. However, timely and pertinent input is given serious consideration; and the disposition of suggestions and the reasoning behind decisions are both, in turn, deployed down and across the company.
This iterative improvement process continues through several-to-many cycles. Organizations are often surprised (and overwhelmed) by how long it takes to do catchball. Nevertheless, they should give themselves permission to complete this essential aspect of communication completely and concisely. Shortcuts may save time in the immediate-term, but may be more costly later in the long-range: in terms of limited reality in, and poor buy-in of, the plan.
Leadership Requirements
Hoshin Kanri requires a high level of senior management commitment; and these senior managers must demonstrate an uncompromising desire for success. Thus, they must be day-to-day participants, providing support, time, and resources. Furthermore, the process must be so important to them that their participation is never delegated. Deming found this to be the single most important step in the quality process. The effort should not even be considered without this commitment-and canceled if it disappears after the effort has been initiated.
Similarly, lasting change requires a strong vision for the future. For the long haul, it requires executives with the courage to pursue that vision. They also must have the desire to weave that vision into the very fabric of the culture—thereby creating a visionary company. (Visionary companies live on long after their visionary leaders have left.) This planning approach is not intended for those organizations that are still not poised to make the long-term commitment to cultural change. It is aimed at companies who are genuinely interested in aggressive long-range strategic planning.
Cross-Functional Teams
Cross-functional teams are also an essential component of Hoshin Kanri. They are defined as consisting of anyone and everyone (in or out of the organization) who can in any way impact (1) the end date of the planning and implementation effort or (2) the quality of the plan. Cross-functional work teams are composed of skilled representatives (internal customers, analysts, designers, outside suppliers, etc.) from every avenue that can affect the successful outcome of the project. As an example, strategic planning representatives may be selected from one or more of the following: marketing, finance, customer services, manufacturing, distribution, publications, personnel, quality assurance, training, customer support, and any outside vendors who can affect the reality of the plan.
THE STRATEGIC PLANNING WORK BREAKDOWN STRUCTURE
Starting at the top of the organization, a clear and concise vision is developed. This vision is translated into a few achievable goals, the corporate goals. In turn, each level of the organization breaks these corporate goals into their own area-goals. This process continues until all of the resources in the organization understand the role that they, as individuals, play in achieving organizational objectives. Everyone in the organization manages their job as though they personally own the company, and their every activity performed every day is related to how it affects the corporate goals.
The Vision
A corporate vision describes the future condition of the organization; i.e., what it would look or feel like at the desired end state. It is not a list of activities or objectives. The vision results from an in-depth understanding of the outside world (e.g., environmental analysis [social, regulatory], economic analysis, new venture opportunities).
The Mission
The vision is synthesized and the findings are mapped into clear and succinct mission statements for each major functional unit of the organization. A mission is the purpose or reason for being. Mission statements are those charters that the functional units accept as their contributions toward driving the organization to achieve its vision.
Critical Success Factors
Once the members of the planning group have defined the mission, they will go straight to specifying the critical success factors. In every organization, irrespective of size or type, there are a fixed number of essentials that are crucial to the success or failure of the enterprise. It is these finite number of elements that are called the critical success factors; and, for most organizations, they number between five and nine. They are the critical processes that, if carried to world-class completion and perfection, would ensure winning competitive performance for the organization.
The critical success factors also include clearly specified success, acceptance and completion criteria for the organization, the three or four measurable definitions in each of these three categories, so that members will have clear goals to work toward. Furthermore, these measures must be specific enough so that success will be easy to evaluate and so that participants will know that they have succeeded and be entitled to their reward.
Since they are the areas that require careful and constant attention of the business managers, critical success factors must be carefully gauged and monitored.
Objectives, Strategies, and Tactics
Objectives describe major departmental accomplishments that are delivered in pursuit of the missions and critical success factors. They are quantifiable and measurable “aimed-at” targets.
Strategies are a set of critical maneuvers built around decisions and events that are used for horizontal integration and vertical deployment and alignment of objectives.
Tactics are specific actions that are invoked to use the strategies to accomplish the objectives. They are also used for horizontal integration and vertical deployment and alignment efforts.
Business Purpose
The business purpose defines the boundaries of the business and the business population. The company must have a clear understanding of what business (or businesses) it is practicing. Furthermore, it is critical to ensure that the organization is in the correct business. As an example, capturing an entire marketplace does an organization little good if the only product they make and sell is obsolete (for example, buggy-whips) or is on its way to obsolescence (for example, 80286 microcomputers).
Values
The values of an organization describe its culture and mores. Values are the ethical principles that clearly state what the organization believes in, that guide the behaviors that are invoked for pursuit of their ambitions. Values surround and permeate all of the above activities.
It is very important that the stated values of the organization be perceived as real. If there is a disconnect between the stated values and the observed behaviors (of executives, for example), employees may become disenchanted and embittered; and lasting cultural improvement will not occur.
The Corporate Road Map
The three-to-five year corporate road map includes the broad areas that need improvement in each successive year or they will block attainment of the vision and mission. It sets performance improvement initiatives, goals, and concisely defines priorities for each year in the road map. It also states what has to be done, specifically who is responsible and accountable, and how each accomplishment will remeasured. The stakeholders are identified at this time; they will make their commitment; they will choose their reward; and the rewards will be approved.
Twelve-Month Objectives
The twelve-month corporate objectives are driven by the three-to-five year corporate road map, refining the broad areas into a few key objectives that must be achieved by each department in the coming year, identifying the truly broken systems and the real opportunities for improvement.
Catchball Revisited
The vision, mission, critical success factors, etc., must be clearly communicated to everyone in the organization and at all levels. Similarly, the development of the vision and mission is likely to result in the evolution of an entirely new vocabulary that must be introduced to the organization. Finally, management's commitment should be confirmed and publicized.
PROJECT MANAGEMENT OF THE STRATEGIC PLAN
In a detailed six-month project implementation plan, each department manager sets quantitative monthly goals. Supervisors and their resources set individual six-month quantitative tasks and make weekly assignments, subsequently using this detail to track and manage the strategic implementation effort. These detailed plans state what activities have to be done and the roles and responsibilities of the facilitators, work teams, and so on.
Five months into the first six-month plan, the twelve-month objectives are reviewed and revised to reflect the next twelve-month objectives and strategic targets; and a new project implementation plan for the next six months is created.
Eleven months into the plan, the entire planning exercise is repeated, starting with a corporate road map that has been revised, if necessary, for the original remaining years—and extended for an additional year. As a consequence, one corporate road map, two twelvemonth plans, and two six-month plans are prepared per year, fostering rolling objectives that are continuously fed into the planning and implementation process.
Because the world is changing so fast that companies have to be able to change rapidly, they have to work harder to figure out what to do. Having two six-month deadlines each year (along with monthly and weekly tracking) demands a more concise focus, leaves less room for procrastination, and causes a greater sense of urgency to hit the target. ALso, given that the detail is prepared every six months, the plan doesn't take as long to prepare. Some organizations even prepare two plans: one with a desired set of goals and objectives and one with a conservative set of goals and objectives, along with recovery strategies.
CROSS-FUNCTIONAL REVISITED
If there is limited cross-functional representation in the strategic implementation and project management effort, then organizations must question just what it is that they are trying to do. It is certainly not project management of the plan! If anyone and everyone who can affect the destiny of the strategic implementation has not given input to its project plan, is not getting weekly assignments, and is not preparing weekly status reports, then the organization simply is not in control of the whole strategic planning effort.
INFRASTRUCTURE REQUIREMENTS FOR SUCCESS
The successful achievement of an organization's strategic desires relies on strong emphasis on two components: satisfactory planning and implementation— and continued project follow up. To support this effort, organizations looking to maximize their strategic planning efforts are advised to create a separate corporate planning and development project office that reports directly to executive management.
At the top of the organizational structure, the corporate planning and development project office supports three essential activities: strategic planning, corporate intelligence, and management planning.
Among their many obligations, the strategic planning group ensures the horizontal integration and cross-functional prioritization of all goals, objectives, strategies, and tactics, and the priorities of all of the organizational projects initiated to achieve these targets.
Corporate intelligence performs environmental analysis, financial and economic planning, product planning, advanced technology planning, and new business development coordination.
Minimally, the management planning function includes:
- Support for and monitoring of the strategic and annual operating plans;
- Product and/or application portfolio management: mapping critical success factors to optimize existing and product/systems expenditures and evaluation of new product/systems opportunities;
- The vertical deployment and alignment of all project priorities, the resolution of any prioritization conflicts, and the horizontal concurrence of all functional groups that may affect (or be affected by) project priorities;
- Optimizing cross-functional resource allocations for the strategic and annual operating plans; and
- Identification of project management correction strategies in response to changing needs.
When considering these objectives from a cross-functional perspective, the charter for the management planning function must be expanded to define the executive-level roles and responsibilities for projects, the cross-functional organizational roles and responsibilities, and finally the project management positions with their corresponding roles and responsibilities.
IN CONCLUSION
This is not a trivial exercise or one that is completed in a weekend! One of the reasons that the strategic planning process has been largely unsuccessful in the U.S. in the past is that it has been a rushed episode and implicitly reviewed as a one-time exercise, to be shelved at its completion. Furthermore, the full benefits of Hoshin Kanri are not realized unless the total process has been implemented. And, because the total Hoshin Kanri process requires skill in a few potent actions that will take several years to master and institutionalize, many U.S. organizations will lose patience and abandon the effort. On the other hand, those that stick with it will likely be their industry masters.
Lois Zells is the co-chair of the PMI Information Systems Specific Interest Group (ISSIG), and the co-chair of the overall SIG Council. She is an international author, lecturer, and business consultant in software engineering, specializing in strategic planning, total quality management, process maturity assessments, systems development methodologies and techniques, and project management. She has authored the best seller, Managing Software Projects, the introductory chapter for Total Quality Management for Software Projects and many other articles. She is working on her second book: Applying Japanese Quality Management in U.S. Software Engineering. Mrs. Zells graduated Summa Cum Laude in data processing management from the University of Baltimore and did her masters studies in computer sciences at Johns Hopkins University.