The Flyover to Strategic Planning

Transcription

1 IRACST- International Journal of Research in Management & Technology (IJRMT), ISSN: HOSHIN PLANNING The Flyover to Strategic Planning 1) Dr. HEMA BHALAKRISHNAN.,MBA.,P.hD Associate Professor Vivekananda Institute of management Studies Coimbatore, INDIA 2) Dr.Sangeetha Natarajan.,MBA.,M.phil.,(P.hD) Assistant Professor Vivekananda Institute of management Studies Coimbatore,INDIA Abstract Who Fails to Plan, Plans to fail This old adage insists on the importance of planning. The business scenario of todays is more complex in nature. In the yester years the world of business is not so competitive. But today in the pace of fast growing technology, everything has become neural and cumbersome. To release the cumbersome knots one has to plan meticulously and implement some methodology and stick on to that. This way, Hoshin Planning is a strategic planning tool which starts at the strategic level by scanning the business environment in a broad spectrum to the operational level of daily management plan to a shop floor individual in a narrow spectrum. This article explains how Hoshin Planning System works at strategic level and at operational level. It clearly shows way to map operational goals in line with organizational goals. On a whole it brings out a juice of MBO, TQM (PDCA), the Product life cycle theory, Porter s Diamond model and BCG matrix. It provides a link from organizational strategies to daily control activities. The potential benefits from Hoshin Planning can only be gained by continuously applying it in a progressive environment. Key Words: Hoshin Planning, Hoshin Kanri, Product Life Cycle Theory, Porter s Diamond Model, BCG Matrix, SWOT, TOWS Matrix Note: The words Hoshin, Hoshin Planning and Hoshin Kanri are used interchangeably throughout this article. I. INTRODUCTION Hoshin Planning is a strategic planning tool developed by Dr. YojiAkao, which is based on a PDCA cycle which has its roots in TQM. For a strategic planning, the most often used effective methodology is MBO. Peter Drucker introduced the concept of MBO in 1950 s and has written about it in his book, The Practice of Management, in Hoshin planning is a system of planning and deployment which evolved in Japan from MBO concept and is now widely used in many leading organizations. Hoshin planning has become a critical tool for bridging the gap between corporate goals and their successful organization wide deployment. II. ORIGIN AND BACKGROUND In the phase of Post-World War II, Japan was faced with the herculean task of rebuilding just about everything. Juran, a management consultant, pointed out that it was the management s responsibility to lead quality improvement efforts. A key element Fig: Hoshin Planning of that responsibility was to define the quality policy and assure that everyone understood and supported it. Management saw the company s planning process as a vehicle to fulfill their responsibility for quality management. At about the same time as Juran s visit, Peter Drucker s book, The Practice of Management, which described the concepts of MBO, was published in Japanese language. The Japanese blended Deming s PDCA concept and Juran s teachings with the concepts of MBO and began their first attempt at strategic quality planning. In 1950 s, the Japanese Union of scientists and Engineers (JUSE) initially introduced the quality management principles and practices within the Japanese industry. This has gained a huge momentum in the use of Plan-Do-Check- Act (PDCA) cycle. In 1957, Kaoru Ishikawa published a 504

2 paper stressing the importance of management and operational policies. Along with the quality management concepts, the concept of MBO by the great Management Guru Peter Drucker was clubbed and a company wide management system began to generate. By the late 1960 s companies including Bridgestone, Toyota, Matushita, Komatsu, and Juse began to develop their own innovative approaches and these efforts created the basis of Hoshin Planning. By the late 1970 s, the experience accumulated in industry had appeared as books on the subject. The first authoritative text of Hoshin Kanri widely called as Hoshin Planning was translated from Japanese and edited in English by YojiAkao. By 1975, Hoshin was widely accepted in Japan. The first symposium on HoshinKanri was held in Japan in 1981 and in 1988 the Japanese Association of Standards published a series of works dealing with HoshinKanri practices. By the late 1980 s, many US organizations such as Hewlett-Packard, Fuji Xerox, Texas Instrument s Oita Plant, Proctor & Gamble, Nissan, bank of America and Danaherare a few to be mentioned who has won Deming s prize for HoshinKanri. IRACST- International Journal of Research in Management & Technology (IJRMT), ISSN: achieve and TQM represents How to achieve? As Professor Ishikawa said on many occasions, Quality begins and ends with education, Hoshin Kanri begins and ends with planning. The key elements of Hoshin Planning are: 1. Vision (goals, aims and future scope) 2. Policy Development (Development of strategy, policy, benchmarking and targets) 3. Policy Deployment (Creation of policy at each level of management) 4. Policy Control (Feedback loop of results) V. HOW HOSHIN WORKS? Hoshin Planning provides an opportunity to continually improve performance by disseminating and deploying the vision, direction, targets and plans of corporate management to top management and to all employees so that people at all job levels can continually act on the plans and evaluate, study and provide feedback results as a part of continual improvement process. The intention is that, in companies that use Hoshin, everybody is made aware of their individual and management s Critical Success Factors (CSF s) and Key Performance Indicator (KPI s). And hence, departments do not compete each other, projects run to successful conclusions and business is seen as a set of co-ordinated processes. A Flow chart of Policy Deployment Fig: Back Ground of Hoshin III. WHAT IS HOSHIN? Hoshin Kanri shortly called as Hoshin or Hoshin Planning was described as a planning, implementation and review system for managed change (Akao 1991). In Japanese, Hoshin means Shiny metal and Kanri means Compass which points direction. Hoshin Planning is more than a compass for steering the direction of your business processes. It is the strategic means of control that allows your organization to make quick turns, changes and adjustments before you get trapped in a crisis. The U.S literature depicts Hoshin planning as that of a ship s compass distributed among many ships, properly calibrated such that all ships through independent action arrive at the same destination. IV. KEY ELEMENTS OF HOSHIN PLANNING HoshinKanri and Japanese-style TQM are inherently related to each other. In fact, the Japanese would say that Hoshin Kanri represents the what it is that we want to 1) Hoshin Kanri at the Strategic Level Since the objective of hoshin planning is to construct a strategic planning methodology, a need arises in this article to address the most desirable strategic planning methods at the competitive edge of a nation s business interests. To 505

3 cater this need, the product life cycle theory and Porter s Diamond Model are used to analyse the maturity stage of products and competitive advantage of nations respectively. Before finding out the strategy thru MBO, quality deployment thru PDCA and the process which enhance the star product in the market, the company should make an analysis on the Business scenario in the international and national wide markets by scanning the environment. This can be done with the help of Porter s Diamond Model and Product life Cycle theory. At the planning of hoshin at the strategic level, the companies have to make a thorough analysis of their business with the best use of product life cycle theory. It has to analyze the position of a particular product in their country. The existing stage of the product will demonstrate the need for implementation of Hoshin. IRACST- International Journal of Research in Management & Technology (IJRMT), ISSN: ) Hoshin Kanri at the Operational Level Hoshin Kanri focuses more on the process improvement rather than on performance. For this purpose of process improvement, the product portfolio of the company s model should be analysed and related to marketing. All these processes of a company can very well be assessed using the well-known BCG matrix strategy. The BCG matrix model is a portfolio management tool used in product life cycle theory. BCG matrix is often used to prioritize which products within company s product mix get more funding and attention. The BCG model is developed by Bruce Henderson in the early 1970 s. The BCG model based on classification of products into four categories is based on combinations of market growth and market share relative to the largest competitor. Having done a detailed analysis of the product life cycle theory, it is high time to find out the overview of the Competitive Advantage of Nations using the Diamond Model which is developed by Porter a famous Harvard business professor. According to Porter, a nation attains a competitive advantage if its firms are competitive. Firms become competitive through innovation. Innovation can include technical improvements to the product or to the production process. The four attributes of a nation in Michael Porter s "Diamond Model" of national competitive advantage are Factor conditions Demand conditions Related and supporting industries Firm strategy, structure and rivalry Now the planning is narrowed down to the operational level. After finding out the Stars, Question Marks, Cash Cows and Dogs, the company s policy deployment has to rely on the processes which can generate profit to the company and invest on it. Then sell or kill the products with low market value. So the daily management system should ensure that the promising quality is being checked and strategies are properly implemented to bring competitive edge to the company. 3) Aligning Operational Goals to Organizational Goals The Hoshin Style At the strategic level, the Hoshin scans the business environment. Then it aligns the operational goals to the organizational goals. While aligning the goals, the PDCA cycle is followed. The organizational strategies are broken down into mid-term strategies and again into annual plans. The breakthrough opportunities are identified and target manuals are prepared. These target manuals are given to operational teams viz the functional teams and action teams. When the work is in progress, the daily management system ensures the closeness of the plan and reviews the mechanism. The progress is checked periodically. The leaders help the employees by training, coaching and mentoring. And the Hoshin cycle is repeated for the next process. Based on this cyclic process, a SWOT analysis and TOWS matrix is constructed to best depict the practical difficulties in application of Hoshin. 506

4 IRACST- International Journal of Research in Management & Technology (IJRMT), ISSN: ) SWOT Analysis of Hoshin Planning Strengths Redefines planning Enhances Quality Management System Complete scanning of business Participation of every single element of an organization Individual goals related to management goals MBO and TQM are taught to all employees Proper training Clear vision Focuses aims Scanned competitive environment Strategies to overcome competition Attain competitive advantage Collective thinking and job knowledge is galvanized Weaknesses Makes people difficult to understand all at a time Resistance to change in employees Many organizations view it as a mere mechanism Implementation problems exist Lack of Clarity Collective Thinking power recognized as contribution to success Job knowledge Gap identified and analyzed for improvement KPIs identified CSFs identified Opportunities More westernized on collaboration Policing style Targeted benchmarking Meticulous planning tiresome Lack of human aspect (Western) Conflict & Rivalry within Departments Threats The SWOT analysis generally analyzes the strengths and weaknesses internally and tries to eliminate weaknesses and makes use of external elements like opportunities and eliminates threats. In Hoshin planning the SWOT helps to explore the possibilities of maximizing the strategic plans into action plans. While considering the action plans the Key Performance Indicators and Critical Success Factors are identified individually for all the employees. The time bound scheduling of management activities become complex without such an analysis. Prioritizing the key factors of the organization is also crucial pertaining to SWOT analysis. After identifying the various strengths, weaknesses, opportunites and threats, TOWS matrix is drawn. The S-O quadrant of the TOWS matrix collaborate the strength and opportunities and identifies strategies for advancement whereas the W-O quadrant of the matrix paves way to overcome weaknesses. The S-T quadrant makes use of the strength to avoid threats. The W-T quadrant after identifying the weakness and threat factors, it strives to avoid weaknesses and overcome threats. This way the Hoshin planning can be made more simplified and understandable. The SWOT and TOWS helps the top level management to identify which strategy fall under which quadrant. If the organization could carefully take steps to overcome weaknesses and threats, it will make the Hoshin planning a great success. The most identified factor which makes Hoshin planning a tiresome process is the policing style adapted in the Western countries. The daily management charts should be prepared and given to individuals and they should be let free to complete their assignments in a given time bound. The target bound work might show case the Hoshin work so meticulous and this is the reason why most of the companies are not ready to adapt Hoshin Kanri in their organizations. 507

5 IRACST- International Journal of Research in Management & Technology (IJRMT), ISSN: ) TOWS Matrix of Hoshin Planning Strengths - Opportunities S O Identify Strategy for Advancement Clear Vision is identified Strategies are identified to fill the gap existing in MBO and PDCA Business environment is scanned and breakthrough is achieved Collective thinking leads to competitive advantage Operational goals are aligned to organizational goals Weaknesses - Opportunities W O Overcome Weaknesses Employees and middle level managers are educated about hoshin planning and daily management system KPIs are elevated and projected with target results Proper training and campaigns are arranged to reach goals State Clear goals and targets to overcome rivalry and conflict within departments S T Avoid Threats The trend charts and linear graphs can be verified at regular intervals to understand deviation and eliminate it Daily management should be implemented in a friendly participative style to avoid policing Review of performance has to discussed with target benchmarking The presence of human aspect in planning has to be checked at all time and at all levels Strength - Threats W-T Avoid Weaknesses and Overcome Threats The human element in every business has to be made sure when strategies are implemented The opinion of employees should be considered Collective and participative thoughts should be encouraged Targets and follow-ups should not be a burden but should be friendly Meticulous planning should be made simple Weaknesses - Threats VI. HOSHIN STYLE MANAGEMENT The most sought after kind of planning that needs to be implemented in all kinds of business activities is the Hoshin Planning. After analyzing all the possible competitive edges of a business, the dominant role of Hoshin comes into play. All the hurdles at strategic level and operational level are scrutinized with the help of daily management system. It is high time for the Strategy to take form of Action. The catch ball for Hoshin development and deployment will be as shown below. The plan goes like this: company Hoshin, Divisional Hoshin, Sectional Hoshin and Implementation within a section (Individual Hoshin). Perhaps more appropriate is the way that iron filings go into alignment on a piece of paper if the pole of a magnet is placed underneath. Each small iron filing could be considered to be just one employee with everyone focused towards the Vision and Aims of the organisation. The concept is based on the principle that the most powerful organisation is the one which has managed to harness the creative-thinking power of all of its employees in order to make the organisation the best in its business. It requires that each person in an organisation be regarded as the expert at their own job and their contribution recognised. All the members of an organization must have a clear understanding of the organisation s Vision and Goals. With all members in perfect alignment and clearly understanding their own role in the achievement of those Goals as they are trained and encouraged to work together to achieve them, then the productive power of the organisation would be optimal. VII. HOSHIN KANRI ROAD MAP SCAN Scan business environment Scan the Product life cycle Porter model 508

6 BCG matrix IRACST- International Journal of Research in Management & Technology (IJRMT), ISSN: [3] I. Levin, Richard and S. David Rubin, Statistics for Management, New Jersey: Prentice Hall, Seventh Edition, [4] Neter, John, William Wasserman and H.Michael, Kunter, Applied Linear Statistical Models, Irwin Inc., [5] Nystrom, Harry, Creativity and Entrepreneurship, Creative Action in Organizations, Ivory Tower Visions & Real World Voices, Edited by Cameron M. Ford, Dennis A. Gioia, Sage Publications, [6] A Few Words AboutHoshinKanri, July [7] Aliah and Hoshin Planning, March [8] David Hutton, Consultancy in Quality Management, March [9] The HoshinKanri Research Project, March [10] Total Quality Engineering, March [11] TQM: Hoshin Management, March [12] Workforce Performance, March [13] shin.html, January [14] March [15] March [16] David Hutchins, Hoshin Kanri The Strategic Approach to Continous Improvement, [17] HRM Review, Vol X, No. XI, Nov 2010, Ref # 12M [18] Fun at Work, Outlook Business for Decision Makers, January 9, [19] David, Fred R., Strategic Management, New Jersey: Prentice Hall, Inc., Seventh Edition, PLAN Long-term Strategy Mid-Term Strategy Annual Hoshin Plan DO Finalize Processes & Develop Leaders Eliminate waste and maintain Quality Implement improvements Standardize reporting / Review mechanism CHECK Daily Management Check Progress Self-diagnosis Analyze and score achievement Recognize achievements Make corrections if any ACT Promote adherence to standard process Develop leaders and make succession plan Train, coach and mentor Repeat hoshin cycle VIII. CONCLUSION Hoshin Kanri is a vast subject embracing every discipline in the organization and possibly creation of some new ones. No system of continuous improvement can be fully effective unless it represents an effective planning and deployment system. Without such a system there is a weak connection between business goals and employees daily activities. The Hoshin Planning will act as glue between the system and the kind of activities and various quality management technologies used in a company. Hoshin Planning cannot be simply installed of specific organizational situations and by progressively learning from experience. Hoshin Kanri is the means for empowering everyone to stay invested in achieving great results. It is the means for strengthening the true purpose of every organization and sticking to the purpose for many years to come. REFERENCES [1] Farnum, R. Nicholas and LaVerne W. Stanton, Quantitative Forecasting Methods, Boston: PWS-Kent Publishing Company, [2] H.H.Harman, Modern Factor Analysis, Third Ed. Revised, The University of Chicago Press, Chicago, AUTHORS PROFILE Authors Profile Dr. Hema Bhalakrishnan is Associate Professor at Vivekananda Institute of Management Studies, Coimbatore. She has completed her PhD from Bharathiar University and has over 8 years of experience in varied fields of industry, research and academia. Her industrial experience throws light in the dimensions of almost all HR activities. She has experience in working with academic professionals as Research Scholar, Junior Research Fellow and Research Associate in major UGC projects. Has been awarded UGC NET & JRF in the year 2005 To her credit she has published over 20 articles in leading Indian and international journals. She has presented 18 papers in various international, national, state level seminars and conferences.her major areas of interest include Organizational Behaviour, Human Resource Management and Industrial Relations, Strategic Human Resource Management, Performance Management and Managerial Behaviour and Effectiveness. Dr.Sangeetha Natarajan, Asst Professor, Gold Medalist in MBA in Bharathiar University, qualified with M. Phil, UGC- NET & SLET and presently submitted her research thesis in PhD. She has over 9.6 years of teaching experience. Her publication includes a text book on Supportive services and over 6 articles in leading National and International journals and has presented over 25 papers in various national and international seminars and conferences. She has specialized in HR and Marketing in MBA and in Finance in Ph.D. 509