Hoshin Kanri Ensures Frontline Problem-Solving within Lean Management

Last week Josh Howell, President of LEI and my colleague for more than 10 years, started a new series for our community called “The Management Brief” that will draw upon our experience in and out of Toyota to share our viewpoints about lean management, primarily focusing on the topics of hoshin kanri, daily management, and A3 problem-solving and the relationship of those three. More importantly, we will invite executives to share their experiences.

For this article, I’m focusing on hoshin kanri supported by daily management and problem-solving, a valuable approach as you attempt to improve the condition of your enterprise.

What is hoshin kanri?

I define hoshin kanri as:

A management system for strategy that defines mid- and long-term direction (objectives and targets) and annually builds alignment—vertically and horizontally—to the direction, manages annual execution to the direction, and develops the capability of people throughout the organization.

Yes, that’s a mouthful.

But for organizations that can swallow this mouthful, it is a powerful and integral part of building a stronger business that functions both top-down based on direction of leadership and bottom-up based on the daily critical work and problem-solving required on the frontline. What good is strategy if it fails to alter the day-to-day activities in your company?

Connect frontline improvements to hoshin kanri and the management system

While in Toyota, I managed its North American hoshin kanri process (Toyota’s primary strategic planning methodology) and, since leaving, I’ve supported many organizations of varying sizes and in different industries to strengthen strategic planning through the use of hoshin kanri.

Hoshin kanri has a critical role in what makes any company successful—a focus on value-creating work. Toyota is successful and those that successfully emulate Toyota focus on the value-creating work of the organization, be that the shop floor in manufacturing, the job site in construction, the emergency room in a hospital, the product design center in engineering, or wherever value-creating work occurs.

I learned this the moment I set foot in Toyota. My first learning (and the first learning every new team member gets who joins Toyota in Japan) was several months working on the assembly line. I worked on a line building Camrys in Toyota’s Tsutumi plant. This grueling but powerful experience sent a message to me that wherever I went in my career with Toyota, I should always remember that people building our cars are the people who directly add the value for which the customer pays. And my job, wherever I go in my career, would be to support them.

What good is strategy if it fails to alter the day-to-day activities in your company?

I spent six years working in product planning in Japan, and then I moved to the US to work for Toyota Production System Support Center (TSSC). At that time, this group was responsible for supporting primarily Toyota’s suppliers to implement the Toyota Production System and build capability. One of my first and most impactful experiences was at a supplier near Lexington, KY, where we transformed their shop floor from traditional manufacturing operation that pushed product through injection molding and assembly to one that pulled products based on customer demand. This experience further reinforced for me the importance of focusing on improving the value-creating work on the shop floor.

The experience at Lexington also revealed, however, that a focus almost exclusively on improving shop floor work isn’t sustainable. After the initial improvements, I ended up back at that supplier multiple times over many years fixing many of the same issues. Even though we had set up a daily management system, there was not a connection to the higher-level objectives of the organization and a structure to achieve them—hoshin kanri.

In 2001, I was transferred to Toyota’s North American manufacturing headquarters as the Assistant General Manager of Corporate Strategy and given responsibility to support strengthening hoshin kanri in the organization. Though our headquarters was established to unify practices across our manufacturing operations, there was not alignment to our objectives and plants acted quite independently. When the plants originally had been established, they reported to sister plants in Japan, and continued to look to them first for guidance. This created huge waste in the organization that slowed down decision-making and inhibited our development.

This experience also made me reflect on the work I’d done while at TSSC and the potential gaps in our approach with our suppliers. We were great at implementing change to the work of the shop floor (very important!) but less so to the transformation to the management system of the company. And to some extent, this hurt our ability to impact change across the enterprise.

Hoshin kanri with frontline problem-solving sustains a lean transformation

When I left Toyota after 23 years in 2011, based on the amazing learning I’d received, I started helping various enterprises with hoshin kanri. I quickly learned while working with a consumer goods company that hoshin kanri, when aligned effectively with frontline shop floor improvement, can lift an organization to a new level.

In the years following that, I’ve worked with multiple organizations that have effectively linked hoshin kanri and problem-solving to improve the frontline work—and achieve broader enterprise goals. For example, three years ago I was introduced to a small furniture manufacturer. Their VP of Manufacturing had learned TPS/lean directly from TSSC, and he had implemented a production system to build units just-in-time. But the company was struggling financially, the shop floor was struggling to sustain its improvements, and leadership was not aligned on how to address problems in the business. The CEO, though a strong lean advocate, was frustrated with the team and struggled to build a problem-solving culture.

They tried hoshin kanri and, honestly, due to disunity and capability of the executive team, it struggled the first year. Results were mixed. But the CEO saw potential value in the approach and his team dedicated themselves to learning frontline problem-solving: the executives began to solve real problems on the frontline of design, manufacturing, and sales. These weren’t random problems, but tied to corporate-level issues that were raised as corporate objectives through the hoshin process. Today, frontline problem-solving is rigorous throughout the company, including the sales function, the company is quite profitable, and their team member engagement scores are the highest they’ve been in history.

I worked with another large public consumer goods company that, when I first met with executives, were quite proud of what they had accomplished with lean for close to 30 years. That’s a long time! But this company was struggling financially as well. Because they had focused their lean efforts exclusively on the shop floor, the benefits and learning had minimal penetration to other areas of the business, like marketing or sales. Bringing hoshin kanri into the organization, allowed the CEO to spread the continuous-improvement culture across the company and brought improvement to the frontline work of sales and marketing.

These are just two examples of the many I’ve experienced. I’ve come to believe that organizations that want sustainable continuous improvement have to align their efforts across the company. This comes not merely from kaizens or kaizen events here and there to frontline work (though that is critical too!), but to an aligned approach that is both top-down and bottom-up. Hoshin kanri and daily management can support and accelerate frontline improvement and ensure it is sustained.

In the coming weeks and months we’ll be hearing from executives and other key influential voices on how hoshin kanri, daily management, and A3 problem-solving have helped their organizations. Through this, we will dive deeply into what hoshin kanri is and how it can help your business.

Please join us!