Hoshin Kanri

Hoshin Kanri is a Japanese strategic planning process involving company-wide communication and implementation. Hoshin planning is also a seven-step process centered around a unified strategic vision.

The words hoshin kanri are Japanese in origin. Hoshin means direction and kanri means administration. The phrase together is often translated to compass management, which truly captures the nature of this strategic planning process.

Seven Steps of Hoshin Planning

Companies interested in embracing Hoshin Kanri should follow these seven steps.

Step One: Define Your Ideal Future State

In order to know how to get somewhere, you have to clearly understand where you're going. The first step of Hoshin Kanri is reviewing or creating your company’s mission and vision statements to clearly reflect the ideal future state of your organization.

Step Two: Define Big Goals

The core of Hoshin planning is identifying and then achieving breakthrough goals that will bring about significant positive change within your organization. These big goals may be related to new products or services, an expansion of your market, or a completely new way of working as a company. Breakthrough goals may take three to five years to realize. This process is often implemented as part of a lean six-sigma strategy within manufacturing companies.

Step Three: Build Your Stepping Stones

Any breakthrough goal needs to be broken down into smaller, more manageable chunks. The third step of this planning process is to come up with your smaller goals for the next year. Create achievable, smaller steps that move your business toward your big goals.

Step Four: Align Your Teams

Once the annual goal is set, each division, work group, and individual must align their specific goals to support the company’s overall objective.

Step Five: Get to Work

This is the nitty-gritty step of rolling up your sleeves and executing your part. Various tools, software, and other processes may play a major role at this stage. The goal of this step is to ensure that all divisions and employees are making the progress they need to be making on a daily, weekly, and monthly basis.

Step Six: Take a Monthly Pulse

As everyone is working toward the same goal, it’s important to check in on a monthly basis to ensure that progress is being made. Supervisors and managers must understand how to motivate and encourage their team to continue moving toward the company’s overall goal.

Step Seven: Conduct an Annual Audit

At the end of the first year, be sure to take a complete audit of what was expected and what was actually accomplished. If all went as planned, the process is repeated for the second year with a new, short-term goal. If it did not, the goals need to be reassessed and adjusted as required.

What Is a Hoshin Kanri Matrix?

By illustrating these seven steps into a one-page matrix document, your company will have the ability to see your overall goals, mid-term goals, and individual initiatives in one place.

The four quadrants in the Hoshin Kanri matrix include long-term objectives, one-year goals, top-level priorities, and improvement metrics. The overlapping portions are explained at the corners, and the names of plan leaders are listed along one side. The most critical components of the matrix are represented in the center of the diagram, while the execution details surround that central goal.

How to Implement Hoshin Kanri

Several application tools and techniques can be used to implement this strategy. Here are the key ones:


During the implementation process, there must be an active exchange between top management and mid-level managers. Think of it as a game of catchball, where strategy and goals are communicated and tossed to the middle management team, who sets meaningful KPIs for tactical execution. This is then thrown back to top management to ensure they support the overall goal.

A3 Reporting

Another way to envision Hoshin Kanri is in a three-stage or A3 reporting system. The feedback loop is not back-and-forth in this implementation process but cyclical. Top management may begin this process by outlining exactly what the long-term goals are, which is then sent to the middle management team. This trickle-down effect continues until it reaches the lowest team level for implementation. At this point, the how is detailed and makes its way around the circle back to top management, informing future planning and goal-setting.

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