Hoshin Kanri, a tool for strategic alignment

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Martin Fairbank
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If you’ve worked for more than one employer in your career, or even for the same company under different leaders, you’ll be very aware that when goals are not very well defined, productivity can suffer, and you and your colleagues could even be working at cross-purposes.

In contrast, when a team’s goal is well-defined and everyone is working towards a common goal, it can be a very rewarding atmosphere, both for the company and the team members. The beginning of a new year is a good time to reflect on the strategic vision of your company and develop objectives.

In previous blog articles, I’ve referred to Lean Management and Continuous Improvement concepts that come from the Japanese, such as Poka Yoke. Another such concept that is so ingrained in many companies today that we don’t even realize that it comes from Japan is called Hoshin Kanri, which roughly translates as Compass Management. Hoshin Kanri is a tool used for strategic planning where strategic goals are translated into objectives throughout a company and put into action. It was first developed by Professor Yoji Akao in Japan in the 1950s.

The analogy of a compass is very appropriate here. A compass needle swings back and forth as it seeks magnetic north, but locks into position when that direction is found.

The Hoshin Kanri process can be broken down into seven basic steps:

  1. Establish strategic vision – for example, increase business by 50% or improve productivity by 15%.
  2. Develop breakthrough objectives – here you need to express what is really needed to get you to your goal, such as develop new products or eliminate non value-added activities.
  3. Develop annual objectives – now you start to quantify and set a timeline for what needs to be accomplished in the next year in order to achieve your strategic goal.
  4. Cascade goals from the top down – this is where you start to work out what the annual objective means at each level in the company.
  5. Implement Annual objectives – these are now translated into specific activities that need to be accomplished by each individual.
  6. Monthly Review – used as a checkpoint to review progress.
  7. Annual Review – measure performance against objectives and define next year’s objectives.

You may recognize this process and call it by another name. For example, W. Edwards Deming, an American that taught quality control principles to North America as well as Japan, promoted the Plan Do Check Act cycle (PDCA). The principles of PDCA can be incorporated into the Hoshin Kanri planning process. 

Hoshin Kanri isn’t a complicated concept, but it is good for focusing on long-term objectives that may otherwise get lost in day-to-day operations. It reminds everybody of the big picture and gives each person a concrete way to contribute to organizational transformation.


Martin Fairbank, Ph.D. Martin Fairbank has worked in the forest products industry for 31 years,
including many years for a pulp and paper producer and two years with
Natural Resources Canada. With a Ph.D. in chemistry and experience in
process improvement, product development, energy management and lean
manufacturing, Martin currently works as an independent consultant,
based in Montreal. He is also an author, having recently published
Resolute Roots, a history of Resolute Forest Products and its
predecessors over the last 200 years.


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