Policy Deployment Matrix

What is the Policy Deployment Matrix?

The Policy Deployment Matrix is used to show the relationships between the upcoming 3-5 year objectives, priorities of improvement, targets, required resources and benefits to the organization.

Coming from the Japanese management the Term Hoshin Kanri is well known as an other term for Policy Deployment.

The key question for policy deployment is how you can develop your organization towards a performance level where continuous self-improvement is part of your organizations daily work. One tool, already mentioned, that supports you on your organizational journey is the so called Hoshin Kanri.

In many western countries Hoshin Kanri is still unknown. The Hoshin Kanri Management System is based on lean manufacturing and lean management principles. To get a foot on ground in the west it is getting more and more popular under the flag of Policy Deployment.

To describe the word itself, short translation: The Japanese word Hoshin means “compass” or “compass needle” and the word Kanri stands for “management” or “control”. Together it can be understood as management of objectives towards targeted state. Hoshin Kanri therfore strives to achieve the so called breakthrough targets by using the maximum out of existing resources. In addition to those breakthrough targets Hoshin Kanri aims to build and develop the structure and culture on management level for your organization that are necessary to operate successfully in the market in the long term.

By having this in mind Hoshin Kanri covers two main processes:

Planing Process

In the Planning Process targets are defined and the plans on how to achieve those are described on each level of your organization. All this is based on cross functional and cross departmental agreed objectives.

Implementation Process

The implementation, in which processes and measures are necessary to achieve the agreed targets are constantly and actively controlled.

A central focus of Hoshin Kanri is not the excessive usage of lean management and manufacturing tools existing, much more the management development (leadership) itself to develop skills and know-how at all levels in order to implement the corporate strategy.

Attention Spoiler Alarm, Hoshin Kanri implementation process follows a well known process - the PDCA.

The PDCA cycle plays again a big role in implementing something new. Having the four phases of the PDCA cycle translated in the Hoshin Kanri implementation process will lead to the following picture:

HOSHIN KANRI following PDCA

Planning Phase:

Agreeing on long term strategy and definition of breakthrough targets

No matter what field you are in with your organization, you need to have an idea of where you want it to develop. Coming from Toyota the term North Star or True North has developed in order to guide all activities towards the agreed strategy in order to achieve defined targets and improvements. Within the Hoshin Kanri process, it is up to the top mgmt. level to develop the vision with the incorporation of the next mgmt. level below. Important point at this stage is the analysis of the current situation on site - e.g. on different manufacturing sites. This means that top mgmt. perspective with the help of mid management and external experts are guided towards the development of an organizational wide vision.

After the global vision is defined the same procedure is guiding the definition of the breakthrough targets following the the vision and strategy. The targets are defined by the same steering committee and have a planning horizon of three to five years. The breakthrough targets are always challenging the actual performance levels and their significant improvements. Unlike the Kaizen approach (step-by-step) breakthrough targets aim for far-reaching changes that also require a complete rethinking of existing processes and systems.

Breakthrough targets do not stop at organizational or departmental boundaries and are typically capped at an amount of five in total. To give some guidance to define breakthrough targets a differentiation is made between four main categories consisting out of financial targets (costs), process targets (delivery capability), quality (ppm) and last but not least employee development (education). On the last category, employees development, we are talking about leaving the comfort zone and going the extra mile.

When thinking about annual achievement reviews, KPIs are also needed to be defined. If you can’t measure you can’t control. With Hoshin Kanri KPIs are seen as an instrument to assess and improve personal performance increase rather than reviewing the all over improvement level. To have an organizational wide comparability the form of the report is defined and agreed as well upfront all activities.

Once the framework is defined and targets as well as measures are agreed on departmental level it is time to conduct several cross functional target meetings in order to align all activities and to make sure all of them are going in the right direction. This process of cascading and developing a detailed action plan runs through the complete organization. Each level of the organization goes through their plans on how to achieve the defined targets and reports it summarized to the next higher mgmt. level. This will be from now on a continuous process.

This Process within the Hoshin Kanri Process is the so called CATCHBALL PROCESS.

One key element of Hoshin Kanri is that all target definition sessions are based on the so called Catchball Process. Like in a ball game all participants have the chance to throw in ideas and play them back and forth where in the end all agree on defined goals, actions and KPIs. In this process all employees should be involved throughout the complete organizational cascade. Mid Mgmt. like directors or head of dpt. are the “Gamemaster”, it is in their responsibility that everything goes in the right direction, that it is a fair game and in the end that all participants agree on the same targets. For this reason, the catchball process shouldn’t be started until managers have the necessary know-how.

Doing Phase:

In the second phase of the Hoshin Kanri Process it is all about empowerment.

You know how it is, everybody is always pretty busy on the planning, but when it is about the implementation it becomes quite quiet. This is not only because of the “I don’t want to do it” but more because of the “I don’t know how to do it” - therefore a lack of competencies in your organization. It starts with not knowing what PDCA is and ends with not knowing how valuable daily routines can be.

As mentioned before, Hoshin Kanri, strives to develop necessary skills within your organization in order to improve existing processes and to reach desired targets. Therfore Hoshin Kanri is quite similar to the lean leadership approach. It differentiates between four levels of competences.

1. Develop yourself as a leader

2. Be able to coach and develop others

3. Daily support of Kaizen (improvement) actions

4. Being able to create a vision and define organizational wide targets

Phase No. 3 - The Checking Phase

Make changes visible and constantly review them.

During the check phase, shop floor mgmt. is key. Another part of the Hoshin Kanri maxim is: instead of getting stuck in administration the focus should be on the plain value adding process. GEMBA WALKS are key “Go and See” instead of “mail and meet”. Let’s be honest the value adding is not happening in the office, at least if you have a manufacturing going, which requires regular presence on the shop floor. Here you will see deviations to standards and their effect on the value adding process. Little side effect - having managers on the shop floor and really being interested in what os going on shows that you care and walk the talk.

One main aid to get shop floor mgmt. ahead is visual mgmt. or simply visualization. With the help e.g. of Andon Boards the actual performance at al levels are visualized. KPIs from the Shop Floor up to the C-Level are continuously checked by each team. The achievement of objectives is visualized on Shop Floor Boards or Hoshin Boards in a manufacturing line, can be also a Cell Board and from there through a cascade distilled to up to the head office.

The complete target of this is to install clear transparency and a repeatable methodology with an organizational wide approach to reach individual targets. This means the process is standardized.

Last but not least the Acting Phase:

In the last phase, the act phase, following the Kaizen approach, everything that has been improved has to be secured on this level with the help of standardization. On top of this, with additional PDCA Cycles further improvement steps are already initiated. In case you haven’t reached the planned state you will start over.

If you want to have Hoshin Kanri institutionalized in your organization you will have to focus on developing natural routines in the planning and implementation process where all active players know what will be expected with the PDCA Cycle.

With this in mind most important in the Act Phase is:

1. Standardization throughout all processes and organizational levels

2. KAIZEN and KAIKAKU as basis to achieve targets

3. Mgmt. development to get skills to succeed

Standardization throughout the complete organization is a must to sustainable install Hoshin Kanri. With not following a standard you will have no idea about target state and what the actual deviation is and therefore no starting point for improvement actions. Standardization means nothing more than that a process can be repeated in the same way at any time. Levels of standardization differentiate on the level of complexity of the process. This means that also the mgmt. and Hoshin Kanri process itself will be standardized.
After standardization, KAIZEN can be implemented. To be honest it is just the PDCA Cycle but constantly and repetitive used to achieve a step-by-step improvement process which will continuously raise the level of standards. KAIZEN makes sure that you will keep on improving your standards and not fall back to old routines.

Sometimes it can be that you are stuck. This is when KAIKAKU comes in the game. KAIKAKU is the revolution in thinking and acting. It is a rocket booster to blast chains and mental locks. With this KAIKAKU is also known as Breakthrough Kaizen.

To do this we come back to the ultimate goal of Hoshin Kanri - leadership development. The Act Phase is down to mgmt. and their ambition to reach set targets. Their success must be reviewed constantly. To be absolutely clear: It must be determined how the competencies of mgmt. has to be developed, therefore central questions, based on Lean Leadership are:

1. How are manager developing themselves?

2. How well have they developed others?

3. Do they run daily Kaizen activities?

4. Do they lead their team towards the agreed strategic targets? 

With the help of the Lean Leadership Development Model leaders will improve on internalized lean thinking and develop more and more lean leadership competencies.

Policy Development

Policy development can be seen as a one year plan that is reflecting the long term vision and 3 to 5 year planing objectives. It is following an implementation process that focuses on a few major, long term customer focused breakthrough objectives which are critical to the long term success of your company. This development process links your major objectives with a specific plan to support your organization on this journey.

In the lean world while talking about policy development the term Hoshin Kanri comes real quick on the table. Therefore we want to talk about Hoshin Kanri and how to develop strategies and how to derive your objectives.

HOSHIN KANRI is an organization-wide planning and control system. Too often new strategies fail in the implementation phase or simply don’t have the expected effect. This can have several reasons:

1. Missing internal support on employees and executives for the strategy itself

2. It is not clear stated on which goals each employee should focus

3. Missing competence on employees and executives to implement a strategy and how to execute in daily operation

4. Splitting up the strategy between departments leads to separated solutions that probably do not support each other

There are several weaknesses in the planing and implementation that should be avoided on first hand when using the Hoshin Kanri approach. Coming from the lean driven operations side some principles should be adopted:

1. Management level is clearly involved in the process of strategy development and responsible in the implementation phase - they have to be role models and function as coaches

2. The breakthrough objectives define targets that the whole organization focuses on - including side-effects between the departments themself

3. Employees and executives are given the freedom and competence to increase their own performance

4. A cross-functional steering committee is installed to observe the progress on action plans and their fulfillment towards the common target

Time to develop the organization-wide strategies

The long term mission with a Hoshin Kanri Management System is to prepare your organization for the marathon not the sprint. In order to achieve the long term success it is a necessity to build up competencies in leadership and to build up a corporate culture and structure that can deal with it.

With the Hoshin Kanri approach one great part of lean manufacturing and management comes across our way again. The PDCA cycle. The Process of Hoshin Kanri is therefore following the 4 Steps of the PDCA:

PLAN
Agreeing on goals and measures

DO
Empowering managers and employees

CHECK
Track and show the development through visual management

ACT
Live Hoshin Kanri and make it a fix part your management system

Hoshin Kanri was one of the first management systems that already took the mid-managers in responsibility to define the companies vision and does not leave it for the C-Level Managers only. It is the same with defining breakthrough targets derived from the vision and strategy. It is crucial that the mid management defines as well which path they are going for the next 3 to 5 years.They have to show their performance to the top management over the upcoming years and report the planned improvements in the steering meetings.

Based on the vision, strategy and defined breakthrough targets, the next level of Hoshin Kanri is to define the mile stones which have to be met in order to reach those breakthrough targets.

Now get this out in your organization

First of all - to be clear you will not achieve anything when you have different departments working on different topics. Make those planed measures to cross-functional tasks. This ensures that everybody is working on the same page.

Like with the management method - “Management by Objectives” - also with Hoshin Kanri you cascade down the targets to the next level. The main difference is that with Hoshin after the target definition and the developing of an action plan their must be a cross-functional coordination between the departments, groups and teams incl. the C-level and mid mgt. This gives your organization the chance to see those effects and interdependencies between all players of your organization. This process is the so called catch ball - it gives the participants the possibility to “throw” around ideas before agreeing on common targets. If you are a superdooper organization you are doing this with all employees. And in the end everybody gains a better understanding of how they can support each other to achieve the overall organizations target.

Next step for a successful transformation - develop leadership skills 

Most of the companies out there are super busy in planning the next big thing, strategies and great visions, but in most of the time it seams like nothing is happening. Don’t get me killed but coaching is a necessity. Just google the story of “Sharpen the Saw” (The 7 habits - by Stephen Covey). The reason behind it is a lack of skills, e.g. if your employees don’t even know what a PDCA cycle is, don’t expect them to achieve your vision. Furthermore if the objectives are not integrated into the daily work and management routine, all tasks are seen as an extra burden nobody wants to have.

Hoshin Kanri pays special attention by developing leadership skills in the organization that are needed to make a real significant change. Based on the Lean Leadership Model it is build up in four levels of development as leader:

1. Develop yourself as a leader
When you see yourself in the future, with a living Hoshin Kanri Mgt. System, you have to walk the talk. That means you have to develop competencies to reflect your behavior and effectiveness in order to increase your own performance. This is also known as train the trainer.

2. Train and developing other people
The second level can be seen as the trainer, you are not the manager you are the coach that develops the competencies of his team to be able to reflect on their own on their actions and reactions. You initiate their own learning curve.

3. KAIZEN (Continuous Improvement Process)
Best way, in my opinion, is to install regular huddles. Short, max. 15 minutes once per week in the morning, to see the progress. Is everybody going in the right direction, does the CIP action meet the direction of the overall target, etc.

4. Create a vision and get target agreements
At the last level, all management levels should be involved. This is the time when you want to get rid of the departmental views and align all activities towards the organization wide overall agreed targets.

Now - how can you support your employees ?

With the Hoshin Kanri System you are giving your employees the right tools in order to achieve the defined breakthrough targets in addition to their day-to-day business. A well known tool is basically a simple piece of paper, the A3 report. Read more about the A3 here (great book for A3 systematic approach).

The best-known A3 report is the problem-solving report. In this case, the responsible quality representative takes the standards through a systematic process that makes it possible to describe the symptoms that have emerged. It is assumed that the cause is not known, but that the effect is evident. Also the A3 is following the PDCA methodology. But before we go into details, if you want to read more about A3 itself go here.

Specially when you go in the Check Phase, Shop Floor Mgt. plays a crucial role of the Hoshin Kanri Systematic. Managers shouldn’t get stuck in the paper work, but do those Gemba Walks. In the lean world it is all about the value adding actions not the paper work. Managers should go and see at the place of action and focus on the deviations of how it should run in order to speed up the performance. With this approach you will also improve your employees’ improvement capabilities which brings the problem solving capability to the lowest organizational level possible.

Following the Shop Floor Mgt. Systematic - You will make the development transparent

This means that the visualization is a central part - not only as an element of the shop floor mgt. All defined KPIs and developments of focus topics are displayed graphically at the place of action. E.g. the production fulfillment of a manufacturing line is displayed at the line on the cell board. Following the information and meeting cascade, all information is funneled bottom up and thereby distilled to the core information.

The idea behind all this is to have a stable routine and processes to reduce the impact of coincidences or unplanned interruptions. This means also the implementation of standard work incl. the CIP of processes themself. Your complete organization is trained to constant change in order to continuously raise current standards and challenging the status quo. Main impact therefore has the problem solving skills - description, root cause analysis, defining measurements, fast decision making, then the rest of the PDCA > DCA. All this is triggered by deviations seen in the visual management. You see speed is everything.

How to steer the development process

In order to steer the development the required communication cascade has to take place in a daily routine. Those needed shop floor meetings are necessary so employees are constantly focusing on the Hoshin targets by challenging the performance on a daily basis. Following the meeting cascade also the plant or group manager are involved daily to meet up and monitor the level of achievement and can react fast when deviations occur.

One top level methodology is the so called “Presidents Diagnosis”. This means nothing less than that the top management personally visits the manufacturing sites and audit their performance. This diagnosis is based on eleven criteria:

1. Management

2. Financial Mgt.

3. Human Resources Mgt.

4. Supply Chain Mgt.

5. IT

6. Quality Mgt.

7. Sales and Marketing

8. Engineering

9. Manufacturing

10. Maintenance

11. Material and Logistics

Each category is rated based on its current status according the PDCA cycle. With the Presidents Diagnosis there is even a fifth phase added the so called “Scan Phase” which leads to a three step model of the diagnosis itself:

1. Self-diagnosis of teams and departments

2. “Presidents Diagnosis” by top level management

3. Recognition of target achievement by top level management

Following the PDCA methodology you will now secure the achieved with the help of standardization

One big point in Hoshin Kanri is to secure what you have achieved by standardizing it. Follow up activities in the act phase are there to keep the achieved and have a new starting point to improve it further. Standardization therefore is the first step of manifesting Hoshin Kanri in your organization.

To be clear with standardization we mean the standardization of processes or activities customers are willing to pay for. In best case repetitive processes not depending on persons, time and location. With Hoshin Kanri you will differentiate between simple and complex processes. In addition also the management of Hoshin Kanri will experience the standardization process.

After the first round of standardization, KAIZEN takes the stage. Kaizen means nothing less than a step by step approach of continuous improvement. Combined with Hoshin Kanri it means the continuous improvement of standard work.

Last but not least time to review the development of the management

In the end with all lean activities, it all comes down to leadership development. That is why also the Hoshin Kanri Systematic continuously checks on the developed of competencies of its managers. Based on the Lean Leadership Model following questions are evaluated:

1. How have managers developed themselves?

2. How well have they developed others?

3. Do they conduct kaizen activities daily?

4. Do they lead their teams in the direction of the overall target?

Hoshin Kanri is depending on the Lean Leadership Development Model. This ensures the further development of people from the shop floor to c-level and drives the development of a lean culture and continuous improvement.