Arrows Aligned to the North Star

In most companies, "Strategy" consists of a few fancy sentences written by the board of directors who gather in a luxury hotel once a year, and then hang them in gilded frames in the corridors. The problem is that after that vision document is hung, the daily way of working of the operator on the floor or the procurement specialist doesn't change one bit. The nervous system between the company's brain (Management) and its muscles (The Floor) is severed.

Hoshin Kanri (Compass Direction or Strategy Deployment) is the art of taking the vision from the sky and bringing it straight down to the factory floor, "aligning" the goals across the entire organization.

True North

Hoshin Kanri starts with determining the organization's "True North." This is the company's massive, inspiring, and hard-to-reach 3-5 year goal (For example: zeroing out the carbon footprint or reaching the lowest return rate in the industry).

However, Hoshin Kanri does not settle for just hanging this goal on bulletin boards. It breaks it down into small, manageable, 1-year goals and distributes them to departments. If the company's "True North" is to reduce costs by 20%;

The Production department says: "I will reduce the scrap rate to 5%."
The Procurement department says: "I will cut shipping costs by 10% by consolidating supply logistics."
The Maintenance department says: "I will increase capacity by reducing unplanned downtime."

Thus, the "small welding improvement" (Kaizen) that the welder on the floor makes that day is mathematically linked to the company's massive "True North" vision.

The Catchball Process

In traditional management, goals are dictated from top to bottom (Top-down). Hoshin Kanri, on the other hand, uses a democratic negotiation process called "Catchball."

Management throws a goal (Ball): "We must increase production by 30%."

The lower level catches this ball, analyzes the floor, and throws it back: "With the current machine capacity, this is impossible, but if we open a 3rd shift or set up a new line, we can increase it by 25%."

This negotiation process ensures that goals are realistic (attainable) while at the same time creating a deep sense of "Ownership" towards that goal among employees. People resist dictated orders, but they passionately commit to goals they have negotiated and set themselves.