Hoshin Planning is a management system that seeks to ensure that corporate goals of the organization are translated into action at every level of the firm leading to elimination of waste that originate from poor communication, lack of synergy, and inconsistent direction. It was conceived in Japan in the 1960. It focuses on managing and controlling organizational actions using a blend of daily process control tools and repeat reviews (Ahmed, 2016). Hoshin Planning endeavours to get all members of the organization pulling in the same direction. According to Moutinho and Oliveira (2015), Hoshing Planning methodology provides a structure for aligning strategic objectives with key performance indicators, setting performance targets, and defining improvement efforts.
According to Pheng, Ying, and Cheong (2009) argues that Hoshin Planning offers a framework for transforming organization’s quality systems from the quality assurance perspective to the quality management school of thought. Hoshin Planning is founded on a number of principles. One of these principles is creating a shared vision. A vision is mental picture of a desired future state. It becomes a shared vision when all members of the organization understand and start believing it (Waldo, 2014). The founders of Hoshin Planning believed that creating a shared vision gives all members of the organization a purpose, which enhances their performance. A shared vision gives the firm’s stakeholders’ focus and drive.
Another fundamental principle is everyone involvement. Hoshin Planning ensures that all members of the organization are actively involved in the planning and development of strategies, as well as, execution of strategy (Ahmed, 2016). This principle is based on the rationale that greater performance is achieved when work is determined through consensus. Another important principle is decentralization. Hoshin Planning emphasize the need to eliminate bureaucracy and empower work teams by creating flat organizational structures. This principle is based on the assumption that a decentralized and flat structure makes it easier for the firm to cascade corporate goals into actions.
The Hoshin Planning process encompasses a number of steps. The first step entails establishing the vision of the organization (Waldo, 2014). The vision should be ambitious and inspiring. The vision is often accompanied with a mission statement, which explains how the firm intends to realize its vision. The second step is to develop breakthrough objectives (Moutinho & Oliveira, 2015). Breakthrough objectives are intentions that can only be realized through massive changes in the company’s operations. Breakthrough objectives are long-term in nature with timelines of more than 3 years.
The next step focuses on developing annual objectives, which are derived from the breakthrough objectives. For instance, if one of the breakthrough objectives is to expand market share to 10% in three years, the annual objectives should set targets for the first and second year of operation. The fourth step is to deploy the annual objectives by developing action plan and performance indicators. The fifth step is to implement the annul objective by executing the action plans. The sixth objective entail reviewing performance on monthly basis using performance indicators developed in step four. The final step entails conduction annual review so as to determine whether the firm is on course in terms of realizing the breakthrough objectives
The Hoshin Planning methodology is gaining popularity in the construction industry. Pheng, Ying, and Cheong (2009) explained that Hoshin is a generic methodology that can be applied in different industries including construction. In their study, the authors found elements of Hoshin Planning in a leading construction company in Singapore, CS Corporation, including setting of long term vision, development of policy directives for projects, and implementation of reviews before, during, and after project implementation. Some elements were, however, missing such as strategic goals and corresponding measurements, architecture to translate goals into employees’ actions, and performance appraisal.
In their article, Hernandez and Aspinwall (2008) assert that Hoshin Planning has a major advantage over conventional planning tools used in the construction setting because it integrates strategic objectives into tactical daily management, addresses all functions of the organization, and increase consensus regarding quality goals. Moutinho and Oliveira (2015) contend that Hoshin Planning is more valuable in the construction setting given that the activities of construction firms span across multiple sites; hence, it is easy for gaps between strategic goals and routine actions to arise. Hoshin Planning offers a framework for cascading organizational goals into the routine operations of employees at multiple sites.