ORGANIZATION MANAGEMENT Structured Planning / Hoshin Planning

Does your organization: Have a beautiful strategic plan collecting dust Keep trotting out the same plan year after year having made little or no progress Have improvement projects working in twenty different directions Seem unable to make progress on strategic objectives because real work gets in the way Have a plan but never checks on progress or holds people accountable Manage by opinion rather than fact Have a great plan but nobody knows about it

Hoshin Planning The Hoshin planning process is a systematic approach to identify, sort and resolve issues requiring breakthrough improvement

Business Fundamentals Key processes that are used to manage the overall business and day-to-day activities Sales forecasting Supplier management Production planning Employee development Customer complaint resolution

Breakthrough Improvement Reduce product failure rate 10X Win the Malcolm Baldridge award Achieve 25% market share in < $100 products Reduce new product introduction time (lab proto to first shipment) to 12 months

Business Fundamentals Annual planning Current Performance Business Plan Gap Analysis Business Fundamentals Hoshin Plan

Why separate business fundamentals planning from Hoshin planning? People have a hard time balancing resources between urgent and important activities . . . urgent activities cause the most immediate pain

Effective planning techniques Identify critical few objectives Evaluate resource constraints Establish performance measures Develop implementation plans Conduct regular reviews Take corrective action

Plan linkage chart

Hoshin plan elements Situation Objective and goals Strategies and owners Implementation items and owners Performance measures and timeline

Hoshin planning table

Hoshin planning guidelines Understand the situation and the causes affecting the objective before developing strategies to achieve the objective Select the few critical strategies that are necessary and sufficient to achieve the objective Do not exclude objectives/strategies because the necessary measures do not exist Avoid Hoshin strategies that are tactical in nature Identify a single owner for each strategy

Planning guidelines - continued Align plans between departments Develop measurable goals and targets Review the plan periodically Management must create the appropriate environment for planning and conducting reviews

Cascading / linking Hoshin plans 1.3 1 1.2 1.1 1.11 1.21 1.31 1.32 2 2.1 1.321 1.211 1.111 Top Management Functional Section Department MANUFACTURING MARKETING R & D

Cascading / linking Hoshin plans Division Manager Functional Manager Section Manager Objective Strategy (Goal) (Measure) 1 1.1 Objective Strategy (Goal) (Measure) Objective Strategy (Goal) (Measure) 1.1.1

GOAL: To become the primary financial institution of its customers Quality personal service delivery Facility management Technology enhancement Coordinated marketing New definition of personal service Enhanced people skills Policy changes Procedure changes Determine skills required Develop training Deliver training Test / certify Revise job descriptions ATM Credit / debit cards Mortgages On-line banking Governance and strategy implementation p. 36

Goals are established based on Past performance data Competitive environment Customer expectations Current and projected resources Estimates of future performance Need for improvement

Identifying strategies How will we achieve the objective/goal Owners Who has responsibility for the achievement of each strategy Performance measures How will we track our progress on each strategy

Equation of goals & strategies Does the set of strategies equal the goal (S1 + S2 + S3 = Goal) If an equation can not be established, revise/improve the plan If objectives are not met, you can trace goal performance through the performance of the strategies If objectives are not met, you can review the planning process

Good performance measures Use customer focused measures whenever possible Use measures that can be checked periodically/frequently Use normalized measures when possible (e.g. per person, per unit, per $) Use dimensionless measures (ratios, %, etc) Use judgmental measures where appropriate Measure results rather than activities where possible

Example performance measures Manufacturing % yield for product/process # days work in process inventory Research & Development # months from investigation to first production # design problems solved in Manufacturing Marketing % orders/forecast per product monthly % deadlines met for new product introductions Finance and MIS # billing errors/invoice # hours system up-time/week Quality % customer complaints/product $ value of process improvements/improvement team

Implementation plan

Hoshin annual planning Setting objectives, strategies, goals and performance measures Developing detailed implementation plans Do Deploying plans through the organization Check Reviewing progress and plan execution Act Ensuring appropriate actions are taken based on results of the plans (i.e. corrective action on deviations)

Review table

Plan linkage chart

Benefits of structured planning Provides organization-wide focus; makes priorities obvious Helps ensure consensus on issues and priorities Aids coordination across departments and functions eliminating duplication of effort and misdirected action Facilitates teamwork Provides methodology for including customer needs Clarifies responsibility and ownership Allows better decisions and correction of significant problems

Benefits of structured planning Provides organization-wide focus; makes priorities obvious Helps ensure consensus on issues and priorities Aids coordination across departments and functions eliminating duplication of effort and misdirected action Facilitates teamwork Provides methodology for including customer needs Clarifies responsibility and ownership Allows better decisions and correction of significant problems Improves Planning Assures Excellence in Execution

Hoshin planning - summary Planning for breakthrough improvement Cascading/linking of Hoshin plans Detailed implementation plans (strategies support objectives) Robust reviews and corrective action

Hoshin planning – summary 2 We need everyone working on the right things We need effective utilization of resources We need to track our progress We need to adjust to new situations … Focus, Orchestrate, Synchronize

Assignment Read BA 550 class packet: Case brief – Silvio Napoli Framing for Learning – Tech Implementation How to Get Aboard a Major Change Effort Case brief – Silvio Napoli Last names beginning with N - Z