On My Mind

Hoshin Kanri, also known as Policy Deployment and Policy Management, is a strategic improvement system that originated in Japan in the 1960s. It is one of the four core components of Total Quality Management along with Cross-Functional Management, Daily Management, and Small Group Activities. There is currently a lot of interest in Hoshin Kanri because of the popularity of the Toyota Production System. I recently conducted a study on “The Application of Policy Deployment in Indian Companies.” Four Deming Application Prize winners from India participated in my study and served as insight-stimulating case studies. The findings provide insight into how Hoshin Kanri is practiced in world class organizations today. I studied the literature on Japanese Hoshin Kanri practices and identified sixteen characteristics: Led by Senior Executives; Formal Annual Process; Long-Term Horizon; Linked to Strategic Management Activities; Focused on Improving Quality/Cost/Delivery/Safety/Morale; Deployment of Objectives and Strategies; Rigorous Application of the PDCA Cycle; Widespread Involvement; Assignment of Responsibilities; Extensive Cross-Functional Activities; Intentional Alignment of Activities; Use of a Catchball Process; Use of Statistical Methods; Leads to Widespread Organizational Actions; Linked to Daily Management Activities; and Formal Periodic Reviews. These characteristics provide a framework for assessing the status of an organization’s Hoshin Kanri system. I created an emergent definition by synthesizing themes from the four cases: “Policy Deployment in India is a systematic annual process led by senior executives—and preceded by Strategic Management activities—for developing, deploying, and accomplishing objectives (ends) and strategies (means) through coordinated organization-wide activities and the rigorous application of the PDCA cycle.” Tune in again next month for more Hoshin Kanri findings. The full paper is available on this website by selecting the “RESEARCH” button on the Home Page.

Interesting Stories

I’m still thinking about the article by Kurt Eichenwald in the August 2012 issue of Vanity Fair magazine titled, Microsoft’s Lost Decade. The article is about Microsoft, but the inevitable comparison with Apple is skillfully made. According to Eichenwald, “In December 2000, Microsoft had a market capitalization of $510 billion, making it the world’s most valuable company. As of June it is No. 3, with a market cap of $249 billion. In December 2000, Apple had a market cap of $4.8 billion and didn’t even make the list. As of this June it is No. 1 in the world, with a market cap of $541 billion.” I found this next passage especially profound: “One Apple product, something that didn’t exist five years ago, has higher sales than everything Microsoft has to offer. More than Windows, Office, Xbox, Bing, Windows Phone, and every other product that Microsoft has created since 1975. In the quarter ended March 31, 2012, iPhone had sales of $22.7 billion; Microsoft Corporation, $17.4 billion.” It will be interesting to watch these two companies going forward.

Company News

There are still seats available for the Fourth Annual Advanced Strategic Improvement Practices Conference which will be held October 16, 2012. The brochure is available by selecting the “ANNUAL CONFERENCE” button on the Home Page of this website.

Intriguing Reads

I sometimes buy a book for one chapter as was the case with the book titled, Rediscovering Japanese Business Leadership: 15 Japanese Managers and the Companies They’re Leading to New Growth by Yozo Hasegawa. Masahiro Sakane is the Chairman of the Board of Komatsu Ltd. and a recipient of the Deming Prize for Individuals in 2008. Chapter 12, Winning in the Workplace, provides a concise summary of the Komatsu strategy and his ideas on visualization, going to genba, and creating dantotsu (unique and unrivaled) products.