Beyond Strategic Vision

Michael Cowley, Ellen Domb

• Publisher: Routledge
• Year: 2012
• eBook ISBN: 9781136014017
• Topic: Negocios y empresa
• Subtopic: Negocios en general

Hoshin is a system which was developed in Japan in the 1960's, and is a derivative of Management By Objectives (MBO). It is a Management System for determining the appropriate course of action for an organization, and effectively accomplishing the relevant actions and results. Having recognized the power of this system, Beyond Strategic Vision tailors the Hoshin system to fit the culture of North American and European organizations. It is a "how-to" guide to the Hoshin method for executives, managers, and any other professionals who must plan as part of their normal job. The management of an organization, whether it be large or small, has as one of its principal responsibilities setting the direction of the organization for the future. The most effective way to set the future direction is to develop a shared vision of what the organization will be in the future, contrast it to the way the organization is now, and then to create a plan for bridging the gap: the Strategic Plan. Beyond Strategic Vision shows you how to do this effectively and efficiently. Michael Cowley has been a teacher and practitioner of management and strategic planning methodologies since 1972. He is a certified instructor for GOAL/QPC and has worked with a wide variety of clients in the automotive, manufacturing, financial, military, healthcare, and educational fields. Dr. Cowley is President of Cowley & Associates, management consultants in Carnelian Bay, California. Ellen Domb is President of the PQR Group, a consulting firm specializing in the application of TQM in Upland, California. She has a successful history of teaching and consulting for planning, management, manufacturing, product development, and business systems. Dr. Domb is the author of numerous articles and books on quality management practices.

Chapter 1

Introduction: What Is Planning and Why Do We Do It?

Our reasons for writing this book are several:

• Both authors have been in the business of developing and using planning methods as part of their management jobs. We are experienced practitioners who can share best (and worst) planning methods and practices with our readers, from our own practical experience.
• For the last 5 years we have both been consultants in and facilitators of planning for a wide variety of clients. We have learned that effective planning at several levels is the common denominator for success in any effort to effect change in an organization. It is the primary enabler of the successful deployment of concepts like Total Quality Management (TQM) and Process Reengineering. Indeed, lack of integration of TQM and Reengineering with a sound business strategy has resulted in disappointment, or even failure, for these efforts in many companies.
• We also believe that planning is the most important activity that managers do. It is how they manage. Our observation is that Strategic and Operational planning are seen as obligatory, onerous activities. Our hope is that this book will change this perception to one in which managers see planning as their most powerful agent and mechanism for setting and meeting ambitious and exciting goals for the organization.
• Finally, we have both found that a specific planning system, Hoshin, is dramatically superior to any of the other systems we have encountered. In the course of our practical and consulting work, we have refined this system to a point where we feel it is appropriate to share it with a wider audience. Hoshin is a system that was developed in Japan in the 1960s and is a derivative of Management By Objectives (MBO). Having recognized the power of this system, we have modified it to fit the culture of North American and European organizations.

This book is intended to be a “how-to” guide to the Hoshin method for executives, managers, and any other professionals who must plan as part of their normal job. A few comments and definitions regarding the purposes for planning in modern organizations are in order before we begin.

What is Planning?

The word “planning” evokes many different ideas in different people, so we need to be clear about what we mean in this book. Webster defines planning as follows:

to devise a scheme for doing, making, or arranging.

Ackoff (1970) defines planning as:

the design of a desired future and of effective ways of bringing it about.

In our own consulting work, we have used this definition:

Planning consists of defining the important objectives an organization needs to achieve and determining how it plans to achieve them.

The word “planning” is sometimes used to describe the process of scheduling work through, say, a machine shop. We will not be covering that usage in our book, but will be focusing on what most people nowadays refer to as Strategic Planning and Operational or Business Planning.

The Hoshin Planning System Includes “Doing” And “Review”

While the forgoing definitions are a good starting point, our focus in this book will be on the use of Hoshin as a Planning System. This system includes the implementation, or the doing, of what is planned, as well as the review of what is done. The entire process is “closed loop,” that is, one where corrections to the plan can be applied based on the outcomes.

This definition is probably different from most readers’ conception of planning, in which it is perhaps more common to imagine that doing the plan is a separate issue from developing the plan. It is our opinion that this is the cause of many of the problems with planning. Further, we are going to make the assertion that plans are best made by the doers, not by a separate group of planners. There will be more on this subject in the next chapter, “Problems with Planning.”

Purposes and Types of Planning

Strategic Planning

The purpose of strategic planning is:

To set the direction of the organization to improve its prospects for long-term survival and prosperity.

Strategic planning focuses on the broadest issues of the business or organization, usually over a relatively long time horizon, typically anywhere from 1 to 10 years. The kinds of issues that strategic planning encompasses are: “What businesses do we want to be in?”; “What are our long-term objectives for growth and profitability, and what must we do to achieve these objectives?”; “What is our long-range product strategy?”; “Should we acquire other companies?”; “Do we have the right set of core competencies?”; “What effect will trends in technology, social structure, politics, regulatory environment, local and global economy, and other areas, have on our future success, or even survival?” And so forth.

Operational Planning

For most organizations, Operational Planning deals with the tactical details of how a business is to be run over a relatively short time frame, typically a year. It is frequently done in the context of having already created a Strategic Plan, and ideally the Operational Plan will reflect important decisions made as part of the Strategic Plan. The elements of an operational plan usually include forecasts of Revenues, Profits, and Cash Flow, as well as detailed plans for employee headcount, operating budgets, project plans, promotional activities, manufacturing capacity, and the like. The focus tends to be financial for most Operational Plans.

Project Planning

Almost all businesses and organizations have projects as part of the system for accomplishing specific objectives, and these can range from the development of a new product, to the construction of a new building, or the installation of a new computer system. Planning and management systems for projects are usually oriented toward the detailed identification and sequencing of all the tasks required to complete the project, and frequently include provisions to predict and track cost and on-time completion of all these tasks. The Implementation Plan phase of Hoshin described in Chapter 11, and the tools and examples of Chapter 13, provide good methods for Project Planning. Excellent software also exists for this purpose, and we recommend its use in conjunction with Hoshin for the planning and implementation of projects.

Financial Plans

Almost all businesses and organizations have financial plans, which are derivatives of the Operational and Strategic Plans. There are various purposes, but the most important are usually that the managers need to make financial projections and commitments to the shareholders or owners of the business or organization, and need to predict cash flow for the purpose of adequately funding the company’s activities. Normally, operational and project plans are iterated until satisfactory financial performance is predicted.

The Hoshin system, the subject of this book, applies to all types of planning (strategic, operational, project, financial, and so on), but our emphasis will be on strategic and operational planning.

Planning and the PDCA Cycle

The concept of a “closed loop” planning process had its start, for practical purposes, with the teachings of Deming and Juran in Japan in the 1950s. Deming popularized the “Plan Do Check Act” (PDCA) cycle for solving problems and improving processes, and as a result it is widely known as the Deming Cycle. It was originally conceived as the Learning Cycle by John Dewey, the noted early twentieth-century educator, and then adapted by Walter Shewhart of Bell Telephone Laboratories as the Improvement Cycle. We will find that both views, learning and improvement, are important. We will frequently invoke the PDCA cycle, as it is most frequently called, as the logical basis or underpinning of Hoshin Planning.

A simple description of the PDCA cycle is shown in Figure 1.1 (Soin 1992, pp. 96–97). The essential elements are:

Figure 1.1 The PDCA Cycle (Sometimes Referred to as the Deming Cycle.) (Soin 1992)

1. Plan. Determine goals to be achieved and methods to reach them.
2. Do. Implement the methods.
3. Check. Examine the results: was the goal achieved? Was the improvement hypothesis validated?
4. Act. If the goals were achieved, adopt the new methods permanently. If not, determine the cause of failure and return to Plan. Continue this cycle until no more improvement or progress is required.

For some readers, thinking of planning as a means of improvement may be new. But, in fact, a sound plan is the best opportunity the management of an organization has for achieving dramatic improvement in business results. We will see presently that Hoshin is really the application of the PDCA cycle to the regime of planning. Hoshin is a Management System for determining the appropriate course of action for an organization and effectively accomplishing the relevant actions and results.

Objectives, Strategies, And Hierarchy of Purpose

In any planning, especially strategic planning, it is vitally important to select the “right” objectives! In fact, some would insist that this is the primary role of strategic planning.

In addition to setting the “right” objectives, part of the job of planning is to determine the best means of achieving the objectives and, further, to facilitate effective implementation and review of the means as the plan is executed. In order to select the “right” objectives, the planners must, among other things, do their work in the context of the higher-order purposes of the organization. An organization’s higher-order purposes will be very specific to its own situation, including the needs and desires of its owners and/or stakeholders (members, in the case of a membership organization; congregation, in the case of churches; and so on).

Examples of higher-order purposes might include “make the owners wealthy,” “provide employment for the population of our town,” and “provide the best products and services to society.” Objectives such as “become profitable in 1997,” or “introduce four new products next year,” rather than being taken simply as objectives in their own right, need to be viewed as means of achieving the higher-order objectives of the organization in the long-term. Or, in other words, they can be called, quite correctly, strategies for achieving these higher-order objectives. What of the higher-order objectives themselves? Are they strategies for achieving yet higher-order objectives? Yes, probably. And the way to determine what these are is to ask “why?” For example, Why do we want to provide jobs? While this may seem tedious, it is vitally important to develop this context in order to develop the strategic plan effectively. Among other things, the process of asking “why” begins to uncover the true values of the organization.

Why Plan?

As we will discuss in more detail in the next chapter, in many organizations planning is everyone’s “unfavorite” activity. Can we provide a rationale to support planning that most people can buy into? Perhaps we can; refer to Figure 1.2, which we call the “Highway” or “Road” metaphor for planning.

Figure 1.2 The “Road” Metaphor for Planning (Cowley & Associates 1995)

The metaphor is rich with meaning. First, we need to recognize that, in its most rudimentary form, planning is designed to help us determine how to achieve a desired new state, or objective. For example, you want to learn how to swim. Your present situation, referring to Figure 1.2, is that you lack this skill, and your desired Future State, or Destination, is that you possess it. It is part of your Vision of yourself in the future. Your plan to achieve the future state is the road leading from your present situation to the desired Future. The boulders are the obstacles or tasks you have to overcome on your journey. The big ones might be “Overcome my fear of the water,” or “Take swimming lessons.” Some of the small ones might be “Purchase a swim suit” and “Schedule an hour three times a week for this activity.”

There are lot...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright
• Contents
• Acknowledgments
• Chapter 1. Introduction: What Is Planning and Why Do We Do It?
• Chapter 2. Problems with Planning
• Chapter 3. Hoshin Planning Overview
• Chapter 4. Preparation
• Chapter 5. Analyzing the Present Situation
• Chapter 6. The Strategic Vision
• Chapter 7. Setting the Breakthrough Objectives
• Chapter 8. Developing the High-Level Strategies
• Chapter 9. Deployment of the First-Level Strategies (Catchball)
• Chapter 10. Implementation Plans and Final Plan Review
• Chapter 11. Implementation and Review
• Chapter 12. How to Introduce the Strategic Management System into Your Organization
• Chapter 13. The Tools of Hoshin
• Chapter 14. Essential Techniques for Strategic Planning
• Index