By Darrell Mann and Ellen Domb
"Planning is everything, the plan is nothing" - Dwight D. Eisenhower
The Hoshin Kanri method of strategic planning was developed to resolve the contradiction between the desire to use management by objective (MBO), in order to motivate people and the desire not to use MBO because of the harm done by arbitrary goals and quotas when a system is not understood. This paper reviews the contradiction that gave rise to Hoshin Kanri and uses the Theory of Inventive Problem Solving (TRIZ)/systematic innovation (SI) to explain the results.
In tough times, managers and leaders have a tendency to revert to wise words from earlier times. Often the words they read appear to conflict with one another. But does this mean some gurus are right and some are wrong? Occasionally, yes it does. More often than not, however, the apparent conflicts are better viewed as a call for leaders to discover higher levels of thinking as current recessionary predicaments demand.
Take the apparent conflict between two of the titans of the previous generation of management thought leaders: Dr. W. Edwards Deming and Peter Drucker. Dr. Deming was the guest of a big three automotive company in the late 1970s. The company sought his advice about quality issues and about competition with Japan. In the course of his orientation, the company told him that all 22 vice presidents had met the objectives set in its MBO system (earning appropriate bonuses) but that the company had lost several billion dollars and substantial market share. Dr. Deming's reaction was to leave, telling them that they had no idea how the company worked and that he could not help them improve if they had no idea what they were doing. He later used this in combination with his universal proscription of arbitrary quotas to condemn MBO in general.1
Some time later, at what turned out to be one of Drucker's last public seminars at the Claremont Graduate School, an audience member noted that the two "D" members of all the lists of important thinkers of the previous century were Dr. Deming and Drucker and asked how Drucker reacted to Dr. Deming's condemnation of MBO. Drucker received the biggest laugh of the evening by saying: "Well, Deming is dead..."
When the laughter had eventually subsided, Drucker, reflected on the automotive story before delivering the succinct and rather profound conclusion: "I never told them to do bad MBO!"2
Twenty-first century managers would do well to debate on whether or not to use MBO while reflecting on the differences between good and bad MBO.
Albert Einstein is famously attributed with saying: "We cannot solve problems by using the same kind of thinking we used when we created them."
How does an individual rethink the MBO problem? Perhaps start by trying to establish the difference between good and bad. In the case of Dr. Deming's prospective automotive client, bad clearly meant that the objectives set ended up as inappropriate. They were good in the sense that generally speaking, it is good to have everyone in the organization know what they are there to do. An individual hopes, however, that when everyone's objectives are set that they are correct. But, there are two ways that objectives can be wrong:
These situations are consistent with a lot of problems that seem to occur with MBO. Organizations as well as individuals tend to set objectives with the implicit belief that it is known what is good for the whole organization and that nothing will change before the end arrives. If those assumptions were true, they are not true in a speed-of-light global economy. The new problem, however, is that objectives are set annually or quarterly or via monthly reviews. The fixed periods are used because they are easy to schedule and monitor.
Just because something is easy to do does not make it right. The fundamental flaw in calendar-based planning is that if the world changes the day after objectives are set for the next period, an individual could spend the rest of the period doing the wrong thing. In worst case scenarios, that could mean almost a year's worth (or more) of doing the wrong thing.
The more sensible strategy in a complex, rapidly changing world is to put away the calendar and set objectives based on timescales that are set by the rate of change for the system an organization (or team) operates on. In theory, the moment something changes with any kind of impact on what is happening ought to be reviewed. Think about if the definition of right has changed in any way.
To help overcome this impossible dilemma, there are a couple things working. The first requires reflection on the story of the two men who were chased across a snowy mountain by a wild bear. Part way along the chase, one of the guys stops to put on snowshoes. The other guy shouts: "The bear is catching up, run!" The first guy shakes his head and says: "I do not need to out run the bear, I only need to go faster than you."
That is to say that an individual does not necessarily need to be sensing and responding every hour, instead they need to do it faster and more effectively than competitors.
What might faster and more effective look like in practice? See Figure 1.
Faster is the simpler of the two parts. It means cycling through the sense-and-respond loop more rapidly than competitors. More effective is complex. Although there are many ways to describe it. It appears to feature six essential activities:
This is an expansion of the plan-do-study-act cycle, which has always suffered from the need to explain that the plan includes sensing, interpreting and designing steps (or LAM of the the look, ask, model, discuss, act (LAMDA) or any other basic problem solving method applied at the strategic level.)1,5
This other side of the perpetual change dilemma addresses the question of what kinds of changes should an organization sense? Change is constant but some changes are more important than others. The really important ones (the ones that require organizations to do something) turn out to possess a distinct characteristic; the changes to look out for are the ones that involve some kind of discontinuity or non-linearity.
Here are some of the main discontinuities that organizations need to be on the lookout for:
Having mapped what organizations need to look for when sensing (the need to make a shift in objectives) what now remains is to work out the details of each of the activities in the sense-respond cycle. This can be done relatively simply by dividing the six basic activities into two clusters:
If the sense part of the story begins with the discovery of a discontinuity, the most effective way to proceed requires a toolkit capable of dealing with the conflicts and contradictions that inevitably arise from such discontinuities. The only sensible option is the TRIZ/SI methodology. Based on the study of more than three million discontinuity resolution data points observed across all forms of human endeavour, SI has successfully removed the noise from the contradiction elimination story. Thus, SI allows organizations and individuals to interpret what is more important than how one discontinuity affects and potentially creates others. Most importantly, how the system needs to be re-designed or re-configured and how the local and global objectives need to be changed.
Sensing boils down to finding the discontinuities. Interpreting is about understanding the inter-relationships of the different parts of the internal and external systems in order to map the causal links of the discontinuities and the rest of the system. Designing is all about resolving the conflicts and contradictions that these causal links create (resolving as in creating step-change, contradiction-eliminating solutions). It definitely does not mean optimization. Traditionally the word optimization sounds like it is a good thing. In some situations it is. When making a response to a discontinuous shift, however, it is a highly inadequate response. Non-linear shifts demand non-linear responses.
In the fashion of author Stephen Covey, optimization is the right response in an incrementally changing world. Non-linear changes often demand wrong jungle responses. (See Covey's story about the scout who climbs a tree to look at the surroundings, only to discover that he has been painfully hacking his way through the wrong jungle.) It may necessitate some significant rethinking of the objectives passed on to the team.
Once the team has designed a range of possible solutions to the initial discontinuity, the second half of the sense-respond cycle needs to be brought into play. If TRIZ/SI made for the best foundation for progressing the first half of the cycle, Hoshin Kanri, is its ideal partner for the second half.
The Hoshin Kanri method was initially developed by professor, Yoji Akao, in Japan and later was used worldwide as the strategic planning methodology associated with total quality management (TQM).3,4 In many ways, the Hoshin Kanri method emerged from the resolution of the apparent conflict of MBO, developed by Drucker and Dr. Deming's 14 points, which specifically advised against using MBO.
The Hoshin Kanri method is illustrated in Figure 2.
The Hoshin Kanri method has two significant differences from classical MBO-style planning:
These are an excellent match for the sense/interpret/design and decide/align/respond system that has emerged from the use of TRIZ/SI to create fast moving strategic systems in dynamic environments. The Theory of Inventive Problem Solving/SI are used to create methods of meeting the strategic goals in the initial plan and they are used at each stage of review to create new solutions to new problems that are revealed by the review.
A recent example shows the power of the frequent reviews: A Texas city development board had set strategic goals of attracting German clean technology businesses to an unused military base that was re-designed as a technology park. They did all the work that was planned; trade shows, publicity through the embassy and trade missions, tours featuring cultural and educational advantages, etc. When the dollar/euro value changed substantially, however, there was nothing that the city could do to make its U.S. location desirable. Because of the flexibility of the Hoshin Kanri review process, they re-set goals to attract a mix of business and targeted other world economies where the dollar still looked cheap and used all the lessons learned in a German experiment to attract business from a variety of Asian countries.4
The Russian origins of TRIZ and the Japanese origins of Hoshin Kanri have been left behind by the companies that are using these methods. Combining the systematic, structured innovation of TRIZ/SI with the disciplined system of Hoshin Kanri gives companies the best flexibility and accountability while asking the right questions and finding the strongest solutions. In the highly complex, highly inter-connected, highly non-linear continuous innovation global marketplace, only the agile will survive. According to observations, the combination of TRIZ/SI and Hoshin offers companies the best chance to not just survive but also drive and thrive in a brave new world.
Darrell Mann is an engineer by background, having spent 15 years working at Rolls-Royce in various long-term R&D related positions, and ultimately becoming responsible for the company's long-term future engine strategy. He left the company in 1996 to help set up a high technology company before entering a program of systematic innovation and creativity research at the University of Bath. He first started using TRIZ in 1992, and by the time he left Rolls-Royce had generated over a dozen patents and patent applications. In 1998 he started teaching TRIZ and related methods to both technical and business audiences, and to date has given courses to more than 3,000 delegates across a broad spectrum of industries and disciplines. He continues to actively use, teach and research systematic innovation techniques and is author of the best selling book series Hands-On Systematic Innovation. Contact Darrell Mann at darrell.mann (at) systematic-innovation.com or visit http://www.systematic-innovation.com.
Ellen Domb is the founder and principal TRIZ consultant of the PQR Group. She is also the founding editor of The TRIZ Journal and a commentator for Real Innovation. Contact Ellen Domb at ellendomb (at) trizpqrgroup.com or visit http://www.trizpqrgroup.com.