In Japanese the word “Hoshin” means direction and “Kanri” means management and combination of both simple translates to “How do we manage our direction?” The direction in this case is the overall management of corporate strategy of the organization. By adopting and using this model organizations identify their daily activities and decisions that are not adding value in the long-term direction of the organization and stop them immediately. The model is made up of a matrix that helps the organization to identify who is working on what initiative, how strategies connect to initiatives, and how they map back to the organization vision and short- and long-term objectives.

The model has five main components that form a matrix: the first component is hoshin planning also known as formulation of the strategic objectives. Generally, these objectives are long-term, and they take three to five years, and they should be aligned with the organization’s mission and vision. Organizations that are mature in planning ensure that their objectives are SMART, and they use them together with strategic initiatives to develop a graphical vision road map so that employees can visualize a clear path of achieving the north star.  The second important component found in this matrix is to develop annual objectives and link them with their respective strategic objectives. Annual objectives indicate the milestones organizations should accomplish on a yearly basis to achieve the strategic objectives. This process of formulating annual objectives is called catchball and it should be done in collaborative manner to direct everyone’s focus on the same objectives. Annual objectives are key in strategy implementation because they represent the basis of wisely allocating the resources, they establish divisional and departmental priorities and help them to see collaborative points.

Moreover, they are primary mechanisms for evaluating managers and employees, they form the base of monitoring and evaluation because out of them we see annual performance targets, key projects and their key activities with timeline and key responsible officers. The third component in this matrix is to plot improvement or strategic initiatives / projects on the upper level of the matrix. In most cases, organizations make mistakes of formulating strategic initiatives based on their intuition and opinions and fail to directly link them with SWOT analysis so that they address the reality of their organization. This is suicidal strategy sin because it means the organization is going to spend resources on something that will not produce desired results. In case these strategic initiatives are quality and have been  formulated using the best strategy practices, according to hoshin kanri matrix, they should be linked to the annual objectives that they serve as well as their expected Key Performance Indicators (KPIs) which is another component on the right side of the matrix. 

KPIs and strategic initiatives are the two most important components of performance measurement. The model emphasizes that effective strategy implementation happens when the organization has robust performance system and that is why it connects strategic objectives to annual objectives, the annual objectives to strategy initiatives then to their performance targets / KPIs and resources. The model highlights that the manager and employees should have regular performance review meetings to track how the strategic initiatives or project activities are being implemented to identify gaps and take corrective actions. This is how the model creates a culture of continuous improvement and encourages the organization to adopt PDCA (Plan-Do-Check-Act) to sustain performance culture. The last component of the matrix is the resources, and they should be linked to the strategic initiatives as inputs. Hoshin Kanri is a game-changer of strategy implementation and it provide a clear roadmap, align employees towards strategic objectives and foster a culture of accountability and continuous improvement on daily basis. 

In summary this model improves strategy implementation by consistently aligning people to the same purpose, it improves their focus by linking resources to crucial strategic initiatives that will create eighty percent of the results. It further promotes communication and clarity of the organization strategy throughout the year and reduces ambiguity. Nothing is confusing like working hard throughout the year and being blank on whether what you are doing is adding value or not. Moreover, the model promotes learning and adaptation, employee engagement and high accountability culture.