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A recent question on Linkedin was about deploying Hoshin Planning as a part of a strategic Planning process.  Few respondents seemed to have come across this in action, so here was my response:

Untangling problems with Hoshin Planning

Let me tell you about a client I helped that was using Hosin Planning, strategic planning and the Balanced Scorecard , got in a right mess and how I helped them untangle it.

First I assume you are referring to Hoshin Kanri, which is an approach developed by Unipart in the UK to deploy strategy, as part of a lean process, using “Strategy Deployment matrices”.  This approach gets called various things including Hoshin planning and the Strategy deployment matrix is sometimes called a Policy Deployment matrix, or even a Cross Matrix (X-Matrix) by various people.

On my blog there is an article that will take you to the original Unipart paper that the Unipart consultants wrote. They freely admit that they admired Norton & Kaplan’s balanced scorecard and decided to create the “Strategy deployment matrix” SDM from it. I’ll put links at the end.

In effect the SDM is basically the scorecard part of the balanced scorecard approach bent around in a circle. Sounds very clever to start with until you try to do it. Which is where my client fell down.

What problems does this cause?

You hit four main problems (and a few more as a consequence) Here are the main ones:

a) there is a massive stretch between the strategic objectives and the measures at any level. So it is quite difficult to design suitable ones once you are two or three levels down.
b) By doing a mapping across the corners of the strategy deployment matrix you have thrown away the close association that the balanced scorecard makes between cascaded objectives and measures at any level of the cascade. You are trying to link local measures to strategic objectives. You also invite the creation of measures all over the place without a structure.
c) The same is true for projects and responsibilities.
d) You have thrown away the balanced scorecard’s cause and effect model between objectives in each perspective. This is where the problems really start.

What problems had this client created?

My client had strategy deployment matrices coming down from strategic objectives with measures and initiatives and responsibilities.

At the same time they had “balanced scorecards” which were really just scorecards, that had measures that were more operational in each perspective.

As these were designed separately they did not sit well together. The result was:

Those performance and finance professionals supporting operations were confused about how things shoudl work

Those operational people who tried to manage using the  tools confused about the various roles of their balanced scorecard and Lean Strategy Deployment Matrix, and how they were supposed to work together.

What was the underlying reason for these problems?

Simple. They had lost the principles of the balanced scorecard approach and failed to develop any strategy maps or cascade them. So nothing had a context.

So how do you solve this?

The solution was to “re-engineer” the strategy maps from the two pieces and recreate what they should have been. As soon as we did this the teams went “Ah ah – that is what we are trying to create” and “At last it is clear what our business model is”. They became big enthusiasts of strategy maps, how they would both make the business planning process easier, and make it easier to manage on a day to day basis.

Now the heart of this problem was that the team cascading the Hosin Kanri lean approach did not understand the origins of their techniques, why the components were there, or how they worked together. The teams putting in the things they called scorecards did not understand the approach, or its origins. As a result a very major organisation was trying to manage its strategy and performance with lead weights tied to its feet.

You can read these articles here:

How do I know how to fix this, by the way?

Well bear in mind I worked for Norton & Kaplan for over 4 years and know the balanced scorecard principles really well – Norton even wrote the foreword for my latest book about Strategy Mapping. So, for me it was obvious. It was not for them.