Strategic Planning and Hoshin Kanri

In health care we are facing a change in our collective theory of business. Peter Drucker wrote about the need for organizations to test and adjust their theory of business from time to time (HBR 1994). Checking three main assumptions needs to be a regular if not ongoing part of doing business: assumptions about the environment, about the mission of the organization, and about the core competencies needed to achieve success. Drucker suggests that the assumptions in all three areas must fit reality, fit each other, and be constantly tested.   An organization’s theory of business must receive preventive care using two interventions: abandoning parts of the business that are no longer needed for success and studying non-customers. There must also be early diagnosis of holes in the system. One of the early warning signs is unexpected failure. The other warning signs include unexpected success, rapid growth and attaining the current vision. In health care there is no shortage of unexpected failure. Time to check our assumptions.

The concept of strategic planning is well known to most leaders and managers. It’s a process whereby the organization aligns and coordinates its efforts towards the achievement of shared and cascading goals and objectives. This planning is formulated after careful consideration of shifts in the environment, namely competitive and consumer related, but also political and economical. Another important consideration is the gap between current performance and desired performance. And finally, given limited resources and seemingly unlimited possibilities, decisions based on business priorities and values are made, which typically requires guiding principles and a process for decision-making.

Across organizations approaches to planning differ and within organizations the approach may differ from one period to the next. Differences arise from a variety of factors including leader preference, recent events, culture, and whether the last strategic plan was considered a success or a failure. An organization could decide not to have a strategic plan, others might keep it very simple providing just a framework or keep it very focused on one decision, such as a merger or acquisition. Others may choose to get detailed and include tactics and describe specific projects. Regardless, all need to follow the hoshin kanri principles of direction management: 1) focus on shared goals, 2) communicate goals to all leaders, 3) involve all leaders in planning to achieve the goals and 4) hold participants accountable for achieving their part of the plan.  There are two fundamental tools used in the hoshin kanri approach: 1) hoshin tables, and 2) periodic reviews of progress.

The Baldrige Award is typically given to those organizations who are adept at horizontal and vertical deployment of their strategy (DA Garvin HBR 1991).  They have an element of hoshin kanri in their strategic planning and execution .