BSC and Hoshin Kanri

 

About Hoshin Kanri

Hoshin Kanri is an organizational framework for strategic management (Witcher and Butterworth, 1999; Witcher and Chau, 2007). The words “Hoshin Kanri” translate as policy management. If we decompose the word Hoshin, ho means method, while shin suggests the light that reflects from a compass needle to show the way. Together, according with Witcher and Chau (2007) the two words suggests a business methodology for direction and alignment.

 

Hoshin Kanri was introduced in the Japanese companies in the 1960s as these transformed statistical quality control and the principle of management by objectives into a new integrating organizational management system, called Total Quality Management or TQM. Over the years the concept developed in the Japanese companies as a strategic management approach that enabled the corporate level to manage strategic objectives across the functional hierarchy of the corporations. (Witcher and Chau, 2007)

 

The strategic management concept is based on four primary tasks or processes (Focus – Align – Integrate – Review), that resembles perfectly the PDCA methodology (Plan – Do – Check – Act ) introduced by Deming. (Witcher and Butterworth, 1999). It seems that it is not strange that in many ways Hoshin Kanri management system is similar with the Balanced Scorecard concept, which is based on the same PDCA methodology.

 

According with Witcher and Chau (2007), Arthur Schneiderman, the man who was in the team that developed the first Balanced Scorecard in 1987 while vice president of the Quality and Productivity at Analog Devices Incorp, was not particularly strange of the Hoshin Kanri principles, after spending several years in Japan and being in touch with Hewlett Packard people.

 

Thus, as Kaplan and Norton (1993) cited in Witcher and Chau (2007) acknowledge, Schneiderman integrated the Hoshin planning principles with the Balanced Scorecard strategic objectives and measures and then deployed them throughout the organization.

 

Balanced Scorecard and Hoshin Kanri similarities

Given, the common methodologies and principles on which they are based, both frameworks offering an approach that is central to the strategic management of the firm, they have several resembling points.

 

Both Balanced Scorecard and Hoshin Kanri offer approaches that are central to the strategic management of the firm.

 

Both frameworks are hierarchically architecture, facilitating the deployment of the strategy at all organizational levels over time

 

The Balanced Scorecard four perspectives are similar with the QCDE grouping of objectives used in Hoshin Karin where:

  • Q – Quality objectives and measures resembles the BSC customer perspective
  • C – Cost resembles the BSC financial perspective
  • D – Delivery covers process objectives being similar with the BSC internal business perspective,
  • E – Education covers people based objectives and measures and resemble the BSC learning and growth perspective, ( Witcher and Chau, 2007)

 

Furthermore, as Witcher and Chau (2007) acknowledge, the two frameworks seems to complement each other. While the Balanced Scorecard is represented as sustaining long term strategy, Hoshin Kanri is seen as the management of the longer term strategy as its short term implementation and execution. Having this view of the systems, Witcher and Chau (2007) considers the combination between the two possible, and propose a dynamic framework that integrates them.

 

BSC and Hoshin Kanri - BSC20.com

Source: Witcher and Chau, 2007

References

  • Witcher, B. & Chau, V., S. (2007), Balanced Scorecard and Hoshin Kanri: dynamic capabilities for managing strategic fit, Management Decision, Vol. 45, No. 3, pp. 518-538.
  • Witcher, B. & Butterworth, R. (1999), Hoshin Kanri: How Xerox Manages, Long Range Planning, Vol. 32, No. 3, pp. 323-332.

BSC system : BSC and other concepts

 

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