A Management Compass: Using the Hoshin Star to Rank Priorities

Organizations always have a number of competing priorities, and determining which ones require our immediate attention can be a huge challenge. It’s impossible to tackle every available opportunity and problem in all areas at once, but if we rank our priorities and commit to maintaining that hierarchy, our operations become much more manageable and progressive. With a hardwired internal “code” to consistently guide us toward daily actions that will have beneficial effects on our top priorities, we won’t end up stabbing away at a lot of relatively unimportant tasks. Instead, we’ll be constantly filling in the big picture of our organization’s mission, vision and values. Our goal, then, is to parse out our priorities, rank them, and then align all team members so that everyone places the same degree of importance on each priority.

If everything is high priority, then nothing is high priority.

How can we go about this? Oftentimes, we gain wisdom not so much by coming across a new idea as by rediscovering or repurposing some bit of information that has lain dormant for a while. So it has been for my organization with the “lost” tool of the Hoshin Star. Our use of the Hoshin Star is the perfect example of both the dilemma and the solution described above. The Hoshin Star is actually part of a large, complex system called the Hoshin Kanri, which can be translated to mean “management compass.” Since our organization’s priorities do not necessitate an in-depth study of this field, we parsed from it what we could use immediately—the simple exercise of the Hoshin Star. This tool has proved so valuable to us that I am surprised that it is not more widely known. When used correctly, the Hoshin Star can help businesses find direction and discover the most advantageous areas upon which to focus their efforts. We’ve found that the Hoshin Star is one way we can go right to the heart of the matter of prioritizing our goals . It’s an easy-to-use, yet profound tool that helps us chop out the extraneous matters that compete for our attention, clearing the way for the most important actions we can take to advance our business.

The reason the ranking is so important is that not all priorities have the same impact upon our success.

Being unclear about which priorities are most important can cause a lot of chaos for the individual and conflict for an organization. It is critical to our personal and professional success to be able to name our priorities and then to rank them. Some will have more impact than others, and it will greatly benefit us to know the difference. Any company can use the Hoshin Star to quickly distinguish and rank its priorities. The more aligned an organization is regarding the hierarchy of those priorities, the more powerful it is and can become.

How to Use the Hoshin Star
The Hoshin Star can be used to develop any area or enterprise in which we want to grow. For our purposes, we will focus on its usefulness in helping an organization thrive in its respective market, although it could just as easily be applied to a specific project, such as designing a website.

1. Identify Critical Success Drivers

A critical success driver is something that satisfies the concerns of one or more constituents served by an organization. In other words, critical success drivers are what make the different aspects of an organization, and ultimately the organization as a whole, successful. Before doing any type of planning, it is first necessary to set priorities. We begin that process by considering our critical success drivers. We can ask ourselves questions such as:

What makes us successful? What do our clients want?
What is holding back the company’s growth?
How can it earn more revenue? Which areas must be improved?
What are our competitors doing that we aren’t?
What technologies or other resources would advance our goals faster and better? Is our team working as efficiently as possible?
Does our corporate atmosphere contribute to or impede our mission?
Are we handling our clients in a way that makes them thrilled to be working with us? Could any of our processes, both internally and externally, be made smoother?
Is it time to reevaluate our pricing scheme?

Questions like these allow us to identify the organization’s assets and liabilities in all areas. This will provide a useful inventory of information upon which leaders can base their goals. This discovery phase must occur before any viable strategy can be considered.

It can also be extremely helpful to speak with clients. They may have valuable and unexpected insights as to what is, or is not, driving the organization’s success. A brainstorming session with key team members may also spark some interesting ideas.

Once we’ve identified the many areas in which we could be working toward improvement, how do we set our priorities? With all of the tasks that this procedure shows us that we could be doing, how do we know which ones to tackle first? This is precisely what the hoshin star helps us decide.

2. Narrow the List

A long list of critical success drivers helps us really see our overall vision and all that will go into bringing about its success. Now that we are armed with that valuable inventory for our given situation, we will want to narrow it down. This will enable us to pinpoint the key areas on which we’ll want to concentrate.

Begin by checking the list for entry factors and removing any that you find. Entry factors are general requirements and are not, therefore, critical to the strategy of a specific enterprise. For example, conforming to manufacturing guidelines is something that simply has to be done by everyone who makes a product for a particular industry. Making an innovative, reliable and valuable product could be just an option and, thus, a critical success driver for the organization who masters it. The former comes off the list; the latter stays on.

Next, merge like items. This is usually more difficult than it would at first seem, but it is well worth the effort. As we pare down the list, we’ll realize that some suggestions are in actuality the same as others, and that other ideas naturally encompass other ideas. For instance, we may have identified competitive pricing as an area of focus. Another item on our list might be high value. These probably could be merged into one item, competitive value, since price and value are inextricably linked in a successful business. The goal in this step is to whittle the list to six strategic items, at most. Five is best. We really want to streamline our approach to the strategy, and the only way to do that is to make the difficult decisions that lead us to what is truly important.

3. Create the Hoshin Star

On a separate sheet of paper, write down each item in a clockwise fashion to form a circle. Number each one and draw a circle around each factor. We used this process to come up with the best ways to create value for our clients at ITX and whittled our huge list of factors to these five for the hoshin star:

4. Compare the Success Drivers

Now it is possible to draw an arrow between each of the labeled items without going through any of the others. There are 24 possible combinations for a list of five factors. For each pair of numbers, consider which factor drives the other; for instance, does Number One drive Number Two, or does Number Two drive Number One? In our example, clarity of vision and path drives a steady diet of quality deliverables, not vice versa. If you are doing this exercise as a group, encourage discussion about the rationale behind your answers so that everyone can come to an agreement. Then, draw an arrow from the number that does the driving to the one that it drives. Continue in this manner until all items have been compared to all of the others.

5. Look for Contradictions

A contradiction in the hoshin star is a circular reference. It will quickly become apparent if your answers for the exercise don’t work out, and it is fine to go back and change them. But if it is done correctly, you will end up with four arrows going in or out of each of the items. One item will have four arrows leading out, one will have three, one will have two, one will have one, and one will have no outbound arrows.

Important: Once you’ve draw all of the lines, make sure that you don’t end up with a circular reference, which will happen if you’ve drawn an arrow going in the wrong direction. For example, A drives B, B drives C, and C drives A is a circular reference because it feeds back on itself. A circular reference must be abolished because it tells you that one or more of the arrows is going the wrong way. Usually, just one arrow is errant, and flipping it corrects the problem. There are actually two ways to check for circular references: You can either look for the “circuit,” the loop that feeds back into itself, or you can count the outbound arrows for each of the drivers, making sure that each one has a different number of outbound arrows. Again, one will have four, one will have three, one will have two, one will have one, and one will have none.

6. Interpret the Results
What does our completed hoshin star tell us? The success driver with the most arrows leading out of it is the most important, because if we could only do one thing today and we focused on that item, it would have an effect on all of our success drivers.

The final step is to list the success drivers in order of their importance based on the number of outbound arrows. Then, read the “chain” the process has created. In our case, we’ve determined that clarity of vision and path drives a steady diet of quality deliverables, which drives efficient use of client resources, which drives a smooth journey, which drives making the client look good. Therefore, focusing on making the client look good would not be as powerful as creating clarity of vision and path because the former doesn’t drive the latter, but the latter does drive the first. If we create clarity, we make the client look good anyway because clarity drives all of the others. If we have a choice between doing something to make the client look good or to create clarity, we’ll now choose to create clarity and, in so doing, automatically benefit both areas.

Even if we don’t choose to use the larger process of kanri, we can create great value for our organizations by employing the hoshin star. Focusing on the critical success drivers with the highest impact empowers us to make excellent judgment calls. When we are evaluating any set of strategies or initiatives, we can rely upon this tool to guide us to the actions that will have the broadest impact.


© 2012 Ralph Dandrea. All rights reserved.

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