(2014-03-11) Hohmann on Goal Trees

Chris Hohmann on Goal Trees:

What is Hoshin Kanri? Hoshin Kanri or Hoshin planning, strategic planning or policy deployment is a method designed to focus and align all contributions of the organization’s staff on required breakthroughs in order to achieve the top strategic objectives.

It is very common in all kind of organizations that people work a lot, spend energy and consume resources on projects and performance improvement without the organization noticing significant progress.

Improvement opportunities are infinite in any organization.

To prevent resource dilution, it is necessary to define what are the few things that are really required to achieve the long-term goal and is not yet available or not under control. This things are referred to as breakthroughs.

All efforts, contributions and resources will be focused on acquiring, building, installing the few breakthroughs.

The focus is now on what is referred as ‘true North’, a metaphor used to indicate where all units should head for, regardless the routes they individually have to take. (cf North-star Metric)

Hoshin Kanri starts with the definition of the few critical breakthroughs the organization must achieve so that its goal or purpose can be achieved. This is considered on long or mid-term, typically three to five years ahead.

The next step of planning is to breakdown the long or mid-term objectives into shorter term objectives

cascading down the objectives and cascading up the proposals.

Strategic planning and deployment can lead to fairly big collections of objectives, hence actions. In order not to recreate the loss of focus it is supposed to avoid, planning overview is done with the help of a X-Matrix.

Such a matrix usually reads clockwise starting with long-term objectives, the related short-term objectives, the actions to achieve short-term objectives and KPIs to monitor progress

For the cascade to lower levels and a more operational use, A3 reports are great tools. The cascading is done with a set of A3 reports

Hoshin kanri or policy deployment is reviewed periodically. The A3 reports are used for operational daily, weekly and monthly reviews

How Goal Tree can help Hoshin Kanri. How to first identify the limited number of necessary breakthroughs?

Reflecting on achievements so far and brainstorming for improvements may seem a good way, but experience tells that without a structured and logical process, the brainstorm may produce a nice-to-have wish list.

Goal Tree prior to Hoshin Kanri

This is where Goal Tree is welcome to give guidance.

while Hoshin Kanri is made for planning and cascading actions, Goal Tree is made for analysis, assessment and designing the future state, depicted in a Tree shaped graphic.

As the Goal Tree is entirely based on necessity-logic relationship between the items, there is no place for nice-to-haves

Considering Goal Tree and Hoshin Kanri as companion tools, displaying the seminal Goal Tree altogether with Hoshin Kanri in the operations room

Goal tree chronicles – The pharma plant. *Years ago, long before I knew about Goal Trees, we got an assignment in a major pharma plant.

We were hired to help ops teams to improve throughput and efficiency, one of a 20+ streams project. Indeed, plant’s top management worked out a strategic plan for the three next years, containing more than twenty “strategic goals”.*

the 20+ list of strategic goals was made of a mixture of: Really needed breakthroughs, Critical Success Factors, as I will discover later
Necessary Conditions, which as their name tells are conditions necessary to achieve some objective
Restoring some basics, or put bluntly, solve problems and drifts that should never had happen
And nice-to-haves, or some managers’ wishes and local objectives.

Now familiar with Goal Trees, I can mentally replay the story and structure it for better outcome with much less hassle.

Once the top of the Goal Tree drawn and checked, top managers would turn to their staff and continue the Necessary Conditions inventory down to ops level.

Next step would be an ‘as-is’ assessment for each NC using the Green/Amber/Red color code I described in another post.

Goal tree chronicles – ToC is about focusing. This post is a post scriptum to the previous one of this series, relating how a Goal Tree could have helped a pharma plant.

Theory of Constraints (ToC) practitioners keep repeating it, ToC is about focusing on the constraint, thus finding the leverage point. The Goal Tree is a simple but powerful tool to achieve this

Even with a Hoshin Kanri to structure the cascade of objectives, I believe many of these 20 streams would have found their way into the X-matrix, keeping the dilution of resources.

Goal Tree – Stating the Critical Success Factors

CSFs like any other objectives has to be set in a SMART way, SMART being an intrinsic quality as well as an acronym for: Specific.
Measurable
Attainable
Realistic
Timely (note Dettmer doesn't say this, nor do other practitioners)

Goal Tree: How to define Critical Success Factors? The original name of Goal Tree is Intermediate Objectives Map, an adaptation of the Theory of Constraints’ Thinking Processes‘ Prerequisite Tree (PRT).

Critical Success Factors (CSF) are high-end objectives necessary to achieve in order to achieve the organization’s Goal. Conversely, failing to achieve one CSF means failing to achieve the Goal, thus the name ‘Critical’.

The purpose or Goal of an organization should not require too many Critical Success Factors to be achievable. Too many of them means the ambition is maybe too high or some CSFs are in fact Necessary conditions mistaken as CSF.

In for-profit organizations and except if in dominant position or in a ‘blue ocean’, the organization faces competition and it is very likely that meeting price, delivery and quality requirements are three Critical Factors. These three CSF are generic and common to all competitors, this leaves two CSFs to distinguish the company from others. The tip here is to state them wisely to differentiate from others, something that makes the company unique. (cf unique value proposition)

CSF statement as for any objective should be SMART. Something like “keeping our quality at best” or “improving our quality” is not SMART, it’s fluffy.

A SMART statement about quality should sound like: “In one year from now our first pass rate is steadily above 98%”.

How to distinguish CSFs from NCs? Put plainly, if no higher objective can be inserted between one objective and the Goal, this objective is most probably a CSF. (Meh arbitrary)

Example of mismatching: costs, price and margin

do customers or market care about company’s costs? No, they care about sales price

Margin is probably also higher rank than costs, because the later surely do influence margin (Price-costs=margin), but it is easier to set a margin level as objective than to foresay future costs

regulatory constrained environment, like aerospace or pharma, where some official certifications are mandatory. Getting and keeping such certification is certainly strategic yet not a CSF, but rather a Necessary Condition and a low level one.