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Learn about KAIZEN™ in Strategy

Learn about KAIZEN™ in Strategy

The COVID-19 pandemic has created a global crisis affecting all aspects of life - personal, social & economic; leading to a high degree of uncertainty. In this situation, organisations are working to cope with the current disruption, scan the changing environment & its’ demands, & create alternative approaches to remain competitive.  

In this critical juncture where most organisations are merely trying to react to disruption & manage the crisis, enlightened organisations also need to be pro-active & emerge stronger post-crisis. Kaizen Institute has suggested some initiatives that can be adopted in different phases of this pandemic induced crisis. These initiatives have been included in three pillars:

KAIZEN™ in Crisis Management 

KAIZEN™ in Organization & Strategy 

KAIZEN™ in Operations 

Our global survey indicated, that for a very significant majority of organisations, work-from-home is likely to be part of the new normal post-crisis for several valid business reasons. Hence, some of the recommended initiatives of KAIZEN™ in Organisation are a means to ensure that organisation prepare for that eventuality.

In this blog, we shall focus on KAIZEN™ in Strategy

Most organisations work to well thought out 3/5-year strategic plans, from where annual business plans emerge. Given the current unprecedented disruption, new risks have to be managed, new regulations related to employee & visitor health have to be followed, sourcing & market demand scenarios have to be reviewed. It is unlikely that the old strategy is still fully valid. Very broadly, four actions are required. 

1. Hansei (Reflection) 

2. Scan changes in the COVID-19 impacted world 

3. Plan updated Strategy, using a Balanced Score Card 

4. Develop Hoshin Implementation Plan 


1. Hansei (Reflection) 

Hansei is carried out with all top/ senior management team members participating. During hansei session, we ask two main questions: 

i. What went well? – We learn from what went well & capture those learnings as inputs to the new strategic plan

ii. What did not go well? – We learn even more from what did not go well! It is no good to keep repeating what did not help us, we either improve or do something else. 

Standards & countermeasures emerging from this exercise become one set of inputs to our new Strategy. 

2. Scan changes in the COVID-19 impacted world 

o Scan changes in Customer needs & demand: Start with identifying changes in customer and consumer values and behaviors. Check if your products, services, and solutions are valued more, less or the same in the COVID-19 impacted world.  If they are valued less, then you need to adjust your portfolio and strategy to provide more value addition. S 

o Scan changes in the business environment – industry-related policy decisions, taxation, credit, economic stimulus packages, technological changes, digitization requirements, competition, demand-supply, market trends, segments, opportunities for essential goods and services. Check how these external factors impact your business and how would need to adjust to take advantage of the changes.  

o Scan for changes impacting suppliers, raw material sources 

o Scan for changes impacting employees and internal operations - especially related to health protection, sanitization and social distancing & Governmental/ WHO regulations impacting operations. How to operate in the short-term and plan for the longer term? To what extent are work from home and virtual meetings workable for internal and external activities? 

Answers to these questions about the impact of the external and internal business environment will provide additional inputs for the updated strategy.

3. Plan updated Strategy using Balanced Score Card 

A great way to update the organization strategy is to look at the goals and plans from four perspectives - financial, customer, internal business processes and employees. These four perspectives form the Balanced Scorecard as shown in the diagram below, which was developed by Robert S. Kaplan and David P. Norton. 

The Balanced Scorecard is a measurement system in which goals and metrics are agreed for each of the four perspectives of the strategy. Before the Balanced Scorecard was introduced, organization success was usually measured only by financial metrics. Later it was realized that financial metrics alone may not be sufficient and operational measures need to be added to have a balance.  

The Balanced Scorecard helps to provide focus on the most important metrics and prevents confusion with too many performance metrics. Financial metrics are well known. Metrics for the customer perspective can include time, quality, and performance and service. Metrics for Internal Business perspective come from the business processes that have the greatest impact on customer satisfaction e.g. factors that affect cycle time, quality, employee skills and productivity. Metrics for Innovation and Learning perspective can include specific rates of improvement for on-time delivery, cycle time, defect rate and yield.

4. Develop Hoshin Implementation Plan 

Once the updated strategy is in place, the next step is to prepare a plan to implement the strategy across the entire organization. Strategy implementation can be successful only if the entire organization understands the updated strategy and is aligned with it. Hoshin Kanri, also called Policy Deployment, is an excellent KAIZEN™ tool to do this alignment and drive actions. The Japanese word Hoshin means setting a direction and Kanri means management. Hoshin implementation drives actions of all employees in the same direction at the same time, removing wasted efforts due to poor communication and inconsistent direction. 

Two important tools used in Hoshin implementation are X- Matrix and Catchball.  

The X-matrix is a visual tool on a single A3 size page that links each of the initiatives or actions to the goals and vision. It helps to keep focus and select the right initiatives to achieve results. An example of the X-matrix diagram and content is shown below:   

Replace with KI X-matrix example 

The catch ball process ensures that communication is not lost when cascading the strategic goals from the top to the middle and then to the operational level in the organization. It is a participatory approach that accompanies the construction of the X matrix. It ensures team alignment, activities prioritization, target integration and understanding.  

The diagram below represents the flow for catch ball.

 

Hoshin implementation using X-matrix and catch ball creates a shared vision of the strategy across the entire organization. It gives a sense of purpose and engagement to all employees to drive actions towards common goals. 

In summary, now is the time to reflect on and reappraise your strategy. If done well, this could result in a significant competitive advantage to your organization.

Author  

  

Atul Ghai, Senior Consultant at Kaizen Institute 



About Kaizen Institute 

Kaizen Institute is the original and premier provider of KAIZEN™ services of Change Management, Business Excellence, Operational Excellence and Lean. 

We support companies of all sizes in all market segments, providing them with a sustainable, competitive advantage. Our Vision is Improving the world with Everyone, Everywhere, Every Day – The KAIZEN™ Way. “KAIZEN™ means Change for the better.” 

Kaizen Institute is a global organization which provides consulting and training services to companies represented in Europe, the Americas, Asia-Pacific, the Middle East, and Africa. We are currently operating in 60+ Countries for 35 years. 

Want to know more about our services? Click Here 

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