Manage on Purpose: Align Teams, Develop Strategy, Grow People with Mark Reich

[00:00:00] Mark: We need to engage everyone in the organization down. So that’s a challenging thing. If you’re not at the top leadership level organization, you’re not day to day, you’re not involved in that strategic. Direction of the organization. So if you wanna evolve people in that, whatever you use it tool has to be simple.

[00:00:16] Katie: Welcome to Chain of Learning, where the links of leadership and learning unite. This is your connection for actionable strategies and practices to empower you to build a people-centered learning culture, get results, and expand your impact so that you and your team can leave a lasting legacy. I’m your host and fellow learning enthusiast, Katie Anderson.

[00:00:36] How effective is your organization’s strategy in achieving results? If your teams don’t know how their daily work connects to your organization’s bigger goals, you don’t have a strategy, you have a gap. A gap in engagement, a gap in alignment. Too often strategy is treated as a top-down directive, created by a handful of leaders and simply deployed to everyone else.

[00:01:00] The result, confusion, misaligned priorities, and a lot of wasted effort. To help you close this gap, I’ve invited Mark Wright to Chain of Learning. In this episode, we explore how Hoshin Kanri, an approach to strategy developed by Toyota, and that I describe in my book, learning to Lead, leading To Learn offers a fundamentally different approach to strategy, development, and deployment.

[00:01:22] One that connects people to purpose, builds capability and turns vision into meaningful action. Mark Wright is the author of the new book, managing On Purpose, using Hoshin Kanri to develop strategy, align teams, grow leaders, and innovate your enterprise. He spent 23 years at Toyota, including six years in Japan, and over a decade leading Toyota’s North American Hoen Connery process.

[00:01:48] Today he’s a senior coach and chief engineer of strategy at the Lean Enterprise Institute, where he advises organizations and their executives on lean transformation. We started off our conversation with a question for listeners who are unfamiliar with the term Hoshin Kanri, what does it mean and how is it different from traditional management approaches to strategy?

[00:02:08] Let’s dive in.

[00:02:10] Mark: First of all, thanks for having me on Katie. It’s great to be here. I appreciate it. Hoshin Kanri. And this is in my book. Uh, I figured that was one of the first questions people would ask ’cause some people aren’t familiar with the Japanese term. It’s sometimes referred to an English as strategy deployment.

[00:02:25] But I never really ap liked that term. And I’ll say, I’ll tell you why I didn’t like that term in a moment. Hoing Connery. Fundamentally, hoing is, uh, your direction or your policy. Uh, it could be personal, it could be for the organization. That can be a general term, and Connery is meant to be management. Uh, I have a.

[00:02:43] Official definition of it in the book that I think it’s probably easiest just to read, ’cause I think gives people a full understanding based on the context of what I learned in Toyota Hoshin Kanri is a management system for strategy that defines midterm and long-term direction, both objectives and targets, and annually builds alignment horizontally and vertically to that direction.

[00:03:06] Manages the annual execution to the direction and develops capability of people throughout the organization. Now, I know that’s a little bit of a mouthful, but in fact, that encompasses everything I learned it to be. And, uh, the powerful methodology. It was when worked in Toyota,

[00:03:22] Katie: as you know and have talked to Mr.

[00:03:24] Yoshino, who’s a subject in my book. It’s such a critical part of Toyota’s success in how they truly get alignment and engagement and develop people. And so I, I wanna explore that with you here today because it really is so different than how. In the West, we tend to approach strategy and strategy deployment.

[00:03:46] So I’m curious from your perspective, what are some of those big differences or things that people get wrong when they, they think about strategy, strategy deployment versus what Hoshin Kanri is really all about?

[00:03:56] Mark: I wouldn’t say. People get anything wrong when it comes to strategy. Uh, strategy has a very broad meeting.

[00:04:03] That can mean, I think, for many organizations, like the direction where you wanna go, how you wanna win in the marketplace. I mean, let’s face it, uh, since Michael’s Michael Porter’s book came out in that early eighties, there’s tons of literature out there about what strategies. What’s unique, particularly around Hoshin.

[00:04:20] Kanri, I believe, is yes, it helps the organization define strategy, but also maybe there’s two big, I say two major differences. It’s a rigorous methodology to ensure that you achieve that. Uh, those objectives are your vision, uh, you put forth your strategy. So, and it’s, it encompasses in rel relation to that.

[00:04:44] And maybe we can talk about this a little more. PDCA and that’s a, an important part of my book. And I think the other thing that I. I just never see organizations focus on is in Toyota. It was a fundamental methodology for developing capability, particularly of leaders, but middle management and frontline people as well.

[00:05:03] And they, that was done through, you know, various methodologies related to problem solving and how that connected to hoshin kanri itself.

[00:05:11] Katie: Thank you for that description and some of the differences. You know, usually when we write books, we’re trying to solve a problem or close a gap, and so what was the problem?

[00:05:20] That you were trying to solve through writing this book?

[00:05:23] Mark: Well, you know, interestingly enough, uh, when I, when I worked in Toyota, I had the opportunity, uh, in my career to work, uh, with an organization called the Toyota Supplier Sports Center, TSSC. That was a group that helped our suppliers and out other organizations implement the Toyota production system.

[00:05:40] You know, Toyota’s very well known for the Toyota product. It’s, you know, it’s world renowned for that particular part of our management. Uh, system in our methodology. And, uh, so I got a lot of experience in the field helping organizations, but I, when I managed to and Connery into, I, I was the general manager of that methodology, kind of managing North America, uh, our corporate strategy.

[00:06:02] You know, I really worked within Toyota and I never really saw, and my focus in TSSC have primarily been shop for improvement. Not management improvement overall. So when I left Toyota and I went out to organizations, they heard that I had this experience at Toyota in corporate strategy in Hoshin Kanri, and they wanted me to come see what they do.

[00:06:22] Well. What I kind of universally saw organizations is a little bit to what I referred to later. Most organizations I went to had some kind of vision, but to tell you the truth, it was either on a PowerPoint slide or kind of posted on the wall and there was no. Clarity around how they were planning to achieve that often lead, you know, team members didn’t really have a good recognition of what it was.

[00:06:45] I would say that, you know, that component plus the, the fact that it was this kind of exclusive thing, strategy among a group of only high level leaders. That kind of had an understanding of what it was. And it was often something that got communicated through, uh, an email or town hall and event. You know, lead and leaders were kind of held accountable to achieve certain targets through it.

[00:07:07] And so it was, it was missed. There was a sniffing a gap between what I had kind learned it to be in Toyota, which was really a people development methodology. And that compared to what I saw outside.

[00:07:20] Katie: In one of my, or many my years of conversations with Mr. Yoshino, you know, he spent so much time, uh, at Toyota really both supporting the Hoshin Kanri process, uh, from the CEO’s department, uh, for many, many years.

[00:07:33] And then has spent a lot of his career helping teach people too. One of the, the things that I see as a difference, and he’s called out too, and I think you’re highlighting here, is that we often get focused on just the result or the outcome and like you said, those targets you have to reach. And of course, Toyota wants.

[00:07:48] The outcomes too, but they’re really focused on that process to get to the outcomes. And so maybe that’s some of that, that PDCA cycle that we’re, we’re talking about as well, it had, that’s so embedded into Hoshin Kanri. It’s not just top down, achieve these targets, but let’s create a supportive learning environment and process to get there.

[00:08:07] Mark: Interesting. That maybe that’s another, you know, you remind me of a third component that’s really different and that is that people forget that like strategy is a process too. Just because I, I guess my career in Toyota, I, I realized everything’s a process. In my book, I give the example of like brushing your teeth in the morning.

[00:08:26] That’s a process actually that’s pretty standardized. I guess. Most everybody has like a standard process. They follow in the morning how they brush their teeth, but people don’t think about things like that as a process. Uh, Hoshin Kanri is a process that has inputs. Uh, you know, the various things that are required to consider what your strategy should be like, the market environment, uh, customer feedback, et cetera.

[00:08:50] And then from, from the, from what you develop, the hoshin has outputs, uh, which you hope would be like new products, new innovative processes, people get developed and that’s what produces your business results. And I think, uh, most companies, particularly around this topic, even those that kind of think, they’re lean, I guess, but particularly around this topic, tend to start backwards.

[00:09:13] This is the business re result we need, and it’s often just financial. And then here’s what we gotta do to get

[00:09:19] Katie: it. One of the things I really appreciate, there are many things I appreciate about your book. To me, it’s really the best book out there for a. How to take and apply these concepts. What I see is a lot of missing elements in talking about strategy in the first place.

[00:09:33] And you, you call out like Laffy and Martin’s playing the win, the reference to playing the win. Like you have to understand where are you gonna play and how you’re gonna win. Like what’s your differentiator, what’s your vision? And that has to then drive the strategy and not. Flipped, as you said, of course you want those outcomes.

[00:09:48] And, and too often we just have this laundry list of all the things we have to do rather than really how are we going to win and play. And um, I’ve seen that’s a lot of challenges when talking about Hoshin Kanri, there’s sort of an assumption that people have done that already, but in my experience with organizations, whether they’re healthcare or manufacturing or wherever, is they’re missing that real clarity of, of that true north vision of where we need to go.

[00:10:13] Mark: That’s a good point, Katie. I, I agree with that. Uh, the clarity of True North Vision. That’s part of what I put in my book too. I would also say that part of that misunderstanding in the community around, that’s something we’ve done relates to tools. You know, it’s true in lean in general, I found. But, uh, people see the, uh, like accomplishment of, or the achievement of lean as you’ve implemented a tool.

[00:10:38] And you know, Hoshin Kanri has some tools that have been introduced, uh, to the community. Let me just clarify up front, I intro. This is a workbook that I wrote and I introduced some tools in the workbook, but tools are not the end game. If you don’t understand the fundamental thinking behind the tool, what what will ha, what will end up happening is you’ll not just fundamental thinking, but also the utility of the tool itself.

[00:11:03] Sometimes some tools are good, some aren’t, to achieve the goals you want. Starting with purpose, which I noticed you talk about in your book too, starting with purpose first. Like why do, why is this? Particular tool effective and for what purpose and, and how does it connect to the higher level objectives of accomplishing your strategy, accomplishing and effectively implementing Hoshin

[00:11:25] Kanri, I think is where that is the best place to start.

[00:11:27] Katie: You were, uh, at the Lean Summit. We were together there in, in. March and it was great to hear you talk and you know, you, you referenced like the X matrix. It’s sort of this glossy, shiny tool that a lot of people wanna use. But you know, if it’s just a place mat that isn’t utilized as a process for management and alignment and communication, then it’s not gonna be worthwhile and it can be very complicated.

[00:11:48] So get back to the purpose and use the tools and process that are gonna help you get there.

[00:11:52] Mark: Yeah, I think that’s the, you know, that’s a little bit, and, and I’m, I’m glad you used the X word. Uh, before me, but yeah, that is, that is one of the common tools you see. I don’t really have anything against that.

[00:12:02] It’s interesting, you know, I, uh, just a, uh, maybe a note that I mentioned in my book who said, when I first left Toyota, like in the first couple months, Jeff Ker called me and he said, uh, he was, he was writing a book on lean leadership with a gentleman by the name of Gary. Previous Toyota leader and he asked me about Hoen Con.

[00:12:22] He knew that I had led it when I was in Toyota and he said, have you heard of this X matrix? And I said, what is that? There was not, it’s nothing we ever used in Toyota. And what I find though is the reason that’s a little bit, the xma is a little bit of a challenge is that people kind of, people kind of go there first before they.

[00:12:41] Try to fill it in, kinda like you fill in a template before you think about the basic thinking and consequently, uh, and, and how it can be effectively utilized in your organization. So I’ve seen a fair number of organizations come back to me and say, it’s just a little, uh. Like difficult to read and difficult to use as a kind of a cascade mechanism so that you can, you can take what’s a higher level and break it down to the next level.

[00:13:04] Now there’ll be people who might view this, that’ll say that, oh, well, you know, we’ve been able to do that effectively. I think that’s probably true. Some organizations do work through that.

[00:13:12] Katie: Right, and, but that’s because they’re using it as a tool to support the actual underlying communication and alignment opposed to just filling out like a bunch of names and then leaving it static on the wall.

[00:13:23] And for listeners who don’t know what an XX matrix is, it’s, it’s often on an a three size of paper that has. You have four quadrants that all align and connect, sort of saying different streams of work and who’s gonna do it in different KPIs. And it can be very complicated. And Mr. Yoshino too, always, he gets asked this question all the time, like, oh, about the X matrix.

[00:13:43] And I remember the first time we were together, this was like pre pandemic and he, he’s like, what is an X matrix? You know? So Can I make a

[00:13:50] Mark: comment about that? Yeah. One other comment that I, that I’m often asked about it too is, so this is not easy stuff. I mean, this is a strategy of a company, but, and then I’m saying I’m purporting in my book that, you know, you this, we need to engage everyone in the organization down.

[00:14:04] So that’s a, that’s a challenging thing. If you’re not at the top leadership level organization, you’re not day-to-day, you’re not evolved in that strategic direction of the organization. So if you wanna evolve people in that, whatever you use, a tool has to be simple. And that that doesn’t mean that, uh, I don’t want people to misunderstand it.

[00:14:21] It’s not that people, the people at the frontline obviously are as, have as much innovative ability as the top level, but if they want common understanding and alignment up and down the organization, whatever tool you use has to be easy for people to, I. Understand, comprehend, and act on fairly like effectively.

[00:14:38] Katie: And the, the simpleness is supposed to be about the communication, right? How can you really distill complexity down to, in a, in a way that connects with people and they can understand? And again, that’s, that’s the, that’s the challenge. That’s the hard part, right? Being a simple tool actually challenges us to get down to the essence.

[00:14:57] Mark: Well, the other, and the other key point to add what you’re, to, what you’re saying, Katie, is uh, that tool has to. Like provide some something that’s actionable. Remember that one of the differences I saw between Toyota and I see outside organizations is high level vision, high level, perhaps strategic objectives, but what specific actions are gonna be taken to like accomplish those things?

[00:15:21] Often is very unclear. So that, that’s an important part of the tool has to be the ability to, uh, kind of share concretely what what’s actually gonna be done.

[00:15:31] Katie: Let’s talk about this process of catchball and how it is used to support, you know, the process of, of Hoshin Kanri going from not just the top down, but the bottom up.

[00:15:42] So it, you know, one of the differences of Hoshin versus, you know, traditional management is you said in the beginning, traditional management, sort of small group of people decide what needs to happen and deploy, maybe even work down, but hoshins really about understanding where do we need to go and how we’re gonna get there.

[00:15:57] And it ha, it’s supported through conversation and understanding. So for people who don’t know what catchball is, maybe you could share some of that. And then let’s talk about how this is such a critical part of the Hoshin Kanri process.

[00:16:09] Mark: In the book, I talk about vertical and horizontal catch school.

[00:16:12] So let’s go about vertical. Uh, first let me, let me just share a little bit about how it kind of worked in Toyota as an illustration. Toyota’s fiscal year at least, it used to run on a, like a from April to March. And so the beginning of the calendar year, like in 1st of January, the CEO global CEO would issue kind of a letter.

[00:16:33] Every team member would get it. This is how our company’s doing and this is what we see as some high level like things that are important for us. So that was one like important input for everybody. I. And then as we would like in North America, we’d go about starting to develop our hoing. It started actually from the bottom, like departments in the organization would reflect on what they’d done and how, you know, we had some things that related to the Hoing this past year.

[00:16:59] How did we do versus those? And the leaders of those groups would take them to the high level kind of leader forum. Where the, we would discuss reflections, uh, and, you know, starting with reflection and then think about what are some key like business drivers that would, that required for us in the coming year.

[00:17:19] So it all, it kind of starts bottom up, uh, that way. But then as the leaders kind of develop that strategy, the other important part of vertical catchball that I talk about in the book is that this whole people development component, because the. Toyota. Anyway, the leaders developed some high level hoing, uh, which clarified what are the objectives and the key activities, but those were pretty broad.

[00:17:44] And so as they got communicated into the organization, people at East Level had to think about, okay, how do, what work do I have that impacts directly, like, like if the organization, for example, while I was there, you asked me to give you some. Industry examples. You know, one of the things we realized we had to develop people a lot faster.

[00:18:04] So we set up a learning center in North America in our, and so, and part of that, that was a, like a high level hoing objective to establish this learning center, HR had to determine the, who was kind of the lead function. What are the specific like training programs we’re gonna put in that learning center to develop capability to people.

[00:18:24] That’s kind of the responsibility of the people in inside the organization. So that’s kind of how the vertical catchball works. Horizontal catchball and just, you know, my interaction in the training class that I’ve taught and uh, and outside is, that’s the harder one really because generally organizations typically are set up in silos.

[00:18:43] And so, and it, back to the whole idea that, you know, that leader gets some. KPI or some measurable thing that they gotta achieve. And that’s, that’s the, that’s their target. And often that’s very silent, you know, it’s a cost reduction initiative or whatever. And so, uh, part of the beauty of this, of the system, I think is, you know, corporations don’t determine direction in silos.

[00:19:08] They determine direction based on what the company needs. So in the case study, in the, in the book IU, they’re a lawnmower company and they need to develop an electric mower. Well, that’s not something that. And, and it’s the responsibility of product development to do that. But obviously they can’t accomplish that on their own.

[00:19:24] They’ve got to get buy-in from manufacturing to ensure that they can manufacture it well and on, and, and deliver it on time. They need buy-in from marketing and sales to kind of think about how to sell this to the marketplace. So that type of a learning is new learning for executives too. And I, I, I, I know that I might lead you to that question, maybe I’ll stop there, but we refer to it as learning by responsibility as opposed to authority

[00:19:49] Katie: through, through the influence.

[00:19:51] Right. Leading that way and having the conversations. You know, before I started my own consulting practice, I worked in healthcare and we were trying to apply Hoshin Kanri, and one of the challenges was. Trying to help leaders have these catchball conversations ’cause it was so different than what they were used to doing in, you know, it’s also a multi-year process, which we can get into later.

[00:20:14] But I wanna go back to how do you help you other leaders and organizations in these organizations have effective catchball conversations To get that real, honest feedback, uh, and really hear what’s going on so it can truly inform, uh, you know, a better, a better strategy.

[00:20:31] Mark: That’s a great question. I think that part of that is a difference in attitude about like, uh, let’s just call it, uh, what you’re investing in for the organization as opposed to investing in what, what you can personally achieve the organization has to value and individuals within the organization have a, have to value what the organization can achieve.

[00:20:53] So meaning that, you know, if we collaborate together on a, on a given initiative, like the example I was just giving earlier about the electric mower being launched, you know, I think probably if we agree, we can come to agreement on how that may hap how to achieve that objective of watching that mower.

[00:21:10] But the organization to a certain extent also has to be able to like support that. Uh, meaning, uh, let’s talk about the elephant in the room, which people often get concerned about is the incentives. If. Our, our leaders incentivized to collaborate. That’s often not true in organizations. So leaders have to be incentivized to be able to work to one, to work across the organization, but they, there also has to be a certain amount of, it’s a, I think it’s a learned behavior.

[00:21:37] It’s, and it’s similar to, uh, the behavior of, you know. People I’m sure are familiar with a three and that that, you know, problems a three problem solving. But it means that I’m gonna, I go in, I go into this conversation, like you and I, for example, are having a conversation. I go into that conversation with my point of view, but I’m also at looking for your point of view as a separate subject matter expert that can provide good input to my point of view, as opposed to a kind of a, a rival in the organization.

[00:22:09] And knowing that if we each have good, independent. Points of view that come together in a conjoin point of view, we’ll get a better output.

[00:22:19] Katie: Uh, I talk about we need to break our telling habit because we’re so used to just telling or expecting our answer, and maybe we’re expecting validation, but we really want to hear other people’s, uh, viewpoints.

[00:22:29] So, of listeners, you can go back to episode 13 where I share some tips on sort of how to ask more effective questions, because that’s really gets at the heart of what, uh, mark is talking about here. How do we. Ask questions that truly open up the space for, that invites other people to contribute. And we want, we wanna get their fingerprints all over our thinking and hear their thinking as well.

[00:22:50] I mean, that’s the essence of that catchball, right? So, I love someone, someone once told me like, it’s, it’s catchball, not dodgeball, right? So you’re not like throwing questions or expecting something, but you wanna catch back and forth and, and share and share and grow and get more information together.

[00:23:03] Mark: And I think that’s a little bit b back to the vertical and horizontal catchball. I think, I think the nature of what you’re talking about is a little bit different between the two. I mean, in the vertical catchball it’s more, it can be more of a mentoring, coaching relationship. You’re trying to mentor the person you’re asking the right questions.

[00:23:18] In a, in a horizontal relationship where you peers, it has to be kind of a collaborative relationship. And the, and the questions that are, and the input that’s being asked is more in, in the context of we’re supporting each other. Back to the lawn, the electric motor example. This high level goal that we know, we both have responsibility, we have a piece of the responsibility for how can we make sure those pieces like conjoin effectively I think is uh, important part of that horizontal collaboration.

[00:23:49] Katie: That’s a, that’s a really helpful distinction too, right? So we, we still wanna be inviting with good questions, but the, the relationship is different within, um, whether the hor talking horizontally to a peer that you need to collaborate and be aligned on versus the vertical, which is how are we aligning all the work up and down within our sort of silo or functional area.

[00:24:09] But the most important, what I’m hearing you say is having those conversations so that we are getting the inputs and, and getting. Getting the understanding both the alignment and then the, the engagement too as a people development, um, process.

[00:24:23] Mark: There’s a point in my book where I talk about the VP of, uh, the production area creates a strategy, a three.

[00:24:31] Uh, in the process of developing that and sharing it and getting input and finalizing it, he goes through a pretty rigorous cycle of, of getting what we, we call it, we use the word na. Toyota, like getting like inputs from various people to ensure that the content of that is like complete. And the reality is it’s really interesting, and I, and you might know more about this than I do in the external world, I know, and only within the Toyota world, Katie, but when you, when you get inputs from everybody, all of a sudden people like agree with it because they can, they can read on the paper that you’ve incorporated their thinking in it.

[00:25:11] So it becomes a collaborative. The hoing or the A three becomes a collaborative methodology that incorporates everyone’s thinking.

[00:25:18] Katie: Yes. I mean, this is the way we sort of navigate our, the political systems and like also get buy-in, right? It’s about per, not persuading people necessarily, but getting their input so that they see their.

[00:25:30] Perspective or part of their perspective in, in the final decision or output or, or see that they’ve been heard and that that nemawashi the tilling the soil or preparing the roots is so critical for us to do, you know, post just going in the back room, you know, those five leaders in the back room doing everything and then pushing it out into the organization.

[00:25:49] Mark: And I wanna make a clear a point about that though, just for clarity, and I think you would agree, is that, uh, this is not just about getting everybody’s think. You have to go into the conversation with your own thinking. So there’s some there that’s naturally, there’s going to, well sometimes be friction.

[00:26:04] I mean not, not every time. Are you gonna agree with someone’s thinking? So how to navigate that is, is like an extremely important, important part of, uh, this methodology, I think.

[00:26:16] Katie: Yeah. Let’s, let’s dive into that. How can leaders, you know, retain their perspective and still have these catchball conversations effectively?

[00:26:24] Or how have you helped, uh, leaders when they’re, they’re working on this.

[00:26:27] Mark: There’s a couple different things. I mean, there’s a, there’s a wonderful book by Daniel Kahneman. He’s the gentleman who wrote Thinking Fast and Slow, Nobel Prize Winner. Uh, he wrote another book, uh, with some other people called Noise.

[00:26:39] That’s really interesting too. He did some pretty important scientific research that when I read it is like, wow, this validates exactly the methodology Toyota did relative to its way of thinking, getting input to ideas, and that is, it’s much better. For an individual and much more productive for an individual, do their own thinking and take that to a group or to a peer or whoever, and then get input as opposed to just sitting in a room together and brainstorming.

[00:27:09] Because what happens then when you, when you do that, is there tends to be a predominant voice that naturally rises outta the room and becomes their. Idea. So, so I think that’s, I think that’s step one. And then step two is kind of building, uh, boy, this kind, I think it’s a learned capability, but it’s building the, uh, willingness to consider like what is really the best solution that may not be a hundred percent.

[00:27:37] Like what I agree with, but willingness to try the, uh, the solution that’s being proposed. And there may be some sticking points where you can’t agree. And in that case, the person who’s proposing the idea may have to adjust the idea. So I think there’s a, I. There’s a little bit that’s kind of this little bit of like back and forth and understanding people’s ideas,

[00:27:58] Katie: and ultimately it is the more senior leader who has the responsibility to make that decision.

[00:28:03] So, you know, gathering the inputs and then saying, with all these inputs, this is what, this is the direction we’re gonna go, right? And now let’s figure out how to get there. At the beginning of our conversation, mark, you mentioned PDCA plan, do check, adjust, or plan, do, study, adjust. It’s sometimes referred to and it is a critical part of, I would say, almost anything at Toyota or that we consider in lean from problem solving to strategy and, and hosan.

[00:28:29] So let’s talk about the, the critical role of the PDCA process within Hoshin framework.

[00:28:35] Mark: Well, you know, you, you mentioned at the beginning of this, uh. Podcast about the importance or, or, or I saw somewhere anyway, the importance, uh, equal importance of this may, I saw it in your book, I’m sorry, uh, you didn’t mention it, but the equal importance of like Hoshin Connery and its methodology re relative to like TPS and to you.

[00:28:56] And I think Hoshin Kanri is, was really critical to Toyota’s success. And it came out of Edward Deming’s teachings in the 1960s around PGCA. And, and the I idea for Toyota that, you know, they needed to develop and build quality. And it wasn’t just Toyota, it was other companies too. Build quality, not only into the.

[00:29:18] Like manufacturing process of the final product, but into each step of the process leading up to that, including product development, including, uh, administrative processes like HR or finance that supported that methodology. And they saw Hoshin Kanri as a way to do that. But in terms of the Hoshin Kanri, like the flow of the book is built around PDCA, it’s a story of a.

[00:29:41] Of a company, as I mentioned, true mowers that’s going through the process of implementing Ho Connery earlier in their first full year. And it starts with plan. How do they go? Which means how, what are the inputs that they need to develop their strategy and how, how do they go about developing that? Then based on that, how do they go about executing on that strategy?

[00:30:00] And there’s, you know, I introduced some methodology of how organizations can follow up rigorously to ensure that even with small p dcas, like month to month, how are, how are things going? So you don’t get behind. And then going back and checking the, the C in PD, CA of how you, how you did, are you on track?

[00:30:19] And then the action, which is like evaluating how we did, I. That’s evaluating not only how we did relative to like targets we set, those are important, but also like the plan we put together, did we achieve the plan we expected? Did we achieve the objective? We set forth. To, we said we would do at the beginning of the year, and then I, you know, important, a really important part of the book, I think is that what organizations don’t do enough of is moving things that they’ve accomplished into standardized like management to what Daily management.

[00:30:53] Take it off the plate of top leadership and the, and off of the plate of the ho ocean and then bring in something else. That’s how organizations can adjust quickly. It’s a pretty like, boisterous environment out there right now. So. Or the need flexibility.

[00:31:06] Katie: Yeah, flexibility. And I, that’s really important point.

[00:31:08] You just called out. It’s like the, the, the difference between strategy and also just the daily management of the business that we’re in and, uh. Challenge I see in a lot of organizations is they, they push every, they push all that together and aren’t making a distinction, truly what’s our strategy versus what’s what should be just normal lights on doors, open operations.

[00:31:30] Um, and then a lot of senior leaders end up spending their time maybe in the wrong, in the wrong spot.

[00:31:35] Mark: I’m working with, uh, fairly large organization right now who’s, uh. I won’t name names, but it’s world renowned organization and uh, they have a pretty rigorous deal, like I would say daily management system in place.

[00:31:48] They’ve had it in place for a long time. On top of that, they put in what they call thought were kind of strategic plans, but that eventually kind of to a certain extent devolved into, uh, like measurable result like deliverables and all of a sudden the organization is kind of. Like it’s a big organization and as you know, as things go down, they’ve gotten confused, right?

[00:32:13] And mixed up between, okay, is this something we should do daily or is this something that really is longer term? It’s better to distinguish those things because the, you know, one of the key objectives here of the Toyota way of thinking, TPS. Hoing countering. We want decision make, we want decision making made at the lowest possible level in the organization.

[00:32:33] And so the more things that get piled on them is just like a avalanche of all these metrics. So how, how can we just get them focusing on what’s really, and the other thing that’s also, uh, sorry Katie to keep going, but the other thing that’s also critical is that many organizations think, well, we’re, if it’s not on the hosing, it’s not important.

[00:32:52] That is so untrue. In Toyota. Honestly speaking, the daily management stuff’s more important. I mean, for us to, we had to make every day, every car has to be good quality, low cost delivered on time to the customer, and it’s critical. So distinguishing those two is important,

[00:33:10] Katie: critical insights for organizations who are trying to become, uh, you know, as we might say, more lean, but really using the different components of, you know, Hoshin Kanri of daily management of a kaizen mindset, and, and all these parts work together.

[00:33:25] I wanna go back to the PDCA mark, and one of the things I’ve experienced in my 20 plus years of, uh, working in the world of continuous improvement is that. We get so focused on plan, do plan, do plan, do that. We’re not very good at the components. You talked about the check adjust, and so we’re not really doing the ey, the reflection, the the time for studying and making adjustments, and I, I see a lot of.

[00:33:51] You know, western companies like, oh, we, we just gotta keep doing. And so they’re not taking the time to truly understand and learn. And my experience with Toyota from learning from you and John Shook and Jim Womack and of course Mr. Yoshino, is that the Hansei, the, the study and the just part is the sort of the critical part for learning.

[00:34:10] You know, Mr. Yoshino says the only secret to Toyota is its attitude towards learning. And that’s where that learning happens. And he shared that, you know, Toyota does a really good job of put like making set time. For that reflection and the check adjust to be happening, and I observe that doesn’t necessarily happen so effectively at Western companies.

[00:34:29] Uh, I’d love to hear your perspective on how you help companies truly embed the time for reflection in their hoshin process to really make that whole PDCA cycle work.

[00:34:41] Mark: Yeah. Well, that’s a great question. I mean, I think that, uh, you know, there is a tendency to do what I, what I refer to as often referred to as the plan, do, check, abandon, uh, cycle.

[00:34:51] I think in a way that’s a flippant remark that’s not. So helpful. Even though I, I use it myself a lot I think, because I think what happens really is organizations don’t, aren’t sure exactly how to go about doing that check and act like you said. And so it’s like any, anything else, what Toyota did effectively and what I’ve seen your.

[00:35:13] Outside of Toyota, not organizations struggle to do is to really go about, define when you hit that, like, let’s use Hoshin Kanri as an example. It’s not the only application of PDCA, but using Hoshin Kanri as an example. When you get to the end of the year and you’re reflecting on what you did. You really need to look, go back and look at what was the process you followed through the course of the year.

[00:35:34] And everybody needs to do that. That’s why you need good like process planning. You need good planning in place at the beginning of the year to see, okay, we, we wanted to achieve the a certain objective and this is the plan we had to achieve that objective, the steps we put in place, and here’s the targets we achieved.

[00:35:51] Well, okay, well maybe we achieve the target, maybe the plan we put in place. It was terrible. We ended up, and then I see this happen in the construction industry, a fair, I work a fair amount in the construction industry and they live and die by project plans. And they’re not, honestly, they struggle with them because what happens in, often in the construction industry, everything, everything gets delayed.

[00:36:11] But you know, if you’re building a stadium and there’s gotta be a football game, and I work with a company that does this and there’s gonna be a football game on like September 1st, that has to be done. And so. All the labor and all this intensity gets pushed into the last six months of the project and it kills people.

[00:36:29] And so I think that’s because they’re not doing good reflection in PDCA in cycled. And so we need to see and and they’re also. Not visualizing effectively the plan and the header, header behind how we’re doing versus plan. You know, those are like critical com, like building blocks of making good PDC.

[00:36:49] It’s easy to say PDCA, you know, in the other, in the book. The other thing I introduced as part of the sustainability that’s critical is organizations. Even if you go through Hoshin Kanri, once it takes a year, but you’ve now created to a certain extent. It’s true in every organization you created what I call a de facto standard, you’ve, that’s the process you follow.

[00:37:10] It might not be the best because there are things may, not everything worked effectively. You didn’t achieve all your goals, but you’ve done something. So we need to write that out. I. And that becomes our starting point. But for us to reflect on and see how we can like, make a good standard and improve upon it,

[00:37:26] Katie: and knowing that that the cycle for learning is on for Hoshin is an annual cycle.

[00:37:31] So you really have to have that long-term view that knowing it’s not, we’re gonna have this amazing. Perfect process within or not, not it’s never gonna be perfect, but you know, a much better process within one or two years. So it’s that tenacity and that long-term view and commitment to long-term learning as well.

[00:37:48] And you know, when I was the last healthcare organization I worked for, I had a great, uh, executive who was leading the way and he said, you know, even like. We’re gonna do another layer of catch ball each year. We’re just gonna practice like going one more layer or having, you know, more conversations. So we’re not gonna try and do it all at the beginning.

[00:38:05] We know this is a long-term journey, so let’s start getting better at the top and let’s start having more conversations because that, that’s the problem solving, thinking of leaders that we need to be doing. And then how do we get more effective as a system, as you said.

[00:38:17] Mark: That’s a great point, Katie. I, in my book, I actually propose kind of a model line approach.

[00:38:24] I don’t recommend actually organizations, particularly for a big corporation, try to do Hoshin, the whole company. These are like learned behaviors. If you have general endorsement from top level, uh, you can do this. You can pilot something in a business unit. I’ve done that. It could be a pretty large size business unit, a billion dollars, or you can pilot something in a plant.

[00:38:45] In the case study, in the, in the book, they piloted something in a plant that actually went pretty well. It’s surprising what you can get even in the first year of Ocean Country, what you can get out of it. Just by all of a sudden people are like engaged and they know what they need to do to like help achieve the objectives of the organization and they’re motivated by that.

[00:39:05] But it’s not sustainable if you don’t build that, like you’re saying, if you don’t build a solid like standards in PDC.

[00:39:10] Katie: I really appreciated hearing, um, from Charlie Mur Murphy of Turner Construction and Marsha Bray at GE Appliances at the Lean Summit in Atlanta. Earlier this year, GE Appliances was a company that, uh, Jim Womack had highlighted when he came on my podcast for episodes 37 and 38.

[00:39:29] As about a company that’s really doing. All of this lean thinking and management effectively over the last 10 years has been really a good student applying it. And I loved how Marsha commented that like they, before they were doing fake ocean and she realized she had this epiphany that they, like they were trying to apply.

[00:39:49] You know, what she thought or they thought was Hoshin, but had these aha moments, and I’m sure it was working with you about what real Hoshin was about and that it was really also the critical part was Hanse was the reflection and, and how the leaders develop those behaviors about having and, and, and building in the time to truly do a deeper reflection process and understand the constraints and the prioritization decisions they needed to make.

[00:40:12] And. Reflect on what they’re not going to do. And, and I think that that’s a challenge I’ve seen leaders do is they just keep piling more and more on and not having those real challenging decisions of what do, what are a critical few we need to do and focus to truly have that alignment towards the vision.

[00:40:27] Mark: Yeah, I mean, both Charlie and uh, Marsha were, uh, are great friends of mine and they. Con they’ve contributed, they contributed to this book significantly, and they’ve contributed to the, while they were at the summit as well. I mean, the GE story is a story that the GE appliance story is a story that really needs to be told.

[00:40:45] I mean, it’s, uh, there’s, there’s so many aspects of that story. Uh, I was kind of there pretty close to the beginning. John Shook was there, uh, when I first left Toyota and joined the Lean Enterprise Institute, even before I was officially a team member, John said. ’cause they’re in lieu. I live in Northern, I live in northern Kentucky.

[00:41:03] He said, you should drive down and meet, uh, rich Cal Russo and Marsha Bray at uh, G Appliances. And they were still in the middle of building, rebuilding their plants that they, that were moved back from China to the us. They’ve, they, they’re, you know, they’re now employing. Us people to manufacture products here in Louisville.

[00:41:23] It’s a, it’s a great story from that perspective, but it’s also a great story of a, you know, of an organization that. Let’s face it, g is a storied history and it’s, they were, you know, going way back, one of the way, way back over a hundred years. So, uh, the, and what’s happened to them in the recent decades is a little, in some sense troubling, but it’s wonderful to hear like what they’ve done, uh, in their organization to make it change over the last 10 years.

[00:41:50] And I was lucky enough to be part of that in the beginning.

[00:41:52] Katie: It’s a great example. Exciting ’cause it’s, you know, Toyota is so unreachable like it’s, it’s been doing for most companies or organizations, it’s been doing it for so many years and when we try and just copy or emulate what they’ve done, it’s, it feels frustrating ’cause we’re not there.

[00:42:08] And it’s that cycles of learning. So organizations that are a little closer, it shows that it’s possible if we keep that long-term view, focus on people, focus on what’s most important and, and keep, keep learning. Agree. So to wrap up our conversation, in addition to of course getting a, a copy of your book, managing On Purpose, which I highly recommend to listeners because it really is a fantastic, not just book, but a workbook where Mark shares, you know, the story of this lawn mower company, but also a lot of insights that he has from working with organizations around the world, not just from Toyota, but Mark, what is.

[00:42:43] Your top recommendation for lean practitioners or leaders who are wanting to get started with Hoshin Kanri?

[00:42:51] Mark: Well, the easy thing for me to say is read my book. Yes. What I learned in Toyota was, uh, the thinking way I learned in Toyota was kind of do first. And I, and I, that was really like, uh, strongly impressed upon me while I was particularly with the Toyota supplier support center, where we went out and implemented Toyota Production System in plants.

[00:43:12] I went to, one day I went to my boss, Mr. Ob said, I, I need to, I don’t know what I’m doing out there. I’m like helping. I’m like advising plant managers. And he said, just try something. He said, whatever you break, I can fix. Which was interesting to me because, uh, sometimes, occasionally we did do things that weren’t like perfect in an organization and he had to come up and help us get and give advice.

[00:43:36] You know, try it, take a part of your organization and re you know. I think referring to the book is helpful. Take a part of your organization and cons and pull together leaders that you know are like supportive and see, let’s, let’s, how, how can we try this in a, in a subset of the organization where, you know, we, we have good input and people and, and, and then set up a process that will engage the organization to kind of try it and see how you do in the first year.

[00:44:05] And, you know, and then just start reflecting and take that, take that if, if it, if that’s not at the company level, take that up to the CEO and share with them what your results have been. So try first.

[00:44:16] Katie: Great. And reflect and learn along the way, of course, as well. So try, try and learn your way forward.

[00:44:22] That’s great advice, and thank you again, uh, mark, for coming here. There’s so much, uh, goodness in your book, managing On Purpose, and it, it’s, it’s a great read. So again, I encourage listeners to go, uh, pick up a copy and I look forward to continuing the conversation, uh, in the future. Mark, it’s been great having you here.

[00:44:39] Mark: Yeah, thank you very much, Katie.

[00:44:41] Katie: As you reflect on this episode with Mark Reich, think about the critical elements we talked about. For setting Hoshin Kanri up for success, not to just be a repeat of your organization’s current strategy process, repackaged in a new format, but reimagined and recreated with a new process to achieve your strategic vision.

[00:45:00] There are a lot of important insights that we shared here, but a few stood out to me that I wanted to emphasize from my experience. One. Don’t get stuck on the tools. As I often say in this podcast, it’s not about the tools. It’s about the thinking process and the behaviors that support the tools and the support the learning.

[00:45:18] Two, remember the importance of Hanse of reflection. Build it into your process of Hoshin Kanri and don’t skip it. Don’t let it be a plan. Do check abandon. As Mark said, remember studying and adjusting is where the real learning and improvement happens. Three, focus on the process of catchball, both vertically and horizontally, and the leadership behaviors around asking questions, getting input and engaging people and peers, and ultimately setting the direction and making decisions.

[00:45:52] Four, invest in developing a management system. It’s the management system that is the engine for sustaining and improving daily work at all levels. Not developing a real functioning management system led by leaders is one of the failure points of lean transformation that Jim Womack called out back in episode 37 and five.

[00:46:13] Remember that Hoshin Kanri is a long-term investment. It takes years to learn and advance and refine, but it’s so worth it in engaging your people, aligning them on a shared vision, and ultimately innovating your way to long-term success. So it’s time to get started. Take Mark’s advice and figure out where and how you can learn by doing.

[00:46:36] Find that group of engaged leaders and set the process up as a learning experiment. What do you expect to happen? And then reflect on what actually happened. Learn and continue to grow and expand the practice. It’s about learning by doing, through reflection and adjusting. That is the key. In addition to Mark’s book, managing On Purpose, which is a great resource for how you can get started or refine your Hoen KRI process.

[00:47:00] If you wanna learn more about the history and application of hoshen kanri at Toyota, I invite you to pick up a copy of my Shingo Award-winning book, learning to Lead, leading to Learn, in which I document ISO’s Insights from 40 years at Toyota. It was the way that I described Hoshin in the book that Larry Culp, the former CEO of GE, and now CEO of GE Aerospace, told me is what led him to recommending learning to lead, leading to learn to all GE employees globally several years ago.

[00:47:29] You can also listen to Mr. Yoshino back on episodes 21 and 22 of this podcast where we explore the skills and behaviors needed for effective leadership, including hoshin. In this episode, mark and I also referenced many important behaviors and skills that executives and change leaders alike need in order to lead transformations and set Hoshin Kanri up for success, including how to get buy-in and navigate politics by getting the fingerprints of others through the process of nei.

[00:47:56] Have effective conversations by breaking the telling habit and how to become a tactical, strategic aligner, all of which are part of my catalyst change leader model. If you haven’t already done so, be sure to download my free Catalyst Self-assessment that covers all eight competencies that you need to master to move from continuous improvement practitioner to transformational change.

[00:48:15] Leader at k bj anderson.com/catalyst, spelled with a K. And be sure to go and listen to episode nine of this podcast to learn more about each competency. If you’re enjoying the podcast, I’d love to hear from you. Please leave a rating or review on your favorite podcast player, your comments about what you’re learning from chain of learning.

[00:48:34] Helps the podcast reach others, and in doing so, helps us all strengthen our chain of learning together. Thanks for being a link in my chain of learning today. I’ll see you next time. Have a great day.