Comparing OGSM and Hoshin Kanri: Aligning Strategy to Execution

What are OGSM and Hoshin Kanri?

OGSM and Hoshin Kanri are two powerful methods that help organizations turn their vision into concrete actions. OGSM, which stands for Objectives, Goals, Strategies and Measures, is an approach that enables companies to clearly formulate their goals and link them to measurable results. This method provides a clear framework for translating the strategy into daily practice.

Hoshin Kanri, also known as Policy Deployment, is a Japanese management philosophy that focuses on aligning an organization's strategic goals with the plans and activities of management and employees. This method emphasizes continuous improvement and involvement of all levels within the organization in achieving the business strategy.

The core principles of OGSM and Hoshin Kanri

At OGSM, everything is about creating a clear line between the overarching objectives and the concrete actions. It starts with formulating an inspiring goal, followed by specific and measurable goals. Strategies are then developed to achieve these goals, and finally, measurement tools are defined to monitor progress. This structure ensures that everyone in the organization understands how their daily activities contribute to the bigger picture.

Hoshin Kanri is based on the principle of “catchball”, where ideas and plans are played back and forth between different levels in the organization. This ensures better alignment and understanding of the strategy. The method uses X matrices to visually represent goals, strategies and actions and to clarify the relationships between them. Through regular evaluations and adjustments, the organization remains flexible and responsive to changes in the environment.

How OGSM and Hoshin Kanri align strategy with execution

Both methods offer a structured approach to bridge the gap between strategy and execution. OGSM does this by creating a clear hierarchy of objectives, with each layer in the organization developing its own OGSM that matches the bigger picture. This creates a cascade effect where the strategy is translated into concrete actions at every level.

Hoshin Kanri focuses on building consensus and engagement. Through the catchball process, employees are actively involved in shaping the strategy and implementing it. This leads to greater ownership and commitment, which is essential for a successful implementation of the business strategy.

Practical application: OGSM vs. Hoshin Kanri in action

In practice, we see that OGSM is often used in organizations that need a quick and clear translation of strategy into action. A manufacturing company struggling with inefficiency used OGSM to translate their goal of “market leader in sustainable production” into concrete goals such as “30% reduction in energy consumption” and strategies such as “implementation of smart factory technologies”. This gave each department a clear focus and measurable targets.

Hoshin Kanri is often used in organizations that want to create a culture of continuous improvement. A tech company implemented Hoshin Kanri to drive innovation. Through regular “catchball” sessions between R&D, production and marketing, new ideas were created that were directly in line with the strategic goals. The X matrices helped to provide insight into progress and to make quick adjustments where necessary.

Challenges and Solutions in Implementing OGSM and Hoshin Kanri

When implementing these methods, organizations often face similar challenges. One common problem is resistance to change. Employees may feel overwhelmed by the new approach or doubt the added value. It is crucial to communicate openly about this and to clarify the benefits. Training and guidance play an important role here.

Another challenge is finding the right balance between ambition and feasibility when setting goals. Goals that are too ambitious can be demotivating, while goals that are too cautious do not lead to the desired improvement. It's important to review and adjust regularly, and celebrate successes to maintain momentum.

The impact of OGSM and Hoshin Kanri on organizational performance

Organizations that successfully implement OGSM or Hoshin Kanri often see significant improvements in their performance. They experience increased focus and alignment within the organization, leading to more efficient decision-making and faster execution of strategies. In addition, increased employee engagement boosts motivation and productivity.

A study among companies that used OGSM showed that, on average, they achieved their strategic goals 20% faster than comparable companies without a structured approach. Hoshin Kanri users saw a 35% increase in successful innovation projects, thanks to improved coordination between departments.

Choosing between OGSM and Hoshin Kanri: Which method suits your organization?

The choice between OGSM and Hoshin Kanri depends on various factors, such as the organisational culture, the complexity of the strategy and the desired level of engagement. OGSM is often more suitable for organizations that want to see quick results and need a clear, linear approach. It provides a clear structure that is easy to understand and implement.

Hoshin Kanri is a better fit for organizations that strive for a culture of continuous improvement and are willing to invest in a more participative approach. It requires more time and dedication, but can lead to deeper changes and a stronger alignment within the organization. Ultimately, it's about which method best meets your organization's unique needs and goals.

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