Many organisations, large and small, find it difficult to cascade strategic objectives down through to tactical and operational levels. In a lot of ways, identifying the organisation's high level purpose, mission, vision and associated strategic objectives is the easy bit. What is much harder is creating a "golden thread" between those strategic objectives and the work that the "front line" performs.
Without this golden thread linking their work to strategic objectives, employees will find it difficult to build a personal connection to the organisation's purpose and values. They will not fully understand the direction of the organisation and without a "North star" to guide their decision making and priorities, they will start to question why they are doing what they do.
When it comes to assessing performance, they will find it difficult to understand "what success looks like". Proactive teams will create performance measures based on their own understanding of what is important but it may turn out that their focus and effort is not aligned with the strategic objectives of the organisation. This not only represents waste, but also leads to frustration and disappointment, as the efforts of well intending employees are not acknowledged and/or rewarded, or worse still, they are punished.
So how do we as leaders build this golden thread for our organisation? The best tool I have found for this purpose is the "Hoshin Kanri" approach. Hoshin Kanri roughly translates to "Compass Management" and came about during the rebuilding of Japan's manufacturing industry post World War Two.
There is a lot of information on the Hoshin Kanri process available online but I have found that most effective implementation of Hoshin Kanri involves these steps:
Develop breakthrough 2-5 year aspirational goals (from the organisation Vision)
Develop annual objectives
Develop annual improvement/action priorities
Develop success measures
Assign responsible team/individuals
Map the relationships
Cascade objectives down to the next organisation level and start again
The steps above are documented in an "X-Matrix" below. The Hoshin Kanri should be part of an annual strategic review and should be completed before the beginning of the reporting year. The priorities and associated success measures should be reviewed and modified as necessary as part of regular performance routines.
A lot of leaders really struggle with the Hoshin Kanri concept, mainly due to a lack of and/or poorly facilitated training/coaching. I have found the most effective way to understand the concept is to work with someone like me who has "real life" experience, not just in using it to get results, but also in facilitating the process with others.
The first thing I do is sit down with the leader to take them through the process and discuss the Vision and priorities of their organisation. I then work with the leader to partially complete the "Top Level X-Matrix". We then take this to the broader leadership team where we give them a functional understanding of the Hoshin Kanri concept and work with them to complete the matrix. I then work with leaders of each of the lower levels of the organisation to compete their level X-matrix. In this way, the golden thread between the strategic objectives of the organisation and the front line is established.
I often wonder why some of the largest companies in the world struggle with this fairly straightforward concept and I think it can be mainly attributed to leaders in the strategic management group being "finite thinkers". They are really only concerned with immediate results, financial year performance and potentially their next role in the organisation. They may give lip service to a longer term vision but the reality is that they so focused on the near term that they don't "lift their eyes" to see what is coming.
Unfortunately, since the 1980's in particular, organisations have tended to reward this short-term approach. Finite minded individuals are promoted to leadership positions where strategic direction setting is required but they just revert to type, fixating on the near term. This creates "a cycle of inaction" in regard to identifying meaningful vision and strategic objectives for the organisation. However, organisations are now slowly realising that in order to achieve the long term, consistent, high performance of companies like Toyota, they must put more focus on vision building and direction setting.
