Bando example of bottom-up approach to deploy targets
Here’s a live case that I read from The TQM Magazine, Volume10, Number 6, 1998 by Yoshio Kondo. I liked it and thought it is very apt and also interesting to read.
“Bando Chemical Company, for a long time had been implementing the top-down type of planning, in which production was carried out in accordance with targets set by the factory manager. In the first 2 weeks of the month, there used to be sag in production but there used to a catch-up in the last leg.
After much investigation and deliberation, this factory decided to change its system for setting the monthly production quotas. Under the new system, the factory manager would first propose the draft monthly production target and explain carefully why it was necessary to achieve that target. The proposal would then be thoroughly discussed by the people in the workplace. When this system was first implemented and the individual values determined as a result of the discussion were collated, the final value turned out to be a little less than that originally proposed by the factory manager.”
When such situations we often try thrust higher targets on people in order to meet the originally proposed value. Though we start our with a bottom-down approach we end up with top-down. To an employee, it looks like an eye-wash.
“This factory took a different approach. It was decided to trust their commitment and enthusiasm and leave the total arrived at as the official monthly production target.
A curious thing happened when the setting of targets was changed from top-down to bottom-up in this way. The sag in the monthly cumulative total production graph occurring at the beginning and middle of the month disappeared, and the production proceeded more or less in accordance with the target line. Also, the monthly target was consistently achieved. Another interesting thing was that, although the target value established as a result of discussion in individual workplaces in this way started out slightly under the factory manager’s proposed draft target, it increased month by month and at the end of six months, was approximately 20 percent higher than the factory manager’s proposal, a result originally thought to be out of the question.”
So again, this is an example of successful bottom-up approach. We wouldn’t ever adapt this method. It is time-consuming and many managers feel defeated to accept a target lesser than what they initially proposed!
It sounds impractical in our culture and current conditions.
There is no doubt that it is a powerful way to get team energized, but lacks universality.
There’s a great opportunity to adapt ‘catch-ball’ technique which overcomes most deficiencies of bottom-up approach and top-down approach.
Hoshin Kanri Policy Deployment
Sometimes it can be really frustrating to see that valuable time is lost in firefighting. When strategic planning and execution are done in a systematic manner, using Hoshin Kanri Policy Deployment, there will be upto 50% immediate impact. There are various methods that can be adapted to accomplish this. Suggestions in the Hoshin Kanri (Policy Deployment) section of the resources would be invaluable. Why don’t you check them out.In a series of 4 articles, I would cover about the traditional ways that most of us adapt to deploy targets to our teams, pros & cons, live cases and introduce ‘Catch-ball’ technique of policy deployment that is used of deploying targets which is several notches about traditional methods.
First in this series, I m talking about traditional ways of deploying metrics. Here are two scenarios that I commonly come across where people are really puzzled about deploying goals to teams.
Scenario 1
- Head of a business unit has received an annual target which is atleast 3 fold more than last year. While he doesn’t have a say in deciding his targets, he has to manage to convey this target to his team managers. He knows there is going to be resistance, but he wouldn’t care much about it as he doesn’t have a choice.
Scenario 2
- Staff attrition is on a rise this year. Operation attributes this to low non-competitive staff compensation & lack of flexible work policies. However, HR head associates this to poor staff supervision, low/no motivation, poor daily management and lack of clarity on growth. So essentially, there is lack of ownership for staff attrition.
Scenario 1 is an example of Vertical deployment of targets to one’s direct reports and scenario 2 is Horizontal deployment, where there is shared ownership of targets, inter-dependencies, etc. between different departments.
Traditionally, vertical deployment of targets has not been a problem due to concentration of power and controllership with the functional head. Mostly Top-down approach is used, but rarely Bottom-up approach is also used.
Read my articles ‘Matsushita example of Top-down approach to deploy targets’ & ‘Bando example of Bottom-up approach to deploy targets’ where they are interesting live cases to read.
Both these approaches have their own pros & cons. Lets review the most important ones.
Top-down approach
Pros
- Quick & fast in deploying
- Goes well with directive leadership or when the message comes from ‘trusted’ & ‘respected’ Leader
- Also works well for regulatory targets
- Most of times, teams achieve such targets
- Incentives are carrot & stick
- Works where there are dominant reporting relationships
Cons
- Demoralizes teams
- Not a long term & sustainable approach
- Discourages openness & transparency
- Can’t be used to share cross-functional ownership
We all know that top-down is the single most commonly used method to deploy targets today.
Bottom-up approach
Pros
- Team participation is high & so builds morale
- Encourages empowerment & fosters openness
- Benefits on long run
- For cross-functional goals, it’s not as bad as Top-down
Cons
- Targets may not be met all times
- Leader should be ready to compromise if team can’t deliver
- Time consuming process
Bottom-up most of the time, sounds impractical and an ideal-case.
Catch-ball technique
In my experience, ‘Catch-ball’ technique which is used in Hoshin-Kanri is much more effective method to deploy goals. It takes a mid-way approach between top-down and bottom-up, but at the same time it doesn’t compromise on the ownership, timeliness and success rate.
More importantly, in an increasingly matrix-driven culture, deploying goals to peers (cross-functional) for shared accountability can only be addressed by Catch-ball technique. Traditional methods of Top-down and Bottom-up down have least impacts.
Turn your strategy to reality using Hoshin Kanri or Policy Deployment
Strategy is a key element to any organization or individual’s success. Traditionally, Small & Medium Businesses have been deprived of a good strategic document. I have usually observed that founders’ vision becomes their strategy. As the organizations grow, their course is governed by several factors other than the strategy itself. Believe me, its very common!
With large corporations, the story is very different. A robust and well thought through strategy is crafted by the best brains with the help of extensive analytics, in-depth market research, detailed understanding customer behavior, economic conditions, financial barriers, global trends, etc. The problem is actually with execution of the strategy. Complexity arising out of geographical spread, cultural diversity, multiple leadership styles, incentive programs, corporate dynamics, communication barrier, etc., play against effective execution.
While these are prevalent in large corporations, several small & medium businesses haven’t been spared.
Is your organization one of them, find out yourself.- What % of the company’s staff understands the strategy?
- Are your performance goals and incentive tied to the strategy? Is it also the case with your manager & your sub-ordinates?
- Are there disagreements on ownership of failures?
- Do the budgets tie-in with strategy?
- By the time your performance goals are agreed, half the year is gone?
- If its not there in the goal sheets, don’t expect it to happen?
- Last year is history. We may a fresh start every year?
- Are critical projects focused to the strategy? What % is delayed?
- How often have you seen meetings where implementation of strategy is discussed?
- Poor penetration of organization’s vision
- Weak top-down deployment of strategy
- Lack of integrated planning
- Poor feedback mechanism on what is working
- Dispersed ownership & accountability
- Unstructured communication & change management programs
Hoshin Kanri or simply Policy Deployment, Japanese term for Strategic Policy Deployment has been used by several successful corporations to fix the above issues. Toyota, Bridgestone, Bank of America, HP and Komatsu are a few topping the list.
Literally Hoshin is ‘Direction’ and Kanri is ‘Execution’.
Hoshin Planning process consists of
- Strategic Vision & Mission for next 3 – 5 years
- Strategic goals in line with Vision & Mission
- Scorecard wrt Customers, Stakeholders & Associate
Along with this comes a host of review and monitoring mechanism. It provides detailed approach to translate strategy to action.
In its simplest form, Hoshin Kanri (Policy Deployment) can be used to create a 3 page Business Plan for Small & Medium Businesses and start-ups.
If you are looking for Hoshin Kanri Policy Deployment consultant in Chennai, Bangalore, Mumbai, Delhi and across India, contact us.Sign-up for collaborat newsletter