How the World Famous Toyota Business Strategy Process Works for Other Industries

Do you know Toyota’s business strategy process? It’s become very effective in making the Japanese company one of the world’s top automakers. However, the company’s strategic planning process has received much attention is one of the keys to the company’s success. The Yair Hamami business strategy explains how.

The key to the company’s effective strategic planning is “hoshin planning.” It focuses on reaching important yearly stretch goals. It’s been used by Toyota and other Japanese companies since the 1960s. It’s also been implemented by top-level companies in the US and other nations. Today more companies like Bank of America have started using the business strategy process as well. There’s a good chance that the big companies will also request that their suppliers use the process as well.

US companies have been somewhat slow to start using hoshin because many of them didn’t have the management/infrastructure to support hoshin planning. Another key issue is that many companies who used it early saw the benefits of the business strategy process but didn’t want to share it because they were worried about losing their competitive edge.

More companies seem to be using the Toyota system the use Hoshin planning will probably become more common in the future. Hoshin kanri is basically about setting a direction/objective. The entire term could be translated to “management of objectives.”

It’s important to note that there are various unique components of hoshin planning that should be noted. It will help companies to use the process.

1. It flows from 2 sources

Those are a yearly review of a company’s “state of the business” and the Hoshin objective. This is a key part of the business strategy process. The yearly review is done by the top-level senior leaders of the company. In the review data about the external/internal environments are reviewed in terms of their effect on the 3-5 year strategic plan.

2. It’s made up a series of objectives from several ends/means

This is another key point of the system. The Hoshin objective is often labeled as “1.0.” The question asked is what are the 3-4 things that must be reached in order to achieve 1.0? The answers then become the top level of lower objectives. They’re labeled as well as part of the business strategy process.

Each of the tiers’ sub-objectives must be assigned to a person. The ends/means process allows direct line of sight via the lowest-level tasks to the objective of the Hoshin objective. This is an important part of the process.

3. Its catchball helps develop top-down objectives

This is another key part of the business strategy process. The catchball is a communication process that involves parties making a series of information exchanges regarding the way of achieving a certain goal. The goal of the exchange is to create a consensus based on the top approach for reaching an objective.

Catchball is founded on the idea that reaching the objective and the people who will have the most influence on reaching it. The secondary benefit of using catchball is a better degree of commitment in order to reach the objective. This is another key to the process.

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