Leaderboard

Goal Setting Powerhouses: OKR vs. Hoshin Kanri:- Both OKR (Objectives and Key Results) and Hoshin Kanri are frameworks designed to help organizations set goals and track progress. Imagine navigating a vast ocean. On one hand, you have a high-powered speedboat i.e., the OKR (Objectives and Key Results) framework. It's agile, steers quickly, and gets you to your short-term destinations with laser focus. On the other hand, you have a majestic ocean liner i.e., Hoshin Kanri. It charts a steady course for the long haul, ensuring all passengers (departments) are aligned and working towards a shared vision. Let’s delve a bit more on each one of them. OKR (Objectives and Key Results) OKR excels at setting SMART goals (Specific, Measurable, Achievable, Relevant, and Time-bound). It operates in shorter cycles, typically quarters or a year, allowing for rapid adaptation and course correction. This framework thrives on transparency and communication, encouraging ambitious objectives that push boundaries, even if not fully achieved. Example: -E-commerce Company Boosts Mobile App Engagement Objective: Increase user engagement with our mobile app. This objective is clear and ambitious, but it needs measurable results to track progress. Here are some key results (KRs) that could be used: KR1: Increase daily active users (DAU) on the app by 20% within the quarter. (Specific & Measurable) KR2: Double the average time spent per session on the app from 5 minutes to 10 minutes within the quarter. (Measurable) KR3: Achieve a 4.5-star rating on app stores by the end of the quarter. (Measurable) KR4: Launch two new in-app features designed to improve user engagement (achievable & time-bound). These KRs translate the objective into concrete, measurable goals. They provide a clear picture of what success looks like and allow the team to track progress throughout the quarter. Some additional consideration for this OKR as per organizations: The specific KRs chosen will depend on the company's unique goals and priorities. KRs should be challenging but achievable. Stretching for ambitious goals can lead to greater innovation and results. Tracking progress towards KRs is crucial. Regular check-ins and adjustments can be made as needed. Hoshin Kanri: Hoshin Kanri, in contrast, takes a top-down approach. It meticulously cascades strategic goals from leadership throughout the organization. This ensures everyone is rowing in the same direction towards a long-term vision, usually spanning 3-5 years. Hoshin Kanri fosters a culture of continuous improvement with a structured approach that breaks down strategic objectives into actionable plans. Example: Manufacturing Plant Reduces Production Waste Strategic Vision: Become the industry leader in sustainable manufacturing. Hoshin Kanri translates this vision into actionable steps throughout the organization. Here's how it might play out in a manufacturing plant: Department: Production Annual Objective: Reduce production waste by 15%. Breakdowns: Implement a "5S workplace organization" system to improve efficiency and identify potential waste (specific tactic with clear timeframe). Analyze production line data to identify bottlenecks and areas for improvement (specific tactic with clear timeframe). Train employees on lean manufacturing principles to minimize waste (specific tactic with clear timeframe). Metrics: Track monthly production waste percentage (monitors progress towards objective). Monitor the number of "Kaizen events" (improvement workshops) held per month (indicates employee engagement). This example demonstrates how Hoshin Kanri cascades the strategic vision into a departmental objective with specific tactics and measurable metrics. This ensures everyone in production understands how their daily work contributes to the company's long-term vision of sustainable manufacturing. Here are some additional points to consider for this Hoshin Kanri example: Hoshin Kanri is an iterative process. Progress is reviewed regularly, and adjustments can be made to tactics or metrics as needed. The success of Hoshin Kanri relies heavily on strong communication and "catch ball" - a collaborative approach where management and employees discuss and refine goals. Here's a table summarizing the key differences: Feature OKR Hoshin Kanri Focus Specific, ambitious goals Long-term strategic vision Timeframe Short cycles (quarterly, yearly) Long-term (3-5 years) with annual plans Strengths Transparency, communication, agility Strategic alignment, continuous improvement Weaknesses Short-term focus, may not be ideal for complex initiatives Bureaucratic, less flexible

In an organization context, the Objectives and Key Results (OKR) framework is a goal-setting technique that helps set and trail objectives and their related expected outcomes. Here we are talking about primary objectives that the company wants to achieve. These said goals are SMART. By SMART we mean: S: Specific M: Measurable A: Achievable R: Realistic T: Time-bound These objectives are in line with the company's vision and overall strategy. They provide information on expected achievements. These major expected results indicate progress toward achieving the objectives. They are quantifiable and tell us how far or close we are to the goals. These results confirm or refute the effectiveness of the actions taken to achieve the objectives. One of the condition for the OKR framework to work is the establishment of periodic reviews not exceeding every six months. in fact, in general, the objectives are annual and by carrying out quarterly or half-yearly reviews, the company will have more or less time to correct or even change its operational strategies and tactics. In addition to scheduled reviews, there may be occasional reviews at the request of top management. To enable these spot reviews, dashboards with real-time analytics are needed. The Objectives and Key Results framework is a good example of the implementation of the PDCA (Plan Do Check Act) quality wheel. When it comes to goal setting, the OKR framework and Hoshin Kanri satisfy the same needs but with different approaches. Below you will find a comparison table contrasting the two approaches. OKR Framework Hoshin Kanri Generality Focus on results as indicators on the achievements Strategic focus on policies and strategies deployment Timeline Year Multi-year horizon Force Flexibility Long-term planning Approach Bottom-up Top-down The flexibility of the OKR framework pushes many small and medium-sized businesses to adopt it. This type of company needs to control the results about the objectives previously set. On the other hand, for hyper-structured companies that already have a certain control over their results, the Hoshin Kanri approach would be more appropriate. The Hoshin Kanri Matrix or X matrix clearly shows the the links and correlation between Strategic goals, Annual objectives, Top-level and improvement priorities and Key performance indicators. At the same time, the X matrics makes sure that someone is taking an action. However, nothing would prevent both approaches from being carried out at the same time if adapted to the need.

OKR Framework: The OKR (Objectives and Key Results) Framework is a strategic tool that numerous organizations across various sectors, including industry leaders such as Google, Intel, Airbnb, Uber, Twitter, and LinkedIn have adopted to drive success and innovation. This framework is structured around two core elements: Objectives, which articulate the goals an organization aims to achieve, and Key Results, which define measurable outcomes that indicate success. Below is an illustration of the OKR framework designed for the Banking and Financial Sector Objectives Key Results Enhance Customer Satisfaction Key Results 1: Achieve a Strategic NPS of 75% points by the end of Q4’24 for Mass and Affluent segment. Achieve a strategic NPS of 82% points by the end of Q4 for High net worth segment. Key Results 2: Reduce customer service time to less than 2 mins in all branches by Q3’24 Key Results 3: Increase credit card customer retention rate by 30% by Q3’24. Increase Operational Efficiency Key Results 1: Automate 40% of manual process in Central Operations by Q3’24 Key Results 2: Reduce operational expenses by 10% through process optimization and technological enhancements by Q4’24. Grow Revenue Streams Key Results 1: Expand mortgage loan volumes by 20% by Q4’24. Key Results 2: Augment Credit Card volumes by 20% by Q4’24. Key Results 3: Launch two new financial products targeting millennials, achieving a market penetration rate of 10% by Q3’24 Strengthen Compliance and Risk Management Key Results 1: Achieve 100% compliance with the latest regulatory requirement before the next Central Bank Audit. Key Results 2: Implement a new fraud detection system reducing External Fraud cases by 75% by Q3’24. Improve Employee Engagement and Satisfaction Key Results 1: Increase employee engagement scores by 20% as measured by the annual employee survey. Key Results 2: Reduce employee turnover rate by 10% by enhancing work life balance options and flexibility. Hoshin Kanri: Hoshin Kanri, a Japanese term, is a top-down, bottom-up, systematic, and structured strategic planning process that engage all levels of the organization, while creating measurable and aligned goals that imbue the concept of continuous improvement through use of the Plan- Do – Check – Act cycle. Here is the generalized flow of Hoshin Kanri process which begins with key inputs from SWOT (Strengths, Weaknesses, Opportunities, Threats) and PEST (Political, Economic, Social, Technological) analyses. These tools offer comprehensive insights from both internal and external viewpoints. Additionally, the process actively seeks contributions from customers, employees, and stakeholders to ensure a well-rounded planning approach. Strategies are built in Planning stage and prioritized in the Do stage. Plans are cascaded downward throughout the organization in a systematic manner. Plans, metrics, and score cards are reviewed in the check stage. Finally, the entire planning process is reviewed, and lessons are gathered and incorporated as improvements into the following year’s planning process. Hoshin Kanri Vs. OKR for goal setting: OKR Framework Hoshin Kanri OKR is developed in the tech industry, popularized by companies like Intel and Google. Hoshin Kanri is Originated in Japan, with roots in Total Quality Management principles. OKR is a goal setting framework which consists of Objectives and Key Results. Measurable goals create alignment. Focus of OKR is to Set ambitious goals to drive performance beyond current capabilities Hoshin Kanri is a goal setting framework which combines long-term objectives with annual objectives and improvement priorities with metrics and KPI. It Focuses on achieving a unified direction through alignment and consensus. OKR is typically set and reviewed quarterly, allowing for rapid adaptation and iteration. Hoshin Kanri is planned annually with monthly or quarterly reviews for alignment and adjustment. Cascades goals top-down but allows for bottom-up feedback to adjust and align objectives. Emphasizes top-down goal setting with bottom-up feedback to ensure alignment and consensus. OKR is Flexible and adaptable, suitable for fast-paced and rapidly changing environments. Hoshin Kanri is Systematic and structured, with a strong emphasis on planning and process. OKR focuses on measurable key results to track progress towards objectives. Hoshin Kanri uses metrics and targets within detailed action plans to measure progress. OKR encourages employee engagement by connecting individual contributions to broader company goals. Hoshin Kanri engages all levels of the organization in the planning process to ensure alignment and commitment.