Monday, August 3, 2009

Glimmers of hope, but no consummating fire

Hoshin kanri and the A3 system is how Toyota manages its vaunted production system. John Shook stated in Becoming Lean (Productivity Press) that hoshin kanri is as important as the production system. Well, we've been tying our best to adopt the production system for over twenty years. How long will it take the business world to adopt Toyota's management system?

Is history any guide?

In the 1920s, Alfred Sloan invented the modern corporation by decentralizing management into the divisions of Chevrolet, Buick, Cadillac, Fisher Body, etc. Each division had its own president. Sloan brought this new system under control by inventing the system of financial targets and internal audits that became what we know today as management accounting.

Despite the fact that Sloan practically put Henry Ford out of business in 1926, it took Ford twenty (20) years to adopt Sloan's new system. And even then he did it under pressure from his daughter-in-law. Schools of business were even slower than Ford. They revised their curricula to reflect Sloan's management system only in the 1950s. European managers were even slower--much slower. They didn't get with Sloan's program until the tail end of the 1960s!

In the case of hoshin kanri, which we might call the Toyota Management System, progress has been extremely slow. There are glimmers of hope, but no fire. Under the title of "the balanced scorecard," hoshin--or at least certain aspects of hoshin--became very popular for a time. The phrase, "balanced scorecard," is repeated frequently in board rooms and schools of business, but hoshin kanri has not been implemented or even understood. Meanwhile, another version of hoshin kanri has had some effect under the title of "breakthrough strategy," which is of course an element of Six Sigma. And of course there are all those prizes modeled after the Deming Prize: the Baldrige, the Shingo, etc. All of them employ hoshin kanri's technique of the "president's diagnosis," which engages top management in the regular assessment of organization fitness based upon well defined diagnostic criteria.

But none of it adds up. Very often, anyway. The Danaher Business System is a good replication of Toyota's system, as was Masland Corporation's COMPASS system, at least prior to Masland's acquisition by Lear Corporation. Hewlett Packard was a fairly early adopter, but abandoned hoshin kanri under the glamorous Carly Fiorina.

Alas, in the case of hoshin kanri the social learning curve may be even more brutal than in the case of Alfred Sloan's system. In Sloan's case, the technology adoption process took over five decades from the time the Sloan invented the system, and at least two decades from the time that schools of business adopted Sloan's system as the gold standard of management education.

It has now been over four and a half decades since Toyota invented the version of hoshin kanri that will eventually become management's new gold standard. Moreover, it is very clear that schools of business--with a very few exceptions (notably the Ohio State University, to a lesser degree the University of Michigan, Portland State University, and perhaps MIT)--have not yet reformed their respective curricula. And they all still teach management accounting as if it were still useful. I estimate that general curricular reform in schools of business is a decade away. If the rate of turnover in the higher echelons of management has not changed, then it may be roughly 30 years before the world's companies finally embrace hoshin kanri as the successor to Alfred Sloan's management system.

That's a very long time to wait indeed.

1 comment:

mike said...

I agree with you.
I'm a retired ExecVP of a Toyota Subsidiary and i've led our hoshin for over 15 years.
Say, how do we get the message out there?
Mike.