The theory behind hoshin: a quantitative investigation of Toyota's strategic planning process

Many companies have attempted to imitate and copy Toyota's strategic planning process more formally known as hoshin kanri in the implementation of lean manufacturing. Unfortunately, most observations of hoshin fail to quantify and accurately represent how such preferences are designed and integrated into Toyota's strategic planning process. This study combines classical strategic planning theory and latent semantic analysis in the study and classification of Toyota's hoshin kanri practices. This study shows that Toyota's hoshin practices inherently have preferences towards resource- and knowledge-based theory which means that internal development of resources, especially human capital is of high importance. Interestingly, Toyota's blend between emergent and deliberate strategic planning approaches creates a targeted creativity style that is difficult to establish without a highly structured problem-solving process. Toyota's hoshin process is also well balanced between the agency aspects of cross-organisational commitment which means that the strategy formation and implementation aspects are more closely integrated compared to traditional approaches. This new insight and others provide an increased understanding of Toyota's hoshin kanri process and practices that relate to the implementation of Toyota production system.