Most organizations treat strategic planning as something that happens once a year. The leadership team retreats off-site, sometimes with a consultant. They produce a deck. They communicate the deck to the next layer of leadership. The deck is referenced occasionally during the year and then revisited at the next annual retreat. The connection between what's in the deck and what actually happens in daily work is loose, sometimes nonexistent.
The Lean methodology for connecting strategy to daily work is called strategy deployment, or hoshin kanri in Japanese -- literally "compass management." Done well, it transforms strategy from an annual ritual into an ongoing management system. Done poorly, it produces the same disconnect between plans and execution while adding the appearance of methodological rigor.
The difference between the two outcomes is what this session is about. Mark walks through strategy deployment as a series of four organizational hypotheses that leadership tests over the course of the year, drawing on examples from ThedaCare, Virginia Mason Medical Center, Scott & White Healthcare, Toyota, and a health system he and Karen Martin worked with on building their first hoshin process. The framing -- strategy as hypotheses to test, not plans to execute -- is what distinguishes effective strategy deployment from the management-by-objectives approach that has dominated American business since the 1950s.
Mark Graban is an internationally recognized author, speaker, and advisor on Lean management, particularly in healthcare, manufacturing, and service industries. At the time of this webinar, he was VP of Improvement and Innovation Services at KaiNexus. His books include Lean Hospitals, Healthcare Kaizen, The Executive Guide to Healthcare Kaizen, Practicing Lean, Measures of Success: React Less, Lead Better, Improve More, and The Mistakes That Make Us. He writes regularly at LeanBlog.org and hosts multiple podcasts on Lean and continuous improvement. He played a producing role in the Thinking Lean at ThedaCare DVD referenced throughout this session.
This session was hosted by Jeff Roussel, then VP of Sales at KaiNexus.
The session opens with a frame Mark returns to throughout his work: Lean is not a toolkit. The tools are visible on a site visit -- the boards, the metrics, the A3 documents, the huddles. They're the part of the iceberg above the waterline. The larger part of the iceberg sits below the surface -- the management system, the philosophy, the culture, the mindsets that produced the tools and that make their use effective.
The risk with any Lean method, strategy deployment included, is adopting the mechanics without the underlying thinking. An organization can stand up huddle boards, post strategy A3s, and run quarterly reviews while missing the discipline that makes the methodology produce results. The artifacts are visible. The thinking that animates them is harder to copy.
Strategy deployment specifically is vulnerable to this failure mode because the artifacts are so visible. The X-matrix or strategy A3 document is recognizable. The cascade from system-level metrics to departmental metrics to frontline boards looks impressive on a tour. Executives can describe their hoshin process accurately while their organization is producing none of the alignment, learning, or focus the methodology is supposed to produce.
The diagnostic question Mark returns to: does the methodology look right, or is it actually working? Strategy deployment works when leaders are testing hypotheses about what matters, learning from what they find, and adjusting throughout the year. When the methodology is producing rituals without learning, the artifacts are theater.
The methodology is widely associated with Toyota and the Toyota Production System, but its origins are slightly different. Strategy deployment as a formalized practice is credited to Dr. Yoji Akao and a group working at a Japanese Hewlett-Packard joint venture in the 1960s and 1970s. The methodology spread from there to Hewlett-Packard globally and was eventually adopted by Toyota and other companies pursuing Lean management. It has been documented in books by Michele Bechtell (The Management Compass) and others, and is now part of the standard Lean management system in healthcare and manufacturing organizations practicing the methodology at depth.
The Japanese phrase hoshin kanri combines two terms. Hoshin means compass needle or direction. Kanri means management or control. Together they describe a system for keeping an organization pointed toward a defined direction -- True North -- while the daily work happens in its many specific contexts.
In English, the methodology is variously called strategy deployment, policy deployment, or hoshin planning. There's no single standardized term, which makes the literature on the topic harder to navigate than it should be. Mark uses "strategy deployment" throughout the session.
The session draws a clear distinction between strategy deployment and the older management-by-objectives (MBO) approach that has shaped much of American management practice since Peter Drucker's The Practice of Management in 1954.
MBO is typically top-down. Executives set goals. The goals cascade down the organization. Performance against the goals determines reviews, compensation, and career outcomes. The implicit threat: hit the goals or be replaced by someone who will. The methodology focuses on results without much attention to means. How the goals get hit is the responsibility of the people who own them.
Strategy deployment shares some surface features with MBO -- goals cascade, performance is reviewed -- but the underlying approach is substantially different.
It uses a process called catchball rather than top-down dictation. Goals are proposed at one level, sent down to the next level for response, sent back up with proposed adjustments and resource requirements, and iterated until there's genuine alignment rather than reluctant compliance. The methodology assumes that the people closer to the work have knowledge the executives don't have, and that the goals are better calibrated when both perspectives are integrated.
It focuses on means as well as results. W. Edwards Deming's question -- "by what method?" -- is central. Setting goals without specifying or supporting the methods to achieve them is what produces the worst outcomes of MBO: people gaming metrics, sacrificing long-term performance for short-term results, or simply failing while the leadership team blames them for the failure.
It uses a balanced set of measures, not just financial ones. The True North categories typically span safety, quality, people, delivery, and financial sustainability rather than treating profit as the only metric that matters.
It runs continuously through the year, not just annually. The catchball, the reviews, and the adjustment cycles are ongoing. The year-end ritual exists but isn't the primary management mechanism.
It's decoupled from individual performance appraisal. This is a Deming point and a source of ongoing debate in how organizations actually practice the methodology. Mark notes that he isn't sure most organizations have actually decoupled hoshin from performance management, but the principle stands as part of the methodology as Deming and others have articulated it.
The catchball process is the most distinctive operational practice. Lean is neither top-down nor bottom-up, as John Shook of the Lean Enterprise Institute says. It's a combination -- and strategy deployment is one of the most explicit places where the combination plays out. Executives propose direction. Frontline practitioners propose how to close gaps. Both sides push back, refine, and reach alignment through iterative dialogue rather than either-direction dictation.
The framing Mark uses throughout the session reorganizes strategy deployment as a set of four hypotheses that leadership tests over the course of the year. The framing matters because it shifts the methodology from "plan and execute" to "hypothesize and learn." The shift is what distinguishes effective strategy deployment from MBO with better artifacts.
Hypothesis 1: We have defined the right True North.
If the organization focuses its improvement efforts on these four (or five) key areas, then we will perform well as an organization this year and over the long term.
True North is the small set of focus areas that define what the organization is trying to achieve at the highest level. At the time of the 2010-2011 Thinking Lean at ThedaCare DVD, ThedaCare defined True North in four categories: safety and quality, people, delivery, and cost and productivity. The categories evolved over time. By a few years later, ThedaCare had separated safety and quality into distinct categories, renamed cost and productivity as financial stewardship, and added customer loyalty as a separate focus area centered on the patient experience.
The evolution is part of the methodology. True North tends to remain relatively stable over multi-year horizons, but the specific categories and language can shift as the organization learns what resonates and what gaps need attention.
A health system Mark and Karen Martin worked with developed True North categories slightly different from ThedaCare's: safety and quality, people, patient service, and financial. The categories aren't transferable. Each organization has to develop its own through structured discussion that builds consensus among executives and then plays catchball with the next level of leadership.
The lesson Mark emphasizes most strongly: don't copy another organization's True North. The categories have to resonate with the people in the organization, both logically and emotionally. Without that resonance, the True North statement becomes wallpaper. The catchball process exists precisely to ensure the language and the focus areas connect with the people who will be doing the work.
John Toussaint's framing: "The best strategy deployment system in the world doesn't make up for the wrong strategy." The methodology is necessary but not sufficient. Choosing the wrong True North categories produces alignment around the wrong things.
Hypothesis 2: We have chosen the right key performance indicators.
If we improve and close performance gaps in these key performance indicators, we will satisfy our need for improvement in the key focus areas of True North, and therefore we will be successful as an organization overall.
The hypothesis links measures to True North. Each True North category has a small number of system-level metrics that the executive team tracks. ThedaCare's metrics at the time of the DVD spanned preventable mortality and medication errors (under safety and quality), OSHA recordable injuries and turnover and a health assessment score (under people), turnaround time and same-day access and quality of time (under delivery), and operating margin and revenue per FTE (under financial).
The principle that distinguishes this from MBO-style metric overload: KPI means Key Performance Indicator, not 100 metrics. The parallel Mark draws is to a person's health. You could measure 100 or 500 things about a person, but a small number of indicators -- height, weight, blood pressure, cholesterol, a few others -- give a useful picture of overall health. The same logic applies to organizational metrics. The executive team focuses on the small set that genuinely indicates progress. That doesn't mean other things aren't measured -- it means the leadership team isn't trying to track everything.
Alignment in metrics doesn't require everyone measuring the same thing. Mark shares a story from Scott & White Healthcare. The system had a high-level metric around patient harm and was pushing patient falls as a key measure throughout the organization. The labor and delivery department pushed back: patient falls weren't the right indicator for their patient population. They needed to measure something else aligned with the same True North category. The executive team listened. The department measured something different. That kind of catchball -- pushback that improves the metric structure rather than undermining it -- is a sign of healthy strategy deployment dynamics.
The lesson: measures don't need to be identical across the organization, but they do need to align with the same True North categories. Frontline boards, departmental dashboards, and executive metrics can all be different specific measures contributing to the same systemic goal.
Hypothesis 3: We have chosen the right vital few initiatives.
If we actually execute and complete these top initiatives and projects, we will make the greatest strides toward closing performance gaps, and therefore we will be more successful in our strategy.
Most organizations have too many high-priority initiatives. Mark shares a slide he saw from John Toussaint showing an organization with 222 listed top-priority projects. He's seen organizations with more than 300. The number completed in a given year is typically a small fraction.
The cacophony of conflicting priorities produces paralysis, conflicts over resources, and a culture of excuses. Project A doesn't get done because resources got pulled to Project B. Project B doesn't get done because resources got pulled to Project A. Both miss their deadlines while everyone reports being busy.
Strategy deployment forces the harder question: what are the 15 to 20 initiatives we must complete this year? Everything else becomes "not now." The discipline of deselection is what distinguishes focus from busyness. Mark notes that ThedaCare's executive room has a wall section for initiatives that are being put on hold -- not eliminated, just deferred. The visibility is important. People can see that their pet projects haven't been rejected, just postponed until capacity is available.
The conversation that produces the short list is often awkward. Pet projects get challenged. Initiatives that lack clear connection to performance measures get deselected. Leaders who had been quietly working on their own priorities have to defend why those priorities deserve a place on the focused list. The methodology requires that level of candor or it doesn't produce focus.
The health system Mark and Karen Martin worked with reduced their initiative list to twenty top priorities. Those twenty aren't the only projects happening across the organization. They're the twenty the executive team is tracking and supporting. The leaders' role isn't to micromanage each initiative -- it's to maintain visibility, remove barriers, and ensure that other work doesn't crowd out the priorities the organization has agreed are most important.
Hypothesis 4: We have the organizational capacity to actually complete the initiatives.
We have the people, time, attention, and resources to complete these top priorities in the time frame we've committed to.
The hypothesis is often wrong. Organizations chronically overestimate their capacity to execute. Twenty initiatives looks achievable in a strategy document and turns out to require resources nobody has. The methodology tests this hypothesis through midyear reviews -- quarterly, biannual, or whatever cadence the organization has chosen -- rather than waiting until year-end to discover the overcommitment.
The reviews ask different questions than MBO-style reviews. The traditional approach asks whether you hit the target. The Lean approach asks four questions in combination: Did we do what we said we would do? Did we get the results we expected? If results were missing, why? If results were achieved, do we understand why?
The matrix produces useful diagnostics. Did what we said and got results: understand why, capture the learning, replicate. Did what we said but didn't get results: the hypothesis was wrong, learn what was missing. Didn't do what we said and didn't get results: a capacity or commitment problem, address it. Didn't do what we said but got results anyway: be suspicious, the results may not be sustainable.
Mark shares a story about a hospital that set a goal to increase admissions by 10%. Partway through the year, admissions were up 11-12% even though none of the planned initiatives had been completed. The leadership team initially celebrated. Then someone investigated. A local bridge was under construction, forcing patients who would have driven to a different hospital to drive to this one instead. The improvement was real but temporary. When construction finished, admissions would normalize. The "did what we said: no, got results: yes" cell of the matrix had identified a false positive that the team would have missed if they'd only looked at the result.
The session walks through several examples of strategy deployment in practice. ThedaCare's executive conference room displays True North categories alongside system metrics. The room has space for the 16 value streams the executive team tracks. The wall also has the "not now" list of deferred initiatives. The visibility is part of the methodology -- the structure isn't a binder on a shelf but a living artifact that the leadership team interacts with regularly.
The health system Mark and Karen Martin worked with built their executive board with a Strategy A3 (sometimes called a "mother A3") for each True North category. Each Strategy A3 captures the highlevel reflection on the past year, the analysis of why goals were or weren't hit, and the action plan for the coming year's priorities. The methodology produces documents because the documents are useful artifacts of the thinking, not because the format itself produces value.
ThedaCare specifically aims for at least 50% improvement on key measures in their breakthrough initiatives. Setting modest targets -- reducing falls from 10 to 9 -- doesn't produce the kind of gap that drives meaningful improvement work. Strategy deployment creates gaps deliberately. The gaps drive the structured improvement effort.
The most powerful demonstration of strategy deployment is when a frontline manager can stand at their team's board and explain four things in connected language:
When all four are visible and the manager can articulate how the daily improvement work contributes upward through the hierarchy to the True North categories, the methodology is functioning as a management system. When any of the four is missing -- when the daily work is disconnected from departmental goals, or departmental goals are disconnected from system strategy -- the methodology has gaps that need to be addressed.
Strategy deployment doesn't exist in isolation. It connects to A3 thinking and continuous improvement methodology in specific ways that the session names.
At the top of the organization, Strategy A3s capture the executive-level thinking about each True North category. These are the highest-altitude A3s in the system, with the broadest scope and the longest time horizons.
At the next layer, what Mark calls "baby A3s" or "tactical A3s" capture the thinking behind specific initiatives. The twenty top priorities on the executive list each have an A3 that explains the problem, the analysis, the proposed countermeasures, and the expected results. The A3 thinking is what keeps the initiatives grounded in actual problem-solving rather than activity for its own sake.
At the frontline, daily kaizen continues independently. Small improvements identified and implemented by the people doing the work happen continuously throughout the organization. Most of these aren't tracked at the executive level. Some of them aggregate into bigger patterns that the executive team needs to know about. The methodology supports both layers without requiring the executive team to micromanage daily improvement work.
Mark notes a specific failure mode worth flagging. Strategic A3s sometimes turn out to be solutions rather than problem analyses. The executive team has decided what to do without fully understanding the problem. When this happens, the right response is to call time-out, return to the problem, and rebuild the A3 from the analysis layer up. It's awkward when an executive team realizes that ten of their fifteen top initiatives are solutions in search of problems, but the awkwardness is the methodology working as designed.
The session includes a brief demonstration from Jeff Roussel of how KaiNexus supports strategy deployment specifically. The platform was designed to support the layered structure the methodology requires:
System-level dashboards display True North categories alongside the key performance indicators tracked at each layer. Leaders can see at a glance what's being worked on toward each goal, what status those initiatives are in, and where attention is needed.
Strategy A3s and tactical A3s live in the system as structured documents. The hierarchy from mother A3s at the True North level to baby A3s for specific initiatives is visible. The connections between A3s and the metrics they're intended to influence are explicit.
Daily improvement work happens within the same system, connected to the strategic structure above. Frontline kaizen and tactical initiatives both contribute to the True North categories. The connection is visible rather than implicit.
The question that gets raised most often when organizations consider moving from physical boards to a platform is whether the platform reduces the visibility and immediacy of the physical artifacts. The session addresses this directly. The platform doesn't replace face-to-face conversation -- it supports it. The conversation starts further along because everyone can see the same data before the conversation begins. For organizations with distributed teams, remote workers, or multiple sites, the platform extends the visibility that physical boards can only provide locally.
The session also notes that many organizations use a blended approach -- physical boards for local teams plus the platform for cross-organizational visibility. The two aren't mutually exclusive. The trade-off is that purely physical artifacts are great for the local team but invisible to the rest of the organization, and purely virtual artifacts can feel less immediate without the daily ritual of standing in front of a board. Most mature organizations find a balance that works for their specific structure.
What is strategy deployment?
A management methodology for aligning an entire organization around a small number of breakthrough objectives and ensuring that daily work contributes to those objectives. Also known as hoshin kanri (Japanese for "compass management"), policy deployment, or hoshin planning. The methodology was developed by Dr. Yoji Akao and colleagues at a Japanese Hewlett-Packard joint venture, spread to Toyota and other Lean organizations, and has been adopted across healthcare, manufacturing, and service industries. It connects long-term purpose, annual priorities, frontline improvement, and daily management into one coherent system.
How is strategy deployment different from management by objectives?
Both involve goals cascading through the organization. The differences are substantial. Strategy deployment uses catchball -- a back-and-forth dialogue between levels rather than top-down dictation. It focuses on means and methods, not just results. It uses a balanced set of measures across safety, quality, people, delivery, and financial sustainability, not just financial metrics. It runs continuously through the year, not just at annual intervals. And in its full form, it's decoupled from individual performance appraisal so that the metrics drive learning rather than fear.
What is True North?
The small set of focus areas that define what an organization is trying to achieve at the highest level. Typically four to five categories that span safety, quality, people, delivery or service, and financial sustainability. The specific categories and language vary by organization. ThedaCare's True North evolved over time from four categories to five and modified the language as the organization learned what resonated. Each organization has to develop its own True North through structured discussion rather than copying another organization's.
What is catchball?
The iterative dialogue between organizational levels that produces alignment in strategy deployment. Executives propose direction. The next level of leadership responds with what they think is achievable, what resources they need, and what constraints they see. The conversation continues until there's genuine alignment rather than reluctant compliance. Catchball is the operational practice that distinguishes strategy deployment from top-down goal-setting. Without it, the methodology is MBO with better artifacts.
How many initiatives should an organization track at the strategy deployment level?
Most organizations have too many. Mark shares examples of organizations with 222 or 300+ "top priority" initiatives, almost none of which get completed. The discipline of focusing on the 15-20 initiatives that will produce the greatest impact on True North metrics is what distinguishes effective strategy deployment from busyness. Other initiatives don't disappear -- they go on a "not now" list, deferred until capacity is available. The visibility of the deferral matters because it prevents people from feeling that their priorities have been rejected.
How many KPIs should the executive team track?
A small number. KPI means Key Performance Indicator, not 100 metrics. The parallel to personal health is useful: you could measure 100 things about a person but a small number of indicators captures the picture of overall health. Most organizations practicing strategy deployment well track somewhere between 8 and 15 system-level metrics that connect to True North categories. The discipline of choosing the vital few is part of the methodology. Tracking too many produces confusion and dilutes attention.
Can different departments track different metrics under the same True North category?
Yes, and this is healthy. Mark shares a Scott & White example: the system had a True North category around patient harm with patient falls as a key system metric. Labor and delivery pushed back -- their patient population doesn't fall in the same way other patient populations do. They needed to measure something different. The executive team listened. The department measured a different metric aligned with the same patient harm goal. The catchball produced better measurement structure rather than undermining alignment. Alignment doesn't mean identical metrics across the organization. It means coherent contribution to the same True North categories.
What's the difference between a Strategy A3 and a baby A3?
A Strategy A3 (sometimes called a "mother A3") captures the executive-level thinking about an entire True North category -- the reflection on the past year's performance, the analysis of why goals were or weren't hit, the action plan for the coming year. A baby A3 (or tactical A3) captures the thinking behind a specific initiative within that strategy. Each of the 15-20 top priorities the organization is tracking should have its own A3. The hierarchy connects strategic intent to operational work. Strategy A3s without tactical A3s become aspirational documents disconnected from execution. Tactical A3s without Strategy A3s become initiatives disconnected from organizational direction.
What do you do when the executive team realizes their "initiatives" are actually solutions without root cause analysis?
Call time-out and rebuild from the problem analysis layer. The methodology requires that strategic initiatives be grounded in genuine problem-solving rather than predetermined solutions. When this realization comes -- and Mark notes it commonly does come once leaders are using A3 thinking rigorously -- the right response is to step back, understand the problem more deeply, and reconstruct the initiative around the analysis. It's awkward to discover that ten of fifteen top priorities are solutions in search of problems, but the awkwardness is the methodology working as designed.
How often should the executive team review strategy deployment progress?
More frequently than annually. The specific cadence varies, but monthly, quarterly, or biannual reviews are all common. The point is that the methodology runs continuously through the year, with structured reviews that test whether the hypotheses are still holding and what needs to be adjusted. The old MBO model of annual goal-setting and year-end review doesn't produce the learning that strategy deployment is supposed to produce. The reviews ask four questions: Did we do what we said? Did we get the results we expected? If not, why? If yes, do we understand why?
Who should be in the room for the initial True North discussion?
The C-level executives plus the senior VPs with significant operational leadership in the organization -- typically 8 to 12 people. The discussion produces an initial version of True North that then goes into catchball with the next level of leadership, typically 50-60 directors and VPs. The director-level catchball refines the language, surfaces resistance, and produces the version of True North that will actually function in the organization. Below the director level, the cascading conversation happens within departments as directors and VPs work with their teams on how the True North categories translate to local goals and measures.
What about hospitals or organizations that are just getting started with strategy deployment?
Don't try to implement the full methodology in the first year. Mark notes that strategy deployment, like other Lean management practices, needs to be phased in. An organization can't credibly stand up True North categories, system metrics, catchball processes, Strategy A3s, tactical A3s, daily management boards, and tiered huddles all at once. The methodology depends on the other Lean management infrastructure being in place. Most organizations start with daily improvement work and basic A3 thinking, build out daily management, and then layer strategy deployment on top of the existing infrastructure. Trying to start with strategy deployment without the supporting infrastructure usually produces the artifacts without the function.
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