In 1995, Peter Drucker conceded that Management By Objectives (MBO) was not “the great cure for management inefficiency” he had believed when he coined the term 41 years earlier. In the meantime, the technique had contributed massively to the decline of American industry by turning managers into metrics gamers.
On 10/7/2025, The Conversation published an article by Aurélien Rouquet, reassuring us that Management by objectives is not a Nazi invention, contrary to what historian Johan Chapoutot claims. Rouquet attributes its paternity to Alfred P. Sloan, the head of General Motors who made it the most powerful company in the world by the end of World War II.
Rouquet’s article also includes a link to another article, dated 9/2/2024, where George Kassar asserts in the title that At 70, management by objectives remains unsurpassed. The most surprising thing, for an article on such a subject, is that it does not cite any company whose performance has been improved by MBO. And the author seems to ignore the existence of an approach that has surpassed MBO for decades, the Hoshin Kanri, which perhaps has the misfortune of coming from Japan.
General Motors is not what it used to be, and it is easy to forget the many innovations of Alfred P. Sloan that allowed him to wrest dominance of the global automobile market from Ford in the 1920s:
Annual model changes intended to “introduce the laws of Parisian dressmakers into the automotive industry.”
Decentralized organization into divisions capable of responding to the demands of all layers of society, as opposed to the centralized system personally controlled by Henry Ford.
The sale of cars through a network of dealers, which allowed factories to run at a constant pace while sales fluctuated. As Sloan quickly realized, it also hid major market downturns until all dealer lots were full.
The accounting ratio system still used today to evaluate corporate performance, for better or for worse. Donaldson Brown developed this system at DuPont, and Sloan transplanted it to GM.
….
Where Sloan’s Name Appears
Alfred P. Sloan left an indelible mark on the industry, but his name appears less often in discussions of management than Henry Ford, the flamboyant competitor he defeated.
Sloan was also aware of the benefits of reducing the time between orders and revenue collection, but lacked the means to achieve it. He made this point in a speech to the automobile editors of American newspapers on September 28, 1927, in a sentence that Kiichiro Toyoda would not have disowned:
“The faster goods can be moved from raw materials to the final consumer, and the smaller the quantity of any goods involved in floating, the more efficient and stable the industry becomes.”
In the 1980s, a grant from the Sloan Foundation enabled Jim Womack and Dan Jones to conduct the comparative study that formed the basis of their 1990 book,The Machine that Changed the World.
The MIT School of Management is named after him, and its MIT Sloan Management Review(MIT SMR) has nothing to envy in the quality of its articles to its better known rival, the Harvard Business Review (HBR).
As the head of a company that manufactured five brands of cars, trucks, buses, and refrigerators, Sloan was concerned with comparing the performance of business units. However, I don’t recall seeing in his writings the notion of numerical targets assigned to individual managers.
The Sloan-Drucker Relationship
After the war, Alfred P. Sloan invited Peter Drucker to study the workings of GM. Drucker synthesized his observations in Concept of the Corporation but Sloan disagreed with them, and wrote his memoirs, My Years with General Motors as a rebuttal.
Sloan’s style, however, is so subtle and gentlemanly that one can read both books without noticing his intention, especially in view of the introduction written by… Peter Drucker in 1990. Neither book deals with MBO.
Who Invented MBO?
Peter Drucker in 1953
So why blame Sloan for MBO? It was Drucker who first used the term, and his followers who spread the practices not just in manufacturing but throughout the economy, first in the US and then around the world. There is no need to invoke Sloan to deny the Nazi Reinhard Höhn the authorship of the MBO, because chronology suffices. Drucker’s book, The Practice of Management was released in 1954. Former SS Oberführer Reinhard Höhn founded his Harzburger Akademie in 1956, and thus had time to read and assimilate Drucker’s ideas.
The Flaws of MBO
In principle, the objectives are established in collaboration with employees, during periodic performance reviews. In practice, in a command and control culture, the line manager tries to impose an objective:
The Haggling Culture
This haggling eventually results in a 10% target that is in no way based on the reality of the business. The parties negociate as in a garage sale and make a fools’ bargain, as both know the target will not be met. The employee commits to an unrealistic goal so as not to appear timid. The superior knows that in three months he will be able to use the employee’s delay in his objectives as leverage to make him redouble his or her efforts.
This is how superiors have behaved since the beginning of his career. Knowing no other way, they pass it on to their juniors, who in turn pass it on to the next generation.
The Blame Culture
Moreover, objectives often relate to characteristics subject to variations beyond the employee’s control, because their fluctuations are random, or due to changes in the economic context through recessions, natural disasters, or wars.
W. Edwards Deming dramatized this phenomenon in hits famous red pearl experiment. Operators remove beads from an urn using a pallet. White beads are the good products, red ones are the bad ones, and the operators’ performance is judged on the proportion of red beads on their pallets. This is a barely forced caricature of the behavior of many companies.
Finally, the pursuit of their individual objectives by all employees is supposed to contribute to the performance of the company as a whole, which is in no way guaranteed by the MBO.
It is possible that they will achieve all their objectives and the company will go bankrupt. This happens, for example, when the performance of workshops is judged by the machine utilization rate or the number of improvement projects.
MBO is a top-down approach that can be described as a disciplinary tool (Chiapello et Gilbert, 2013).
Du MBO au Hoshin
Since MBO is an approach that has lost credibility by decades of failure, isn’t it better to learn more modern methods that have served leading companies well, like Hoshin Kanri? Yoji Akao(赤尾 洋二) invented this method in the 1950s, and he is also known for Quality Function Deployment (QFD).
Yoji Akao
Since MBO is an approach that has lost credibility by decades of failure, isn’t it better to learn more modern methods that have served leading companies well, like Hoshin Kanri? Yoji Akao(赤尾 洋二) invented this method in the 1950s, and he is also known for Quality Function Deployment (QFD). Although it is no longer presented this way, Akao saw Hoshin Kanri as a way to engage managers in Total Quality Management (TQM), in parallel with QC Circles for operators.
Adoption in Japan
Hoshin Kanri has been used at Bridgestone since the 1960s and by Toyota since the 1970s. Nissan and Komatsu are also known to be using it.
Kan-Pro at Toyota
in Learning to Lead, Leading to Learn, Isao Yoshino reports that, at the initiative of Eiji Toyoda, Toyota supplemented the Hoshin Kanri with a two-year training program called Kan-Pro, focused on the managerial posture of executives destined to succeed current leaders. This two-year training program was developed and implemented by Masao Nemoto (根本正夫) and Mikio Sugiura (杉浦幹夫).
Although Hoshin Kanri is a procedure carried out annually, the value of its results depends on the spirit of its execution, and in particular on the behavior of managers towards their subordinates.
Key skills in Kan-Pro
According to Yoshino, Kan-Pro aimed to strengthen key skills, some of which seem obvious and others less so. It was intended to teach them to do the following:
Determine your priorities and choose your goals accordingly. All managers think they do this, but in reality they tend to scatter their attention.
Set “seemingly impossible” goals. This doesn’t mean pivoting from shock absorber manufacturing to AI. It means setting goals that cannot be achieved just by increased effort. You can reduce a machine’s tool changeover time from 120 to 100 minutes by hurrying. But reducing it to 9 minutes requires method changes and technical modifications to the machine.
In the late 1940s, while his company was retrofitting surplus American engines to bicycles, Soichiro Honda gave it the goal of winning the world’s top motorcycle races. 15 years later, the company did it. Why this goal? Soichiro Honda wanted to instill the “racing spirit” into all of the company’s projects, which, decades later, allowed it to bring new models into production faster than competitors.
Consider that “the absence of problems is a problem” and demand the bad news first. In other words, do not shoot the messenger and encourage the communication of bad news. And reject a candidate supplier who boasts of having no problems.
Tell stories that make the reasoning visible on an A3 page (420×297 mm). Today, the goal of fitting communication onto a single page remains. However, fixation on a paper format is no longer relevant, as discussed below.
Check and reflect to learn. It means taking the time to do a post-mortem on results, whatever they may be. It is about not loudly celebrating successes and keeping silent about failures. Examining the consequences of decisions after the fact is often avoided in companies, under the pretext of “looking towards the future.”
Acquiring the Kan-Pro Skills
When you look at such a list, it is easy to convince yourself that you already know and practice all this, but the perception of others is often different.
Yoshino doesn’t elaborate on the art of developing these soft skills, which is very different from teaching technical skills. In the United States, this is done through role-playing exercises that put the learner in a position to react to a variety of realistic situations. These exercises give concrete meaning to abstract principles.
Adoption in the United States
American manufacturing companies that have adopted Hoshin Kanri are a minority, but this minority includes Tesla, HP, Caterpillar, and Danaher. Toyota’s North American branch is also an important case, as two alumni have written books on Hoshin Kanri, Pascal Dennis in 2006 and Mark Reich in 2025.
Alternative MBO updates
Kassar cites other attempts to update the MBO:
The Balanced Scorecard. Robert Kaplan’s Balanced Scorecard, which aimed to measure performance on more than just financial indicators. Robert Kaplan was a professor of accounting at Harvard Business School.
The OKR (Objectives and Key Results) that Andy Grove developed at Intel, and which Google has adopted. Andy Grove is the inventor of many semiconductor manufacturing processes, co-founder of Intel, and author of books on technology and management.
OKR involves formulating objectives for teams, each associated with a few progress indicators, quantitative but not necessarily financial. The difference with MBO is the separation between the objective and the progress indicators. But this distinction is already found in versions of MBO where the objectives are organized around goals.
These approaches deserve attention, but not at the expense of Hoshin Kanri.
Vocabulary
Hoshin (方針) is an everyday Japanese word that translates to “policy,” meaning a guideline or directive. The full name of the method is Hoshin Kanri (方針管理), or “policy management.”
Misinterpretation in France
In France, the spread of these ideas was slowed by a more serious misinterpretation made in the 1990s, when professionals misused the word “Hoshin” to refer to 5-day improvement projects. This made all the literature on real Hoshin incomprehensible to French readers.
To be able to talk about it in France, we often use the full Japanese term “Hoshin Kanri”. To describe it more concretely, we also call it “strategy deployment”. As it is first and foremost an exercise in planning, the term “Hoshin Planning” has become common in the United States.
The Hoshins
Unlike the objectives emerging from the MBO, hoshins are not always quantitative. For a police force, for example, increasing the number of offences revealed by the action of the services (IRAS) by 15% is a quantitative objective; improving relations with citizens is not one but can be a Hoshin.
Some hoshins, especially for senior executives, are as sibylline as Zen koans. Pascal Dennis, who in 1997 worked in Human Resources at Toyota in Canada, reports that the head of Toyota for North America and future CEO of Toyota, Fujio Cho, had the hoshin “Beloved Company.”
How can you interpret such a directive? Toyota’s success in the North American market was provoking nationalist reactions, and this directive called for initiatives to counter this effect and give Toyota the image of a responsible company towards the society in which it operates.
In the human resources department where Pascal Dennis worked, this directive resulted in an open house to show the local population how Toyota treats its employees and manages their careers. In the design office, engineers developed the Prius to strengthen the company’s environmental reputation.
At first glance, it seems likely that Fujio Cho didn’t know how his teams would translate his directive into action. It was up to them to invent it, and to discuss it with each other, their superiors, and their subordinates, to arrive at a coherent action plan for the entire company.
The method
Hoshins are neither decreed by hierarchy nor bargained between bosses and subordinates. They emerge from organized deliberations aimed at building consensus. While there are no illusions about the feasibility of consensus, intention matters and is central to the method. Developing hoshins requires more work than the top-down imposition of arbitrary numerical targets.
Catchball
Of all the components of Hoshin Kanri, the one that best dramatizes the difference with MBO is the process called “catchball.” The first throw of the leader’s Hoshins is a “balloon” that he sends to his direct subordinates. Each person translates them into directives for their own activity and shares the result with their superior, peers, and subordinates:
After several iterations involving in-person meetings and deliberations, all the hoshins at all levels converged on a coherent strategy to which everyone was able to contribute. It is therefore, in principle, the subject of a consensus to which everyone commits. This is a considerable undertaking, carried out annually, with quarterly checks and adjustments.
Twenty years ago, the standard format for hoshins was a single-page A3, and the company trained managers to write and read such documents. Technological developments have since challenged this focus on a single paper format.
Other tools
There are many other tools to aid in the development and monitoring of hoshins at all levels that you need to learn to successfully apply Hoshin Kanri.
The tools and methods provide the rules of the game, but the results depend on the sincerity, habits, and experience of the participants. Among the books that explain them, Pascal Dennis’s Getting the Right Things Done, stands out for the depth of experience he brings to the table: 10 years of experience at Toyota in Canada. Even though the title is Drucker’s definition of effectiveness, the book is not about Drucker’s ideas.
Dennis introduces Hoshin Kanri through an in-depth case study of an imaginative manufacturing company facing challenges that practitioners readily recognize. The tools are not technically complicated. It’s their implementation within the context of an organization that makes the difference.
Dennis structures his presentation of Hoshin Kanri around Deming’s PDCA cycle:
Plan, planning
Do, l’execution
Check, validation
Adjust, the adjustments
Mark Reich, another Toyota alumnus, just published another book about Hoshin Kanri, called Managing on Purpose. It’s new and I have not read it yet. Any comment from readers who have read it is welcome.
The rise of the A3
Writing in 2006, Dennis also highlights the systematic use of A3 sheets for written communications within the framework of Hoshin Kanri.
The dominant medium for professional communication, in 2006 as today, was PowerPoint. By default, if you ask an industry executive to explain their strategy for the coming year, the result is about twenty slides. Originally, these slides were oral presentation aids in sales situations, where the objective is commercial persuasion rather than technical or scientific communication.
But for decades, professionals have used these slides for all sorts of reports, proposals, and even teaching aids in training, replacing full sentences and paragraphs with bulleted lists. As early as 2003, Edward Tufte denounced the dumbing down of these communications through the use of PowerPoint.
Toyota chose the A3 format, 420×297 mm, because it was the largest its office printers could handle. Requiring everyone to describe their plans graphically on a single A3 page forced synthesis and saved readers time. Instead of a narrative covering the various elements in succession, A3 shows the whole thing at a glance.
The paper sizes are too large to be displayed here at full size. However, you can see the relative sizes of A4, A3, and A2 and the differences between what they offer in terms of communication space:
Toyota chose A3 as the Goldilocks size, large enough to hold complete stories, yet small enough for their office printers. Additionally, providing A3 forms and templates encourages authors to cover any topic they want and allows readers to find the same items covered in the same places in documents from different authors. Creating these documents and commenting on those submitted to you is a skill that requires training.
The Fall of the A3s
In the 20 years since Dennis published his book, the technology for collaborating on electronic documents has advanced. People increasingly avoid printing documents, making paper less useful. By sharing an electronic document, multiple colleagues can collect comments on the same copy and manage multiple revisions more reliably than on paper.
Communicating about the A3 format has never been easy, for both technical and human reasons. First, A0, A1, etc., are an international standard that Americans don’t use. This creates problems for both publications and communications.
The format of John Shook’s Book on management by A3s is 22×24 cm, and therefore it cannot contain an A3, even in a double-page spread. Similarly, Dennis’s book is 17×24.5 cm. For books that promote this format for corporate communications, it is embarrassing that they cannot contain one. It is a bit like a black and white film dealing with colors by Matisse. The American format closest to A3 is the Tabloid, at 11×17 inches, slightly shorter and wider.
In addition to these confusions over standards, Americans and Europeans often fail to see the value of the A3 format. In production workshops, we often see A4 documents that their authors present as their “A3s.” And the replacement of paper media with screens of varying sizes has added to the confusion.
In 2025, the discipline of communicating strategy on a single page or screen remains relevant, but even Toyota has abandoned the reference to a paper format. This is no longer essential for people who communicate via screens.
Sustainability
In management, you can take nothing for granted. Hoshin Kanri can serve for years and eventually degenerate into a formality to which everyone submits halfheartedly. The arrival of new employees imbued with the MBO ideology can reduce Hoshin Kanri to a barely modified version of MBO.
Pascal Dennis’s book dates from 2006. Nineteen years after its publication, it remains relevant, though it includes a few technical details that have aged. Dennis, for example, emphasizes the use of A3 sheets for communications.
Conclusions
When a method does not produce the desired effects, its promoters are quick to explain that its users applied it incorrectly. After 70 years, however, we expect to be able to cite examples of success, even if they are in the minority. When you Google MBO, it comes up with Intel, Google, and HP. This is paradoxical, since the Intel invented OKR and Google them, while HP uses Hoshin Kanri.
Bibliography
Anderson, K. (2023). Learning to Lead, Leading to Learn, pp. 135-158. (n.p.): Integrand LLC. ISBN:9781734850628
Akao, Y. (2020). Hoshin Kanri: Policy Deployment for Successful TQM. Taylor & Francis. ISBN:9781000286618
Chandler, A. D. (1993). The Visible Hand. Harvard University Press.
Chiapello, E., Gilbert, P. (2013). III. Critical approaches. In: Sociology of management tools, Introduction to the social analysis of management instrumentation. Paris: La Découverte. Repères, p.61-95.
Dennis, P. (2006). Getting the Right Things Done: A Leader’s Guide to Planning and Execution. Lean Enterprise Institute.
Drucker, P. F. (1946). Concept of the Corporation. John Day Company.
Drucker, P. F. (1954). The Practice of Management. Harper & Row.
Grove, A. S. (1995). High-Output Management. Knopf Doubleday. ISBN:9780679762881
Guserl, R. (2013). The Harzburg Model: Idea and Reality and Alternatives to the Harzburg Model. Germany: Gabler Verlag, ISBN: 9783322917331
Höhn, R., Böhme, G. (1967). Führungsbrevier der Wirtschaft. Verlag für Wissenschaft, Wirtschaft u. Technik.
Hounshell, D. (1984). From the American System to Mass Production, 1800-1932. Johns Hopkins University Press. ISBN: 9780801831584
Kaplan, R. S., Norton, D. P. (1996). The Balanced Scorecard. HBR Press. ISBN: 9781422148167
Reich, M. (2025). Managing on Purpose. Lean Enterprise Institute.
Shook, J. (2008). Managing to Learn. Lean Enterprise Institute. ISBN:9781934109205
Shook, J. (2009), Toyota’s Secret: The A3 Report, MIT Sloan Management Review, Vol. 50, No. 4 Reprint #50408
Sloan, A. P. (1964). My Years with General Motors, [by] Alfred P. Sloan, Jr. Edited by John McDonald with Catherine Stevens. Macfadden-Bartell.
Tufte, E. R. (2003). The cognitive style of PowerPoint. Graphics Press. ISBN:9780961392154
Womack, J. P., Jones, D. T., Roos, D. (1990). The Machine that Changed the World. Scribner. ISBN:9780892563500
Oct 21 2025
From MBO to Hoshin Kanri
In 1995, Peter Drucker conceded that Management By Objectives (MBO) was not “the great cure for management inefficiency” he had believed when he coined the term 41 years earlier. In the meantime, the technique had contributed massively to the decline of American industry by turning managers into metrics gamers.
On 10/7/2025, The Conversation published an article by Aurélien Rouquet, reassuring us that Management by objectives is not a Nazi invention, contrary to what historian Johan Chapoutot claims. Rouquet attributes its paternity to Alfred P. Sloan, the head of General Motors who made it the most powerful company in the world by the end of World War II.
Rouquet’s article also includes a link to another article, dated 9/2/2024, where George Kassar asserts in the title that At 70, management by objectives remains unsurpassed. The most surprising thing, for an article on such a subject, is that it does not cite any company whose performance has been improved by MBO. And the author seems to ignore the existence of an approach that has surpassed MBO for decades, the Hoshin Kanri, which perhaps has the misfortune of coming from Japan.
Contents
The legacy of Alfred P. Sloan
General Motors is not what it used to be, and it is easy to forget the many innovations of Alfred P. Sloan that allowed him to wrest dominance of the global automobile market from Ford in the 1920s:
Where Sloan’s Name Appears
Alfred P. Sloan left an indelible mark on the industry, but his name appears less often in discussions of management than Henry Ford, the flamboyant competitor he defeated.
Sloan was also aware of the benefits of reducing the time between orders and revenue collection, but lacked the means to achieve it. He made this point in a speech to the automobile editors of American newspapers on September 28, 1927, in a sentence that Kiichiro Toyoda would not have disowned:
In the 1980s, a grant from the Sloan Foundation enabled Jim Womack and Dan Jones to conduct the comparative study that formed the basis of their 1990 book,The Machine that Changed the World.
The MIT School of Management is named after him, and its MIT Sloan Management Review(MIT SMR) has nothing to envy in the quality of its articles to its better known rival, the Harvard Business Review (HBR).
As the head of a company that manufactured five brands of cars, trucks, buses, and refrigerators, Sloan was concerned with comparing the performance of business units. However, I don’t recall seeing in his writings the notion of numerical targets assigned to individual managers.
The Sloan-Drucker Relationship
After the war, Alfred P. Sloan invited Peter Drucker to study the workings of GM. Drucker synthesized his observations in Concept of the Corporation but Sloan disagreed with them, and wrote his memoirs, My Years with General Motors as a rebuttal.
Sloan’s style, however, is so subtle and gentlemanly that one can read both books without noticing his intention, especially in view of the introduction written by… Peter Drucker in 1990. Neither book deals with MBO.
Who Invented MBO?
So why blame Sloan for MBO? It was Drucker who first used the term, and his followers who spread the practices not just in manufacturing but throughout the economy, first in the US and then around the world. There is no need to invoke Sloan to deny the Nazi Reinhard Höhn the authorship of the MBO, because chronology suffices. Drucker’s book, The Practice of Management was released in 1954. Former SS Oberführer Reinhard Höhn founded his Harzburger Akademie in 1956, and thus had time to read and assimilate Drucker’s ideas.
The Flaws of MBO
In principle, the objectives are established in collaboration with employees, during periodic performance reviews. In practice, in a command and control culture, the line manager tries to impose an objective:
The Haggling Culture
This haggling eventually results in a 10% target that is in no way based on the reality of the business. The parties negociate as in a garage sale and make a fools’ bargain, as both know the target will not be met. The employee commits to an unrealistic goal so as not to appear timid. The superior knows that in three months he will be able to use the employee’s delay in his objectives as leverage to make him redouble his or her efforts.
This is how superiors have behaved since the beginning of his career. Knowing no other way, they pass it on to their juniors, who in turn pass it on to the next generation.
The Blame Culture
Moreover, objectives often relate to characteristics subject to variations beyond the employee’s control, because their fluctuations are random, or due to changes in the economic context through recessions, natural disasters, or wars.
W. Edwards Deming dramatized this phenomenon in hits famous red pearl experiment. Operators remove beads from an urn using a pallet. White beads are the good products, red ones are the bad ones, and the operators’ performance is judged on the proportion of red beads on their pallets. This is a barely forced caricature of the behavior of many companies.
Finally, the pursuit of their individual objectives by all employees is supposed to contribute to the performance of the company as a whole, which is in no way guaranteed by the MBO.
It is possible that they will achieve all their objectives and the company will go bankrupt. This happens, for example, when the performance of workshops is judged by the machine utilization rate or the number of improvement projects.
MBO is a top-down approach that can be described as a disciplinary tool (Chiapello et Gilbert, 2013).
Du MBO au Hoshin
Since MBO is an approach that has lost credibility by decades of failure, isn’t it better to learn more modern methods that have served leading companies well, like Hoshin Kanri? Yoji Akao(赤尾 洋二) invented this method in the 1950s, and he is also known for Quality Function Deployment (QFD).
Since MBO is an approach that has lost credibility by decades of failure, isn’t it better to learn more modern methods that have served leading companies well, like Hoshin Kanri? Yoji Akao(赤尾 洋二) invented this method in the 1950s, and he is also known for Quality Function Deployment (QFD). Although it is no longer presented this way, Akao saw Hoshin Kanri as a way to engage managers in Total Quality Management (TQM), in parallel with QC Circles for operators.
Adoption in Japan
Hoshin Kanri has been used at Bridgestone since the 1960s and by Toyota since the 1970s. Nissan and Komatsu are also known to be using it.
Kan-Pro at Toyota
in Learning to Lead, Leading to Learn, Isao Yoshino reports that, at the initiative of Eiji Toyoda, Toyota supplemented the Hoshin Kanri with a two-year training program called Kan-Pro, focused on the managerial posture of executives destined to succeed current leaders. This two-year training program was developed and implemented by Masao Nemoto (根本正夫) and Mikio Sugiura (杉浦幹夫).
Although Hoshin Kanri is a procedure carried out annually, the value of its results depends on the spirit of its execution, and in particular on the behavior of managers towards their subordinates.
Key skills in Kan-Pro
According to Yoshino, Kan-Pro aimed to strengthen key skills, some of which seem obvious and others less so. It was intended to teach them to do the following:
In the late 1940s, while his company was retrofitting surplus American engines to bicycles, Soichiro Honda gave it the goal of winning the world’s top motorcycle races. 15 years later, the company did it. Why this goal? Soichiro Honda wanted to instill the “racing spirit” into all of the company’s projects, which, decades later, allowed it to bring new models into production faster than competitors.
Acquiring the Kan-Pro Skills
When you look at such a list, it is easy to convince yourself that you already know and practice all this, but the perception of others is often different.
Yoshino doesn’t elaborate on the art of developing these soft skills, which is very different from teaching technical skills. In the United States, this is done through role-playing exercises that put the learner in a position to react to a variety of realistic situations. These exercises give concrete meaning to abstract principles.
Adoption in the United States
American manufacturing companies that have adopted Hoshin Kanri are a minority, but this minority includes Tesla, HP, Caterpillar, and Danaher. Toyota’s North American branch is also an important case, as two alumni have written books on Hoshin Kanri, Pascal Dennis in 2006 and Mark Reich in 2025.
Alternative MBO updates
Kassar cites other attempts to update the MBO:
OKR involves formulating objectives for teams, each associated with a few progress indicators, quantitative but not necessarily financial. The difference with MBO is the separation between the objective and the progress indicators. But this distinction is already found in versions of MBO where the objectives are organized around goals.
These approaches deserve attention, but not at the expense of Hoshin Kanri.
Vocabulary
Hoshin (方針) is an everyday Japanese word that translates to “policy,” meaning a guideline or directive. The full name of the method is Hoshin Kanri (方針管理), or “policy management.”
Misinterpretation in France
In France, the spread of these ideas was slowed by a more serious misinterpretation made in the 1990s, when professionals misused the word “Hoshin” to refer to 5-day improvement projects. This made all the literature on real Hoshin incomprehensible to French readers.
To be able to talk about it in France, we often use the full Japanese term “Hoshin Kanri”. To describe it more concretely, we also call it “strategy deployment”. As it is first and foremost an exercise in planning, the term “Hoshin Planning” has become common in the United States.
The Hoshins
Unlike the objectives emerging from the MBO, hoshins are not always quantitative. For a police force, for example, increasing the number of offences revealed by the action of the services (IRAS) by 15% is a quantitative objective; improving relations with citizens is not one but can be a Hoshin.
Some hoshins, especially for senior executives, are as sibylline as Zen koans. Pascal Dennis, who in 1997 worked in Human Resources at Toyota in Canada, reports that the head of Toyota for North America and future CEO of Toyota, Fujio Cho, had the hoshin “Beloved Company.”
How can you interpret such a directive? Toyota’s success in the North American market was provoking nationalist reactions, and this directive called for initiatives to counter this effect and give Toyota the image of a responsible company towards the society in which it operates.
In the human resources department where Pascal Dennis worked, this directive resulted in an open house to show the local population how Toyota treats its employees and manages their careers. In the design office, engineers developed the Prius to strengthen the company’s environmental reputation.
At first glance, it seems likely that Fujio Cho didn’t know how his teams would translate his directive into action. It was up to them to invent it, and to discuss it with each other, their superiors, and their subordinates, to arrive at a coherent action plan for the entire company.
The method
Hoshins are neither decreed by hierarchy nor bargained between bosses and subordinates. They emerge from organized deliberations aimed at building consensus. While there are no illusions about the feasibility of consensus, intention matters and is central to the method. Developing hoshins requires more work than the top-down imposition of arbitrary numerical targets.
Catchball
Of all the components of Hoshin Kanri, the one that best dramatizes the difference with MBO is the process called “catchball.” The first throw of the leader’s Hoshins is a “balloon” that he sends to his direct subordinates. Each person translates them into directives for their own activity and shares the result with their superior, peers, and subordinates:
After several iterations involving in-person meetings and deliberations, all the hoshins at all levels converged on a coherent strategy to which everyone was able to contribute. It is therefore, in principle, the subject of a consensus to which everyone commits. This is a considerable undertaking, carried out annually, with quarterly checks and adjustments.
Twenty years ago, the standard format for hoshins was a single-page A3, and the company trained managers to write and read such documents. Technological developments have since challenged this focus on a single paper format.
Other tools
There are many other tools to aid in the development and monitoring of hoshins at all levels that you need to learn to successfully apply Hoshin Kanri.
The tools and methods provide the rules of the game, but the results depend on the sincerity, habits, and experience of the participants. Among the books that explain them, Pascal Dennis’s Getting the Right Things Done, stands out for the depth of experience he brings to the table: 10 years of experience at Toyota in Canada. Even though the title is Drucker’s definition of effectiveness, the book is not about Drucker’s ideas.
Dennis introduces Hoshin Kanri through an in-depth case study of an imaginative manufacturing company facing challenges that practitioners readily recognize. The tools are not technically complicated. It’s their implementation within the context of an organization that makes the difference.
Dennis structures his presentation of Hoshin Kanri around Deming’s PDCA cycle:
Mark Reich, another Toyota alumnus, just published another book about Hoshin Kanri, called Managing on Purpose. It’s new and I have not read it yet. Any comment from readers who have read it is welcome.
The rise of the A3
Writing in 2006, Dennis also highlights the systematic use of A3 sheets for written communications within the framework of Hoshin Kanri.
The dominant medium for professional communication, in 2006 as today, was PowerPoint. By default, if you ask an industry executive to explain their strategy for the coming year, the result is about twenty slides. Originally, these slides were oral presentation aids in sales situations, where the objective is commercial persuasion rather than technical or scientific communication.
But for decades, professionals have used these slides for all sorts of reports, proposals, and even teaching aids in training, replacing full sentences and paragraphs with bulleted lists. As early as 2003, Edward Tufte denounced the dumbing down of these communications through the use of PowerPoint.
Toyota chose the A3 format, 420×297 mm, because it was the largest its office printers could handle. Requiring everyone to describe their plans graphically on a single A3 page forced synthesis and saved readers time. Instead of a narrative covering the various elements in succession, A3 shows the whole thing at a glance.
The paper sizes are too large to be displayed here at full size. However, you can see the relative sizes of A4, A3, and A2 and the differences between what they offer in terms of communication space:
Toyota chose A3 as the Goldilocks size, large enough to hold complete stories, yet small enough for their office printers. Additionally, providing A3 forms and templates encourages authors to cover any topic they want and allows readers to find the same items covered in the same places in documents from different authors. Creating these documents and commenting on those submitted to you is a skill that requires training.
The Fall of the A3s
In the 20 years since Dennis published his book, the technology for collaborating on electronic documents has advanced. People increasingly avoid printing documents, making paper less useful. By sharing an electronic document, multiple colleagues can collect comments on the same copy and manage multiple revisions more reliably than on paper.
Communicating about the A3 format has never been easy, for both technical and human reasons. First, A0, A1, etc., are an international standard that Americans don’t use. This creates problems for both publications and communications.
The format of John Shook’s Book on management by A3s is 22×24 cm, and therefore it cannot contain an A3, even in a double-page spread. Similarly, Dennis’s book is 17×24.5 cm. For books that promote this format for corporate communications, it is embarrassing that they cannot contain one. It is a bit like a black and white film dealing with colors by Matisse. The American format closest to A3 is the Tabloid, at 11×17 inches, slightly shorter and wider.
In addition to these confusions over standards, Americans and Europeans often fail to see the value of the A3 format. In production workshops, we often see A4 documents that their authors present as their “A3s.” And the replacement of paper media with screens of varying sizes has added to the confusion.
In 2025, the discipline of communicating strategy on a single page or screen remains relevant, but even Toyota has abandoned the reference to a paper format. This is no longer essential for people who communicate via screens.
Sustainability
In management, you can take nothing for granted. Hoshin Kanri can serve for years and eventually degenerate into a formality to which everyone submits halfheartedly. The arrival of new employees imbued with the MBO ideology can reduce Hoshin Kanri to a barely modified version of MBO.
Pascal Dennis’s book dates from 2006. Nineteen years after its publication, it remains relevant, though it includes a few technical details that have aged. Dennis, for example, emphasizes the use of A3 sheets for communications.
Conclusions
When a method does not produce the desired effects, its promoters are quick to explain that its users applied it incorrectly. After 70 years, however, we expect to be able to cite examples of success, even if they are in the minority. When you Google MBO, it comes up with Intel, Google, and HP. This is paradoxical, since the Intel invented OKR and Google them, while HP uses Hoshin Kanri.
Bibliography
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By Michel Baudin • Uncategorized 0