What Are the 7 Steps of Hoshin Kanri?
The seven steps of hoshin kanri, as commonly taught, run from vision through breakthrough objectives, annual objectives, catchball deployment, execution, and monthly and annual reviews. This article explains each step, where the seven-step model comes from, and how it differs from the practice at Toyota.
The seven steps of hoshin kanri, as commonly taught, are: establish the vision, develop breakthrough objectives, develop annual objectives, deploy the objectives through catchball, implement, review monthly, and review annually. The seven-step count is a Western teaching convention rather than a Toyota standard, but the model is a workable scaffold, and this article explains each step and then how the model differs from the practice at Toyota.
- The seven-step model is the most widespread way hoshin kanri is taught outside Japan
- Published versions vary: four-step and five-phase models circulate alongside the seven
- Toyota’s own practice is organized differently, compared in one section below
What are the seven steps of hoshin kanri?
| Step | Name | What it involves |
|---|---|---|
| 1 | Establish the vision | Define the organization’s long-term direction and purpose |
| 2 | Develop breakthrough objectives | Choose 3–5 significant changes to achieve over 3–5 years |
| 3 | Develop annual objectives | Define what portion of each breakthrough this year must deliver |
| 4 | Deploy annual objectives | Cascade objectives through the organization, negotiating via catchball |
| 5 | Implement | Execute the plans with owners, timelines, and visible tracking |
| 6 | Monthly review | Track progress, surface deviations, adjust |
| 7 | Annual review | Reflect on the year’s results and feed the next cycle |
What does each step involve?
Step 1: Establish the vision. Define where the organization intends to be over the long run, and state it concretely enough that later choices can be tested against it. In this model the vision is the standing reference point: every breakthrough objective in step 2 should trace to it.
Step 2: Develop breakthrough objectives. Choose a small number of significant changes, usually three to five, to achieve over three to five years. Breakthroughs are the changes that require sustained, cross-functional effort: entering a market, transforming quality performance, building a capability the organization does not have. Routine improvements do not belong on this list, and neither does everything the organization is already doing. The discipline of the step is saying no.
Step 3: Develop annual objectives. Translate each breakthrough into what must be accomplished this year, with measurable targets. A three-year breakthrough that has no defined first-year portion is a wish. The annual objectives are the bridge between the multi-year ambition and this year’s budgets, staffing, and projects.
Step 4: Deploy the annual objectives. Cascade the objectives down the organization level by level, negotiating rather than assigning. This is where catchball enters the model: each level responds to the objectives it receives with proposed targets, means, and resource requirements, and the exchange continues until both sides genuinely commit. Deployment done as one-way assignment is the step’s standard failure, and the model itself warns against it.
Step 5: Implement. Execute the plans. In practice this step carries the ownership mechanics: named owners for each objective, defined countermeasures, timelines, and visible progress tracking. Bowling charts (monthly actual-versus-target tables) are the common tracking artifact in this model, and some organizations also maintain an X-matrix as the one-page summary of objectives, priorities, metrics, and owners.
Step 6: Review monthly. Check progress against the targets, examine deviations, and adjust countermeasures while there is still time in the year to act. The monthly rhythm exists to catch drift early; a plan reviewed only at year-end can fail for eleven months first.
Step 7: Review annually. At year-end, reflect on results: which objectives were achieved, which were not and why, and what the gaps say about the organization’s plans and its planning. The output of step 7 is the input to next year’s step 3, which is what makes the model a cycle rather than a one-time exercise.
Taken together, the seven steps form one large PDCA loop: steps one through four plan, step five does, steps six and seven check and act. That shape is the model’s real teaching content, and it is faithful to the system it summarizes.
Where does the seven-step model come from?
The seven-step model is a Western teaching construct, developed to make hoshin kanri trainable outside Japan. It does not trace to a Japanese primary source, and the published field has never settled on a count: four-step and five-phase versions circulate alongside the seven, each compressing the same underlying system into its own sequence. None of the counts is wrong as pedagogy. None of them is Toyota’s.
How does the seven-step model differ from Toyota’s practice?
Toyota’s practice is organized differently from the taught model. The comparison below draws on the account of Mikio Sugiura, the responsible manager for hoshin kanri in Toyota’s Corporate Planning Department in the late 1970s.
| Dimension | Seven-step model | Toyota practice |
|---|---|---|
| Structure | Seven sequential steps, taught as a cycle | No step count; a written hoshin in three layers: Basic, Long-term, Annual (from 1963; six functional categories by 1967) |
| Time horizons | Multi-year breakthroughs feed an annual loop | Three layers operate at once; the Basic Hoshin barely changed over fifty years |
| Target setting | Typically grounded in current-state analysis | Ambitious targets deliberately set before detailed current-state analysis; the cycle opens with hansei on the prior year |
| Deployment | Teaches catchball at the deployment step; how deeply organizations practice it varies | Catchball as a standing discipline (the word is used inside Toyota); documented cascade stops at section manager, then carries on through daily management in changed form |
| Horizontal alignment | Not a named step in the model | Standing Function Meetings (Quality, Cost, Production, Technology, Sales/HR) coordinated hoshin across departments |
| Review | Monthly and annual reviews | Regular reviews as well, plus a documented additional layer: theme-driven operational audits reporting to the president (4–6 themes per year, double-sided A3, ten minutes plus questions, feedback in the president’s own words) |
| Management development | Not named as a step, though practitioners develop through the work | Made explicit: improving management capability was itself a Company Hoshin item, and after the 1978 degradation Toyota re-educated 760 managers (Kan-Pro) |
| Below the management layers | Not specified by the model; many organizations add shop-floor boards and metrics of their own design | Prescriptive: FMDS boards with bronze, silver, and gold certification levels, reached through audits and demonstrated results, paired with 3 Pillar activity |
Four of these differences deserve a sentence more.
Below the management layers, Toyota’s practice becomes more prescriptive, not less. Shop-floor boards are common in lean implementations, and organizations running the seven steps often have them. What differs at Toyota is the standard behind the board. The Floor Management Development System (FMDS) connects company hoshin to daily shop floor activity through layered visual boards with defined certification levels, bronze, silver, and gold, reached through audits and demonstrated results, not by putting up a board. 3 Pillar activity pairs with it for daily maintenance, improvement, and people development. Both have full guides on this site.
The audit layer sat on top of regular reviews, not in place of them. Toyota reviews hoshin progress through the year like any disciplined implementation. What Sugiura documents in addition, for the period from the 1960s through the 1980s, is an audit mechanism reporting to the president: four to six themes per year, chosen by the president, examined in depth on a double-sided A3 in ten minutes plus questions, with written feedback in the president’s own words. The audits carried organizational weight: a 1982 audit observation about neglected distribution led within months to a new Head Department of Distribution Management. Whether the practice continues at Toyota in that exact presidential form today is not something the published record establishes. The mechanism is described in Operational Audits: The Missing Feedback Loop in Hoshin Kanri.
The layers are standing structure, not planning inputs. In the taught model, the vision and breakthroughs exist to feed the annual cycle. At Toyota, Basic Hoshin and Long-term Hoshin are operating layers in their own right, with their own content and continuity. Global 10, declared by Eiji Toyoda in 1978 at 7% global production share and reached in 1990 at 10.6%, lived in the long-term layer across more than a decade of annual cycles.
The target-setting sequence runs the other way. Sugiura flags this as one of the most important distinctions in Toyota practice: hoshin sets the ambitious target first and works the gap afterward, because targets set after current-state analysis anchor to today’s performance. The broader thinking pattern is CA-PDCA, a cycle revolved one and a half times, with check and act on the prior year preceding the new plan.
Frequently asked questions
What are the 7 steps of hoshin kanri? As commonly taught: 1) establish the organizational vision, 2) develop breakthrough objectives (3–5 years), 3) develop this year’s annual objectives, 4) deploy the objectives down the organization through catchball, 5) implement, 6) review progress monthly, and 7) review results annually and feed the learning into the next cycle.
How many steps does hoshin kanri have? There is no canonical number. The seven-step version is the most widespread teaching model, and four-step and five-phase versions circulate alongside it. The counts differ because each training organization compressed the same underlying system into its own sequence. Toyota’s own practice is not defined by a step count.
Does Toyota use the 7 steps of hoshin kanri? No. The seven-step model is a Western teaching format. Toyota’s written hoshin has been structured as nested layers since 1963 (Basic, Long-term, Annual; six categories by 1967), and its annual cycle runs through the president’s New Year’s speech, catchball, Function Meetings, and disciplined review, which in the documented era included operational audits reporting to the president. The substance overlaps; the structure differs.
Does hoshin kanri start with analyzing the current state? Not at the target-setting step in Toyota practice. Hoshin deliberately sets ambitious targets before grasping the current state in detail, because targets set after current-state analysis tend to be timid and anchored to today’s performance. The current-state work then happens in working the gap. The overall cycle does open with reflection: each annual Company Hoshin begins with hansei on the previous year.
Is the 7-step model wrong? No. It is a teaching scaffold that compresses the system into a learnable sequence, and organizations use it productively. The main differences from Toyota’s practice are the documented audit layer that sat on top of regular reviews, the three standing document layers, and the horizontal coordination through Function Meetings that a step list does not show.
Related reading
- Hoshin Kanri: How Direction Becomes Daily Work — the full guide to Toyota’s system
- What Is Catchball in Hoshin Kanri? — the deployment step in depth
- Operational Audits: The Missing Feedback Loop in Hoshin Kanri — Toyota’s review mechanism
- Why Does Hoshin Kanri Not Work? — the failure modes, whichever model you run
- PDCA — the underlying cycle
Art Smalley is president of Art of Lean, Inc. This article draws on Mikio Sugiura’s firsthand Japanese-language account of Toyota’s hoshin kanri system (Toyota Global 10) and firsthand Toyota experience. AI was used in the editing of this article.