A management process that aligns an organization's functions and activities both horizontally and vertically with its strategic objectives. As part of this process, a specific plan - usually an annual plan - is developed with precise objectives, actions, timelines, responsibilities and indicators.
Sample A3 shows the strategy of a director of a finance department to return his company to profitability. The Performance box in the upper left corner shows that the company has not met its revenue and EBIT targets for the past year. It also shows inventory levels, because the director considers them the biggest source of waste in the company, and they are a heavy drain on cash flow.
The word "red" in the Reflection box indicates that key improvement efforts have not borne fruit over the past year. The Analysis underneath describes the key actions to be taken to meet this year's strategic profitability target. The Action Plan on the right contains the who, what, when, where and how of the strategy. The Follow-up box contains any unresolved concerns and information on how the director will check on progress.
Strategy deployment, also known by the Japanese term hoshin kanri, can begin as a top-down process the moment an organization initiates a Lean conversion. Once key targets are formulated, however, it should become both a top-down and bottom-up process in which senior managers and project teams dialogue with each other about the resources and time both available and needed to meet the targets. This dialogue is often called catchball (or nemawashi) because ideas are bounced back and forth just like a ball.
The goal is to match available resources with desirable projects so that only projects that are desirable, important and achievable are approved. (This is intended to avoid what happens in many organizations: one launches a lot of improvement initiatives that are popular in certain parts of the organization but are not completed because there is no agreement among functions and no resources available for them.)
As an organization moves forward with its Lean transformation and gains experience with policy deployment, the process should become much more bottom-top-bottom, with each part of the organization submitting proposals to senior management to improve performance. A mature Lean organization may call this process "strategy alignment" or "policy management.