Balanced Scorecard and Hoshin Kanri: Why and how they might be used together

Abstract

Aligning day-to-day operations with the company’s long-term strategy is a challenging managerial task. This paper explores how Hoshin Kanri (HK), from Total Quality Management, can complement the Balanced Scorecard (BSC), from strategic management, to increase the company’s strategic alignment. Previous studies have discussed this combination of management tools theoretically, but they are sparse on empirical evidence. The contribution of this paper is to demonstrate empirically how HK can complement the BSC, so that lower levels of the organization can link their short-term goals and improvement initiatives to the organization’s strategy. Based on the findings, I recommend managers to learn and adopt the HK as a complement to the BSC. I specify the roles of the two tools and discuss what is required to make the combination work. In the end, I also suggest future research opportunities.