Purpose: The paper combines the uses of the balanced scorecard and hoshin kanri as integrative dynamic capabilities for the entire strategic management process. A model is posited for the combination of these long-term and short-term organizational activities as a framework for a senior level to manage a firm's strategic fit as an integrated organization-wide system that links top management goals to daily management. Methodology/Approach:The resource-based view of strategy is explored for its relevance to how a combined balanced scorecard and hoshin kanri approach serves as a high-order dynamic capability. Examples are given from Canon, Toyota and Nissan, of how core capabilities are managed to show how strategy is executed cross-functionally across a firm's functional hierarchy. Findings:The strategic management of the organization should consider the long-term strategy as well as the short-term capability. Important to this are: core capabilities and core competences, cross-functional management, and top executive audits, which when managed properly, explicate a new view of strategic fit, as a form of nested hierarchies of dynamic capabilities.Originality/Value: The paper is the first exposition of how balanced scorecard and hoshin kanri practices may usefully complement each other in strategic management. It is a useful framework for dynamically managing sustained competitive advantage.

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This paper presents the findings from an ESRC two-year research project about Hoshin Kanri (policy management). Hoshin Kanri is a form of corporate-wide management that combines strategic management and operational management by linking the achievement of top management goals with daily management at an operation level. The research explored practice in real time in three Japanese manufacturing UK-based subsidiaries. This paper consists of: an introductory review of the Hoshin Kanri and Japanization literature; a description of the research and a presentation of the three case studies and the main specific issues; and a discussion of the model and the parts played by lean working and TQM, catchball and nemawashi, strategic management, and the uniqueness of Hoshin Kanri, especially in relation to conventional planning, MBO (management by objectives), and the balanced scorecard. Hoshin Kanri is found to be an organizing framework for policy-based objectives. These are translated into QCDE (quality, cost, delivery, education) targets which are used in daily management to drive progress. Hoshin Kanri employs a participative approach to developing and deploying objectives, and is driven by a process of review. Hoshin Kanri must be managed as a process. Some of the main issues include changes in organization and personnel, problems with administering periodic review, and cross-functional working in departmental forms of organization. This paper is about a form of policy management used by western management in Japanese subsidiaries called Hoshin Kanri (policy management). Little is known about this experience, and what it suggests for our understanding of quality management, Japanization, and strategic management. This paper reports findings from a major research project, which has explored practice in three Japanese subsidiaries based in the United Kingdom. It offers insights into how and what Hoshin Kanri actually is, how it is managed and some of the related main issues. It also clarifies its significance to understanding organization-wide management.

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This article presents findings from an ESRC sponsored research project about the use of hoshin kanri (policy management) in the UK. The research used tracer studies to follow in real time the development and management of annual policies in three Japanese subsidiaries based in the UK. In addition, case histories were also compiled for companies belonging to the project’s practitioner network. The project explored hoshin kanri as a PDCA‐led strategic management process. There are important issues associated with each part of this PDCA cycle with which practitioners wrestle, but in general there remain important company‐wide benefits.