Vertical and horizontal alignment in product management

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TLDR

In this episode of Product Mastery Now, I’m interviewing Mark Reich, senior coach at Lean Enterprise Institute and former Toyota executive, to demystify hoshin kanri—a Japanese strategic framework that transformed organizations like Toyota and powered major innovations such as the Lexus launch. Mark outlines how hoshin kanri enables both top-down and bottom-up alignment, creating a culture where strategy and innovation are owned at every level of the organization.

Introduction

Product managers know they need to align their work with their organization’s strategy. Often, it’s not clear how to actually accomplish this. We need a strategic framework that can transform how your organization innovates to support strategic objectives. Hoshin kanri is such a framework and has worked for other organizations, including helping Toyota launch Lexus, one of the most successful automotive innovations in history. By the end of this conversation, you’ll understand specific frameworks and tools, like catchball, for connecting your work to the organization’s strategy.

Our guest is Mark Reich, Senior Coach at the Lean Enterprise Institute and author of the new book Managing on Purpose. Mark spent 23 years at Toyota, including six years in Japan working directly with Chief Engineers during the Lexus launch. He then managed Toyota’s North American strategic planning process during a period when the company nearly doubled in size. For over a decade, he’s coached executives at companies like GE Appliances, Turner Construction, and Nucleus Software on implementing hoshin kanri for breakthrough results. If anyone can show you how to turn strategic planning into an innovation engine, it’s Mark Reich.

Summary of Concepts Discussed for Product Managers

• What is Hoshin Kanri?
  Hoshin kanri is a management methodology that defines organizational strategy and engages people at all levels to execute on core objectives. It facilitates both vertical (top-down and bottom-up) and horizontal (cross-functional) alignment. Hoshin refers to the direction of an organization and can also refer to a document of strategic objectives and actions. Kanri refers to the management necessary to execute those actions and achieve those objectives.
• The Power of Alignment
  Mark shares how Toyota’s breakthrough with the Lexus brand was achieved by aligning the whole organization—product development, marketing, sales, and manufacturing—around a clear, bold objective using hoshin kanri.
• It’s Not Just Top-Down
  Successful strategic execution requires both leadership direction and frontline insight. Innovation often emerges from understanding real customer problems at the ground level.
• Vertical & Horizontal Alignment
  Vertical alignment connects executive strategy with actions at every management and frontline level. Horizontal alignment ensures departments and functions work together toward shared objectives, rather than working at cross-purposes.
• Catchball: The Engagement Mechanism
  The Catchball process is a key component of hoshin kanri. It facilitates structured dialogue up and down the organization (vertical) and across teams (horizontal), fostering ownership, learning, and consensus on strategic objectives and how to execute them.
• Practical First Steps for Product Leaders
  Mark explains how product leaders can start using hoshin kanri by focusing on a handful of clear objectives, breaking them down into actionable departmental and individual goals, and engaging the necessary cross-functional support.

Useful Links

• Connect with Mark on LinkedIn
• Check out Managing on Purpose
• Learn more about Lean Enterprise Institute

Innovation Quote

“Innovation is a bottom-up phenomenon.” – Matt Ridley

Application Questions

1. Where does your organization currently struggle most with alignment—vertically between strategy and frontline execution, or horizontally across teams and functions?
2. How could adopting a framework like hoshin kanri help your team connect day-to-day tasks to high-level strategic objectives?
3. What processes (if any) does your organization have in place to capture the raw voice of the customer from those on the frontlines, and how could this be improved?
4. In the context of your current or most recent product launch, what would catchball look like as a structured approach to achieving cross-functional buy-in and action?
5. What three to five strategic priorities would make the biggest impact in your organization if everyone was genuinely aligned and accountable for them?

Bio

Mark Reich spent 23 years working for Toyota, starting in 1988 with six years in Japan in the Overseas Planning Division, where he was responsible for Product Planning and collaborated with Chief Engineers to define vehicle specifications for overseas markets. This pivotal time was when Toyota introduced the Lexus to the world. 

In 1994, Mark returned to the US and transitioned to the Toyota Supplier Support Center (TSSC), a non-profit organization Toyota in North America established dedicated to the practical application of the Toyota Production System (TPS). While their, he worked to extend TPS beyond manufacturing into healthcare and non-profits, which remains a key focus of TSSC’s mission. 

Mark joined Toyota’s Corporate Strategy group in North America in 2001, serving as Assistant General Manager. He managed Toyota’s North American hoshin kanri process during a period of significant growth that saw sales and production nearly double over the next decade. Hoshin kanri was essential for aligning the organization during this transformative time. 

In 2011, Mark transitioned to the Lean Enterprise Institute (LEI) and has held several positions, including Chief Operating Officer and, since 2018, Senior Coach and Chief Engineer of Strategy. He has led lean transformations and coached executives in hoshin kanri across various industries, with clients including GE Appliances, Legal Sea Foods, Michigan Medicine, Nucleus Software, and others. 

Mark recently authored the book Managing on Purpose. This workbook is vital for leaders looking to implement hoshin kanri effectively within their organizations. It provides practical insights into developing corporate and departmental hoshins while fostering leadership development and innovation. The book includes a fictional case study, allowing readers to apply hoshin kanri concepts in a relatable context. 

Mark earned his bachelor’s degree from Ohio Wesleyan University and specialized in Japanese studies at Nanzan University. He resides outside of Cincinnati with his wife and daughters. He is fluent in written and spoken Japanese. 

Thanks!

Thank you for taking the journey to product mastery and learning with me from the successes and failures of product innovators, managers, and developers. If you enjoyed the discussion, help out a fellow product manager by sharing it using the social media buttons you see below.

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