547: Why product leaders need to understand the hoshin kanri framework – with Mark Reich

Vertical and horizontal alignment in product management Watch on YouTube 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 AlignmentMark 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-DownSuccessful strategic execution requires both leadership direction and frontline insight. Innovation often emerges from understanding real customer problems at the ground level. * Vertical & Horizontal AlignmentVertical 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 MechanismThe 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 LeadersMark 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,