Mark Reich, Former Toyota Leader on Hoshin Kanri and ‘Managing on Purpose’

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My guest for Episode #528 of the Lean Blog Interviews Podcast is Mark Reich, a Senior Lean Coach with the Lean Enterprise Institute and former Toyota leader with over two decades of experience.

Mark spent six years working in Japan, including helping launch the Lexus brand and later leading Hoshin Kanri strategy processes during Toyota's rapid growth in North America. He also played a pivotal role at the Toyota Supplier Support Center (TSSC), helping bring the Toyota Production System to manufacturing, healthcare, and nonprofit organizations. In our conversation, we dive into his career journey, his approach to Lean leadership, and the practical lessons behind his new book, Managing on Purpose: Using Hoshin Kanri to Develop Strategy, Align Teams, Grow Leaders, and Innovate Your Enterprise.

You can get a 25% discount on the book via LEI using the code LBIPODCAST25.

Mark shares compelling stories from his early days at Toyota, including working on the front lines of assembly, learning by doing, and his first experience pulling the andon cord. These moments shaped his appreciation for Toyota's deep respect for frontline work and its commitment to developing people. He reflects on how Toyota embeds learning and support into problem solving, where pulling the cord is seen as a learning opportunity, not a failure. That mindset became foundational for his later work, especially when managing enterprise-wide strategy through Hoshin Kanri.

We also explore what Hoshin Kanri really is–and what it isn't. Mark challenges the overemphasis on tools like the X-matrix and instead advocates for focusing on purpose, alignment, and leadership behavior. He explains how strategy deployment at Toyota was never a one-way cascade, but a dialogue grounded in humility, curiosity, and shared responsibility. Whether you're new to Hoshin or struggling to sustain it, Mark offers insights that can help any leader make strategy a living, breathing part of organizational culture.

Questions, Notes, and Highlights:

• How did you end up working for Toyota, and what led you to Japan?
• What was your educational background, and did you already speak Japanese before moving there?
• What was your initial role at Toyota, and how did it relate to their global expansion?
• Did you meet or work with John Shook during your time in Japan?
• How did Toyota develop you into an industrial engineer despite your background in English writing?
• What was it like working in a Toyota plant, and what did you learn from that experience?
• Did you experience any early mistakes or learning moments while working the line?
• How did your role evolve after leaving Japan, and how did you get involved with Hoshin Kanri in North America?
• What challenges was Toyota North America facing that made Hoshin Kanri so essential?
• How did you facilitate alignment and catchball between Toyota's plants and leadership teams?
• How do you define Hoshin, strategy, and Hoshin Kanri?
• Why do you prefer not to use the term “strategy deployment,” and what's the issue with top-down-only thinking?
• How do you coach executives to embrace catchball and bottom-up engagement?
• How do you balance executive direction with frontline input in strategy development?
• What role does psychological safety play in making Hoshin Kanri work?
• How does A3 problem solving fit into the Hoshin process, and how does it help build capability?
• Why is it important for executives to practice PDCA and engage in direct problem solving?
• What's the difference between long-cycle and short-cycle PDCA, and how should leaders manage both?
• Why does it take most organizations a couple of years to fully embed Hoshin Kanri?
• What lessons do companies learn when they start with too many strategic initiatives?
• Why did you choose not to include the X-matrix in your book, and what are your thoughts on its use?
• What business problems does Hoshin Kanri best help organizations solve?
• How can Hoshin Kanri help clarify the distinction between daily management and long-term strategic work

This podcast is part of the #LeanCommunicators network. 

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Full Video of the Episode:

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Key Quotes

“Toyota doesn't aim to build a perfect system–they build a system knowing problems will always happen.”

“Hoshin Kanri is not a top-down command–it's a management system for alignment, execution, and capability development.”

“In Toyota, pulling the andon cord isn't a failure–it's an expectation and an opportunity to learn.”

“Leaders often want to engage their teams more–they've just never had a mechanism to do it. Hoshin Kanri provides that structure.”

“If you want people to own problems, don't just cascade goals–break them down together.”

“The X-matrix is just a tool. Hoshin Kanri is about purpose, people, and process–not just filling out a form.”

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Automated Transcript (Not Guaranteed to be Defect Free)

Mark Graban:
Hi. Welcome to the podcast. I'm your host, Mark Graban. Our guest today is Mark Reich. He is a senior Lean Coach with the Lean Enterprise Institute.

Mark Graban:
Mark spent 23 years with Toyota, including six years in Japan helping launch Lexus and later managing the Hoshin Kanri process in North America during a period of rapid growth. Then at the Toyota Supplier Support Center–TSSC–he helped apply TPS in manufacturing, healthcare, and nonprofits. Since 2011, he's been a senior leader at the Lean Enterprise Institute, coaching executives and guiding Lean transformations across multiple industries.

Mark Graban:
We're going to talk about a lot of things today, but one is Mark's new book published by LEI. It's titled Managing on Purpose: Using Hoshin Kanri to Develop Strategy, Align Teams, Grow Leaders, and Innovate Your Enterprise. So, Mark, welcome to the podcast. How are you?

Mark Reich:
I'm great, Mark. Thank you for having me. Good to be on a podcast with someone of the same name.

Mark Graban:
It's the Mark and Mark show. We almost crossed paths at LEI–I was kind of on my way out of a former role there as you were joining. But I'm glad you're part of the LEI team and that we have this opportunity to dig into what you've learned at Toyota and how you're helping share that with others, as I know Toyota encourages.

Mark Reich:
Right, absolutely. One of the key organizations I worked with while I was at Toyota was TSSC. TSSC's mission now is to work with a broader set of organizations across nonprofits, manufacturing, and other sectors.

Mark Graban:
Yeah. The people who left Toyota–retirees or those pursuing new challenges–have emphasized how Toyota framed it almost as an obligation to go out and share what you've learned, which I appreciate. It's not about keeping it secret and close to the vest.

Mark Reich:
Exactly. I spent my first six years working at Toyota in Japan. When I had the opportunity to move to TSSC in the U.S., I hadn't heard of it before. When I learned about it, it was a little shocking–here's an organization that's decided to share its most precious know-how with anyone who's interested. And not just through classes, but by helping companies practically make change. It's pretty interesting.

Mark Graban:
It is. One of my standard questions–since you talked about starting at Toyota–I'd love to hear more of that origin story. How did you end up working at Toyota, and what led you to Japan?

Mark Reich:
Sure. I think people stumble upon opportunities and create them, and this was a combination of the two. It was the 1980s, the U.S. economy wasn't doing so well, and the Japanese economy was booming. I thought it would be interesting to go there and learn something. I went to university in Japan–in Nagoya–at a school called Nanzan, to do some postgraduate studies.

Mark Reich:
When I finished, I asked my professor if any companies came to the university for recruiting. He said they didn't have a formal program but sometimes got calls. So he asked his secretary, and she said, “Toyota called this morning.” That's how I made the opportunity. I didn't realize at the time just how respected Toyota was. But I went through a series of interviews and ended up getting in.

Mark Graban:
Did you already know Japanese when you went there?

Mark Reich:
That was part of the challenge. My undergraduate degree was in English writing–not exactly engineering. But I'd always wanted to write a book, so publishing this one checks off a 40-year bucket list item.

Mark Reich:
Toyota built me into an industrial engineer. When I went to Japan, I'd taken an introductory course in Japanese at Berkeley, but I pretty much just hit the ground running once I got there.

Mark Graban:
That's different from the more common path of teaching English. Did you do that at all?

Mark Reich:
I did teach English part-time while going to school. It wasn't enough to live on, but it helped. I got professionally proficient in Japanese, and that helped me get hired at Toyota.

Mark Graban:
What was the role you were hired into?

Mark Reich:
I joined the Overseas Planning Division. We acted as intermediaries, defining product specifications for future models, as well as pricing and supply. It was a critical group working between chief engineers and overseas markets. For example, you might have a chief engineer designing a new Corolla that sells in 75 markets. You can't make 75 different versions, so we had to balance global specs with local requirements.Mark Graban:
Many listeners probably know John Shook's story–being the first American hired into Toyota in Japan. He co-wrote the foreword for your book. Did you cross paths with John while you were there?

Mark Reich:
Yes, I worked with John. By the time I got there, he had moved on from Toyota City and was working in public affairs in Tokyo. But all the foreign national employees–there were only about 50 of us in the company at the time–knew each other. So I did interact with him a bit.

Mark Graban:
Toyota is known as a people development company. You mentioned they developed you into an industrial engineer. Did that include time working in a plant?

Mark Reich:
Yes, and not just for me. Everyone joining Toyota in Japan started by working on the line. Before I even went to my desk, I spent three months building cars.

Mark Graban:
That's similar to what I've heard John Shook and others describe. Where did you work?

Mark Reich:
I worked at Tsutsumi plant, the mother plant for the Georgetown plant in Kentucky. It was the middle of the bubble era in Japan–sales were crazy, and the plant was very busy. It was hard work, but a powerful learning experience. Toyota wants all employees, regardless of their future function, to understand where customer value is created and how hard that work is.

Mark Graban:
To respect the work.

Mark Reich:
Exactly.

Mark Graban:
Sal Yoshino shared something similar–starting in manufacturing and experiencing a mistake early in his career. He thought he'd be fired but was met with understanding instead. That left a huge impression on him. Did you have a moment like that?

Mark Reich:
Well, I vividly remember my first andon pull. I was doing front bumper assembly. I'm 6'2″, which is taller than the allowed height for the main line at the time, so I worked just off the line. I was next to a supplier team member doing two-thirds of the work, and I struggled. I made a mistake–we had to pull the andon.

Mark Reich:
The team leader came over and did what I can only call a miracle–he completed the task within the 60-second takt time flawlessly. It was amazing. And even though we had clearly messed up, there was no scolding–just coaching. That's what stuck with me. That approach is intentional. It shapes how you view mistakes and learning.

Mark Graban:
Yeah, the consistency of those stories tells you it's cultural–it's not coincidence. And unfortunately, some companies try to copy the mechanics of things like the andon cord without copying the leadership behaviors behind them.

Mark Reich:
Exactly. Just last week I visited the Georgetown plant with LEI and TSSC. The culture is still alive and well. There's red everywhere–which means they're openly discussing problems. It's not a sign of failure, it's a sign of learning. The plant itself has changed significantly, too, not just in layout but in how they manage flow and line structure. It was exciting to see that evolution.

Mark Graban:
When I visited recently, I noticed the constant sound of andon chimes. Some might wonder, “How does a company that's so good still have so many problems?” How do you respond to that?

Mark Reich:
That reflects a fundamental misunderstanding of TPS. The system isn't designed to eliminate all problems. It's designed to recognize that problems are inevitable. You're not building a perfect system–you're building a system to identify and address problems continuously.

Mark Graban:
Right. You solve one problem, and new ones emerge–because of product changes, new technologies, etc.

Mark Reich:
Exactly. And a good example is inventory. People assume TPS means zero inventory, but that's not true. It means managed inventory–enough to deal with the problems you know will come.

Mark Graban:
So after Japan, what roles did you take on that eventually led to managing Hoshin Kanri in North America?

Mark Reich:
I transitioned back to the U.S. and became a manager at TSSC, helping suppliers and other organizations implement TPS. After nearly seven years there, Mr. Oba, the head of TSSC, talked with me about next steps in my career. He suggested a role in the corporate strategy group, leading Hoshin Kanri.

Mark Reich:
I had participated in Hoshin before, but this was a chance to manage it for the entire North American enterprise. It was a big challenge, but also a big opportunity. At the time, Toyota was growing rapidly–we had gone from a few plants to a dozen. The plants were siloed and still reporting directly to Japan. There wasn't strong alignment across North America.

Mark Reich:
Hoshin Kanri helped change that. It's about building alignment, and we needed that badly. Over the next five or six years, I worked with leaders to define a shared vision, coordinate across plants, and focus on key priorities–like supplier development. That work made a big difference.

Mark Reich:
That taught me a lot about the automotive industry, even though I didn't have a background in cars. Our job was to define specs–it was a great introduction.

Mark Graban:
And in that role, were you helping facilitate catchball both vertically and horizontally? Were you working with senior leaders to help articulate strategy and ensure alignment?

Mark Reich:
Exactly. We realized early on that our plant leaders–who managed massive operations of 5,000 to 7,000 people–weren't aligned in their thinking. So one of the first things we did was bring together top leaders from headquarters and the plants to define a shared vision for 2010. This was around 2002 or 2003.

Mark Reich:
That effort helped us focus on long-term initiatives, like improving supplier relationships. At the time, many of our major suppliers were still focused on the Big Three. Building strong, collaborative relationships with them was critical, but our plants weren't working together on those challenges. Hoshin Kanri helped change that.

Mark Graban:
Let's take a step back. How do you define terms like “Hoshin,” “strategy,” and “Hoshin Kanri”?

Mark Reich:
Sure. I go into this early in the book. “Hoshin” refers to fundamental direction or policy. It comes from the Japanese words for “compass” or “arrow,” so it's about pointing the organization in the right direction.

Mark Reich:
“Strategy” is the specific set of decisions and actions that position an organization to achieve a goal and competitive advantage. It considers both external factors–like the market–and internal factors.

Mark Reich:
“Hoshin Kanri” is a management system for strategy. It defines long-term and mid-term direction, sets objectives and targets, and annually builds alignment–vertically and horizontally. It manages execution and develops capability across the organization.

Mark Graban:
Sometimes people use “Hoshin” as shorthand for “Hoshin Kanri,” similar to how people say “Kaizen” when they mean “Kaizen event.” Something gets lost in that simplification.

Mark Reich:
Exactly. “Hoshin” by itself is more about the direction, while “Kanri” means management. “Hoshin Kanri” is the full system for managing that direction. I'm not dogmatic about Japanese terminology, but I do caution against using the term “strategy deployment” because it can sound militaristic–like a general issuing orders. Hoshin Kanri is not meant to be top-down only.

Mark Graban:
Right. Terms like “deployment” or “cascading” imply a one-way process. How do you coach leaders to adopt a mindset that welcomes input and catchball?

Mark Reich:
Great question. Honestly, it's often easier than people expect. Leaders generally want more engagement but lack the mechanism. Strategy tends to stay at the top, and there's no structure for involving others.

Mark Reich:
Hoshin Kanri introduces a structured approach. You start with high-level objectives, then quickly engage those at the next level. You ask: are these really the right things? What are the barriers? It's not just about cascading–it's about two-way feedback.

Mark Graban:
So, it's more than just taking input–it's about shared ownership of goals and execution.

Mark Reich:
Yes. And that ownership builds over time. One of the most important aspects is role clarity. At each level, people break down the objectives and define responsibilities. That creates buy-in and sparks innovation from the bottom up.

Mark Graban:
And hopefully it encourages people to ask questions or raise concerns, which requires psychological safety. In Toyota, the phrase might not have been used, but the behavior was there. What was your experience with that?

Mark Reich:
I can't speak for every Japanese company, but Toyota wasn't overly hierarchical. One mechanism we used was the A3 process. People at middle and frontline levels would use A3s to drive problem solving. Often, they initiated them themselves.

Mark Reich:
The A3 is a powerful tool because it gives people ownership. It's not just about communication–it's about learning. I reference a Lean Post article that compares Hoshin to a skeleton and A3s to the muscle. The structure holds things together, but A3s build capability.

Mark Graban:
That makes sense. I've noticed that in many organizations, problem-solving training is aimed at the frontline–but often executives don't model those behaviors. Does the process work better when leaders actively practice PDCA and A3 thinking?

Mark Reich:
Absolutely. One of the most valuable things you can do is get senior leaders solving specific business problems–not broad ones like “increase revenue.” Something more targeted.

Mark Reich:
It teaches them how to investigate issues and ask the right questions. When Hoshin is underway and roadblocks arise, they're better equipped to support their teams. If leaders never go through that problem solving themselves, they won't understand how to lead it.

Mark Graban:
You also write about short-cycle versus long-cycle PDCA. Can you explain that?

Mark Reich:
Sure. Long-cycle PDCA spans years. In the book, I focus on the annual cycle. But short-cycle PDCA is essential. Once the plan is in motion, I recommend setting up an obeya–a visual management room where leaders can review progress monthly.

Mark Reich:
They need to ask: are we behind? Why? Is it lack of progress, collaboration, or support? That's the opportunity. And leaders need to go to the gemba to see for themselves–not just sit in a room and hear a report.

Mark Graban:
And if you're waiting nine months into the year to review your plan, it's too late to adjust meaningfully.

Mark Reich:
Exactly. You need monthly check-ins to spot gaps early. That's where the culture comes in. Leaders have to create a space where it's okay to raise issues and ask for help. That's how you make real-time adjustments.

Mark Graban:
I've also heard people say that it took their organization a couple of years to really get into a rhythm with Hoshin Kanri. Do you hear that often?

Mark Reich:
Yes, definitely. That's common. Let me give an example. I'm working with a software company in India right now. They're in their first year and making significant progress. They've taken on six objectives–which might be a little too many, but it's still far more focused than they were before.

Mark Reich:
So yes, you can make a lot of progress in year one. But you're also building the system as you go. People are learning new behaviors and ways of working. It takes two to three years for Hoshin Kanri to become stable and embedded in the culture. Like any process, you don't get it right the first time. It takes iteration.

Mark Graban:
Right, and part of that learning is realizing that having 300 top priorities isn't actually a strategy.

Mark Reich:
Exactly. That's part of what I call the “sustainability and long-term view” section of the book. You need to PDCA the PDCA process itself.

Mark Graban:
Meta-PDCA.

Mark Reich:
Yes. You need to reflect on the components of the Hoshin process. For example, how do you define vision? How do you gather input? How do you decide what gets included in your strategy? That reflection helps you build standards and improve them.

Mark Graban:
There's also often confusion between daily management and strategic work. That's another learning journey for organizations.

Mark Reich:
Absolutely. I'm working with a large healthcare organization right now where that's a core issue. It's unclear how their long-term direction connects to daily work. People are confused–what's strategic, what's operational? Hoshin Kanri helps clarify that.

Mark Reich:
You need two systems: one to run the business (daily management) and one to change the business (strategy). They should work together but remain distinct. Hoshin helps you define and manage that separation.

Mark Graban:
There's something else I wanted to ask you about. Some people closely associate Hoshin Kanri with the X-matrix. But you don't use it in your book–and you even write that there's no X-matrix in it. Can you explain your thinking there?

Mark Reich:
Sure. It's like associating “pull system” with “kanban.” Kanban is just one tool. Similarly, the X-matrix is just one tool within Hoshin Kanri. And honestly, I never saw one during my seven years managing Hoshin at Toyota.

Mark Reich:
After I left Toyota, Jeff Liker called me and said, “We're writing a book and want to include a section on Hoshin Kanri. What do you think about the X-matrix?” And I said, “What's that?” I had to go look it up.

Mark Reich:
Since then, I've learned more. I'm not against the tool–it can be useful. But if your goal is to engage the whole organization, simpler is better. X-matrices can be hard to understand and even harder to cascade effectively.

Mark Graban:
Yeah, I remember someone showing me one 20 years ago. I couldn't tell if I was supposed to rotate the paper or tilt my head to read it. It's a lot to absorb, even for people with technical backgrounds.

Mark Reich:
Exactly. It's not that it's bad–it's that we often fixate on the tool instead of the purpose. We need to start with the business problem, then decide what tools support solving it. That's something I appreciate about John Shook's influence at LEI: purpose first.

Mark Graban:
When I was in Japan last November on Katie Anderson's study trip, we asked a retired Toyota executive about the X-matrix. His response: “What's that?” Even Mr. Yoshino said he'd only seen them at companies outside Toyota.

Mark Reich:
That's consistent with my experience. I don't want to knock the tool, but I do want to encourage people not to get distracted by it. There's a lot more to Hoshin Kanri than any one template.

Mark Graban:
Well said. And your book reflects that–it's not about a form; it's about a system and a mindset. So again, the book is Managing on Purpose: Using Hoshin Kanri to Develop Strategy, Align Teams, Grow Leaders, and Innovate Your Enterprise. There's a lot to absorb, and I mean that in a good way.

Mark Graban:
Maybe a final question–what's the best way for an organization to define the business problem that Hoshin Kanri is meant to help solve?

Mark Reich:
Great question. In Toyota, one of the most common questions asked at all levels was, “What problem are you trying to solve?” That mindset is powerful.

Mark Reich:
When starting with Hoshin Kanri, you need to look at your organizational challenges. It might be growth, cost, or engagement–but also alignment. In the healthcare system I mentioned, the biggest issue was confusion between daily management and strategic initiatives. Hoshin helps clarify that.

Mark Reich:
It gives you a system to think longer-term and align your people and processes around that direction. It also helps you distinguish between the two systems you need: running the business and improving the business.

Mark Graban:
Mark, thank you so much for sharing your time, your experience, and the lessons from the book. It's been a great conversation, and hopefully we can do it again sometime.

Mark Reich:
I'd love to. Thanks, Mark. This was great.

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