The spark that ignited the IT startup boom was, of course, Silicon Valley. Silicon Valley cultivated its "development" ecosystem through a history that ran from military research into the high-tech industry. That history is well summarized in The History of Silicon Valley You Don't Know by Shusaku Uesugi. I highly recommend reading it.
There is one methodology that has been used broadly across Silicon Valley: "product management" — the art of creating products and succeeding with them.
Eric Ries's The Lean Startup and its concept of the MVP, and Steven G. Blank's The Four Steps to the Epiphany and its customer development methodology are well known in Japan too. I can only imagine how many people have read The Lean Startup, built the smallest possible product with a tight feedback loop, and pitched investors and users repeatedly. It has become that universal a framework in the startup scene.
Lean Startup: "reverse-imported" into Japan
The Lean Startup was imported into Japan and has been revered as the foundation for hypothesis validation. But there is an important truth about the book — stated explicitly in Eric's own introduction — that most Japanese readers have missed.
I encountered Lean Manufacturing, which traces its roots to the Toyota Production System of Japan. It offered a completely new way of thinking about manufacturing. I realized that by applying its concepts to the problems of entrepreneurship, I could resolve many of the fundamental challenges entrepreneurs face. This insight became the Lean Startup. — The Lean Startup
Yes. The methodology now used by startups around the world was born from TOYOTA, a company rooted in Mikawa, a region of Aichi prefecture in central Japan.
There is one more fact worth adding. Alongside the Lean Manufacturing system that Eric borrowed from, there existed a second TOYOTA-style product management approach.
The practices Eric referenced — kanban, kaizen, Just-in-Time, and so on — are collectively called the Toyota Production System (TPS). TPS is knowledge about "how to make something well once you know what you're making." But that's not actually where TOYOTA's true strength lies. TOYOTA's real strength is called Toyota Product Development (TPD) — the design of what to make and why, and the know-how to keep generating that design. TPD is what Eric should truly have focused on.
"Lean Manufacturing" refers to the Toyota Production System (TPS), while "Lean Development" refers to the methods and thinking of Toyota's Product Development approach (TPD). [...] Even Eric Ries's Lean Startup shows confusion between development and manufacturing, because Ries himself doesn't fully understand lean development. This has created significant confusion at companies trying to apply it in practice. The underlying concept of "lean" is shared across both development and production: any management resource invested — whether knowledge, materials, capital, or equipment — must become high-value, asset-like "information," "things," or "accumulated problem-solving capability." That principle is consistent. But development and production require different interpretations of "lean." Unlike lean production, lean development does not begin with a predetermined output. And its output is entirely about quality, not quantity. — Toyota's Competitive Secret: Japan's Largest Global Company, Unknown to Most Japanese
A product's competitiveness is largely determined not by manufacturing or operations, but by the output of its development phase — that is, product design. Yet producing "good product design" is notoriously difficult to replicate consistently. The hardest challenge in product management lies in this design domain. Even TOYOTA faces the same struggle.
"The winner and loser of global competition is decided at the development stage — in the generation of 'design information' — before any manufacturing begins." — Toyota's Competitive Secret
The greatest misunderstanding
Everyone who works on products shares a certain feeling: they want the product they're building to grow big, like a parent wanting good things for their child. That's exactly why it's necessary to learn what it really takes to design and manage a product that produces real results.
In Japan in particular, I sense a prevailing assumption: "to learn how to design great products, look to Silicon Valley."
When I translated and published a Medium article by Josh Elman — a product manager who had worked at Twitter, Facebook, and others — the positive response on Twitter and Hatena Bookmark was real. But behind that enthusiasm I could sense a mindset: "if the PM at successful Silicon Valley products says it, it must be right."
I think Silicon Valley worship is the greatest misunderstanding holding back those of us building products in Japan. If you want to design great products, you should first look at your users — and for the methodology, look not to Silicon Valley but to its source: TOYOTA and the land of Mikawa. TOYOTA continues to compete with Apple for the title of world's top manufacturer by revenue. The source is also the frontier.
The roots of "inheriting failure"
When I think about the essence of product management, I keep coming back to "inheriting failure." Unlike a project, a product is visible and tangible — which means it gets exposed to endless review, and failure accumulates into concrete form. Product management means inheriting failure and distilling those learnings into design. I feel every day the need to systematize efficient failure. Each failure, translated into design, refines the product.
When you look into the history of Aichi and Mikawa — the region that produced TOYOTA — you can see that this identity of "inheriting failure" was cultivated over centuries.
And perhaps this is just my bias, but I can't help feeling it traces back to the warlord Tokugawa Ieyasu. What kind of place was the Mikawa of the Sengoku era (the Warring States period, roughly 1467–1615), which produced the man who ended 100 years of war ignited by the Onin War — a conflict that began in Kyoto and spread across Japan?
A land caught between two great powers
Ieyasu was born into the Matsudaira clan, a minor power in Mikawa. His childhood name was Takechiyo. At the time, Mikawa was hemmed in to the east by Suruga (present-day Shizuoka), ruled by the Imagawa — then considered the strongest warlord family in Japan — and to the west by Owari (present-day Gifu), where the rising Oda clan was consolidating power. The weak Matsudaira clan was drawn into the conflict between these two forces.
The Imagawa's rule-of-law governance
The neighboring Imagawa clan of Suruga was seen at the time as the strongest power in the land. The source of their strength? Lord Yoshimoto — who would eventually face Nobunaga Oda at the Battle of Okehazama — was considered a born military genius, but his strength extended beyond battle to governance.
The foundation of the Imagawa clan was built by Yoshimoto's father Ujichika and refined by Yoshimoto himself through what was called the Imagawa Kana Mokuroku — a remarkably modern legal code. By having the Imagawa clan intervene even in civil disputes and maintain order through law, they earned the trust of the common people and built the capacity for large-scale conscription.
The six-year-old Takechiyo was supposed to be sent as a hostage to the Imagawa, but was intercepted and taken by the Oda clan due to a betrayal by the retainer assigned to escort him. Two years later he was finally transferred to Suruga as an Imagawa hostage, where he was raised in something like a mentor-pupil relationship with Yoshimoto. He would certainly have learned the Imagawa's approach to territorial governance through legal rule — and then Yoshimoto was defeated by Nobunaga at Okehazama.
Nobunaga's forces were little more than a semi-agricultural guerrilla band, hardly comparable to the Imagawa army. Yet by offering enormous financial rewards as incentives and skillfully drawing out human desire, Nobunaga unlocked their potential and defeated the supposedly invincible Imagawa. Ieyasu, who had experienced both powers intimately, must have learned that rule-based organizations governed by systems are vulnerable to guerrillas who cleverly exploit human desire.
From Yoshimoto's failure, Ieyasu evolved — seeking to combine the Imagawa's "rule-of-law governance" with the "incentive-driven free economy" model pioneered by Nobunaga. That hybrid became the basis of his nation-building.
The ancestor of Japanese finance? Oda Nobuhide
When six-year-old Takechiyo was seized, the power representing western Mikawa and Owari was Oda Nobuhide — Nobunaga's father. He was the figure who introduced "money" and "incentive systems" into the world of spears and peasant revolts, and grew his domain by accumulating wealth in ways impossible in a rice-based economy.
Nobuhide may have been the founding father of Japanese finance — not as a merchant player, but as the person who connected war to the circulation of money and the accumulation of wealth. That genius was passed to Nobunaga, and spread across all of Japan. The economic slogan of raku ("freedom/ease"), a concept Nobuhide originated and Nobunaga perfected, represented deregulation and the opening of markets.
By granting merchants "freedom of commerce" in exchange for taxation, Nobunaga accumulated the revenue to recruit skilled warriors, acquire weapons, and build supply lines. He transformed a one-dimensional war fought with spears by peasant-soldiers into a two-dimensional competition for resources in an open market — a virtual game he drew his rivals into.
The great houses of the era — the Asai, Asakura, Uesugi, Hojo, and the mightiest military force of all, the Takeda — failed to notice that the rules of the game had changed. They couldn't adapt, and fell to Nobunaga. Then Toyotomi Hideyoshi and Tokugawa Ieyasu, who had studied Nobunaga's logic at close range, adapted his style and seized the economic reins to create the era that followed.
(This is knowledge at the level of a personal hobby, and there may be plenty of criticism or counterargument — but I hope the broad strokes are close enough to earn some generosity.)
As a side note: unlike Hideyoshi, who developed the merchant class by partnering with great merchants like Sen no Rikyu, Ieyasu — after his victory at the Battle of Sekigahara — instituted the shi-no-ko-sho social hierarchy (warriors, farmers, artisans, merchants), tied farmers to the land, and reverted to an agrarian-centered order. Beyond the fact that Ieyasu himself came from a farming background, I think the intent was clear: introduce explicit social ranking, regulate civil disputes through law, and prevent the "usurpation from below" that had destroyed Nobunaga — who had been killed by his own retainer Akechi Mitsuhide when his pure incentive-based system generated too much ambition. At its core was an element of Imagawa-style legal governance.
Incidentally, the Tokugawa shogunate is associated with isolationism, but Ieyasu himself was actually a proponent of free trade and invested heavily in commerce using Japan's gold and silver reserves. The isolationist policy was introduced by his descendants; Ieyasu himself was an enthusiastic advocate of trade as a way to open frontiers.
By combining the shi-no-ko-sho social hierarchy and agrarian ideology to suppress insurrection while enabling civil governance through law, and by mastering the market through control of commerce and rice prices, Ieyasu became the figure who inherited the failures of both the Imagawa and Oda clans and mastered the management of nation, war, and market alike. The geographic context of Mikawa, and the identity of inheriting and learning from the failures of the era's great figures, were the primary reasons he could reign supreme. And I believe this is the true root from which product management emerged.
As a personal aside: I'm a devoted reader of Sengoku, a manga depicting the Warring States era through the life of Sengoku Hidehisa. The Ieyasu portrayed there is the closest to my mental image of the man.
This is a scene from Sengoku volume 10, in which Ieyasu — having barely escaped with his life after being drawn out of Hamamatsu Castle by the Takeda army at the Battle of Mikatagahara — sits in grim self-reflection upon his return. To sear the failure into his memory, he had his portrait painted showing this anguished expression; the portrait, known as the "Shikamizo," is said to be real. There are other scenes in the manga that vividly capture Ieyasu's rare capacity for learning and his relentless hunger — embodying the spirit of Mikawa.
The chief engineer's one-top management
To return from the digression: what methodology did TOYOTA — rooted in Mikawa's culture of "inheriting failure" — actually build? It is crystallized in what is called the shusa (chief engineer) system. Their TPD is executed through a one-top organizational structure with a talented individual serving as shusa — the product manager.
Reading through various sources on TOYOTA's chief engineer system, the role of the product manager can be organized into three responsibilities:
- Product vision
- Cross-functional expertise and communication
- Business sense
What is distinctive is the strong demand for "3. Business sense." At TOYOTA, when the chief engineer designs a product, they are expected to commit to a profit plan for that product — they clearly bear P&L responsibility. They are literally the "CEO of the product."
By contrast, in the IT industry, the most common path to product manager is from engineering, which means many PMs have authority and responsibility for creating the product (points 1 and 2), but relatively few bear P&L responsibility.
At TOYOTA, the chief engineer holds broad authority and responsibility together. When a product fails, demotion is the consequence — but some have risen from chief engineer all the way to chairman (Uchiyamada Takeshi, for example). In a product-driven company culture, the future of the company rests with the chief engineer.
As a digression: when thinking about the future, Sato of Metaps often talks about balancing three elements:
- Human emotion
- Economic viability
- Technical feasibility
The chief engineer balances all three to send the future — the product — into the world.
The talent the chief engineer demands
What kind of personality does a chief engineer need? Hasegawa Tatsuo, who built the chief engineer system, articulates ten principles:
- Rule 1: The chief engineer must always be learning — seek broad knowledge and insight.
- Rule 2: The chief engineer must have their own strategy.
- Rule 3: The chief engineer must cast a wide and good net of investigation.
- Rule 4: The chief engineer must dedicate all wisdom and ability to achieving good results.
- Rule 5: The chief engineer must never be reluctant to repeat things.
- Rule 6: The chief engineer must have confidence (conviction) in themselves.
- Rule 7: The chief engineer must never blame others for their responsibilities.
- Rule 8: The chief engineer and their deputy must be as one.
- Rule 9: The chief engineer must not be clever in a merely expedient way.
- Rule 10: The qualities required of a chief engineer: (1) knowledge, technical skill, experience; (2) judgment and decisiveness; (3) magnanimity; (4) freedom from emotion, composure; (5) energy and persistence; (6) concentration; (7) leadership; (8) expressive ability and persuasiveness; (9) flexibility; (10) selfless desire. In sum: total capability. That is "character."
It reads like a portrait of the perfectly self-accountable manager that appears in a Drucker book. Even at TOYOTA, with hundreds of thousands of employees in its talent pool, finding and developing individuals of this caliber is the central challenge.
"How to find and develop the right people and organizations suited to the increasingly sophisticated vehicles of the future is a challenge even Toyota faces." — Toyota's Competitive Secret
The difficulty of development is a topic that comes up regularly in the product manager community of the IT industry as well.
The core difficulty, I believe, is that the opportunities to design products — and therefore the failure opportunities that drive growth — are extremely limited. That said, the IT industry is still fortunate. The cost of building a product has been falling daily as tools improve, and the openness of the industry means anyone can create opportunities. In the auto industry, which produces only dozens to hundreds of new products per year, this scarcity of opportunity must be fatal.
Summary and open questions
TOYOTA's chief engineer system is the most efficient and effective mechanism ever built for continuous product creation. It is a one-top management approach that delegates much to a great individual — but even TOYOTA faces the challenge of discovering and developing that talent.
At the beginning of this piece I proposed that the essence of product management is "inheriting failure." TOYOTA's organization has systematized this by concentrating failure's lessons in a single person. But stated another way, even TOYOTA is dependent on an idiosyncratic, individual-centered model of product management. Other development environments face the same problem, and then some.
"If you want to see the latest state of the art, look to Mikawa, not overseas" — this is the "greatest misunderstanding" I set out to argue against in this piece. But if product management is a solo sport — and I use the word "sport" deliberately — then studying examples matters less than creating your own opportunities and allowing those opportunities to update you. Building your own product management style through lived experience may be far more important than anything else. I'd like to close with a famous line from Eizo Ezoe, founder of Recruit:
"Create your own opportunities, and let those opportunities transform you." — Eizo Ezoe
