Strategy flows vertically. Work flows horizontally. Nothing manages the boundary
The horizontal coordination is how work actually flows across the organisation. No strategic objective is delivered by a single function. On-time delivery requires sales, planning, production, logistics, and quality to coordinate — not just to each achieve their individual targets but to manage the handoffs, dependencies, and trade-offs between them. This is Management by Function — cross-functional coordination that manages what happens at the boundaries between departments. Most organisations under-invest here. They have functional structures with clear vertical accountability, but the horizontal coordination that makes those functions produce coherent outcomes is left to informal relationships, ad hoc meetings, and goodwill. When it works, it works because specific people make it work — not because the coordination was designed.
Diagonal
Every organisation manages in three directions: vertically through objectives, horizontally through processes, and diagonally through the capability that connects them. Most organisations build the first, neglect the second, and don’t know the third exists.
Vertical
The vertical direction is how the organisation sets and communicates purpose. Strategy, objectives, targets, KPIs — cascading from senior leadership through middle management to the front line. This is Management by Objectives. Most Western organisations invest heavily here: strategic planning cycles, balanced scorecards, OKRs, town halls, dashboards. The machinery of direction is well built. Targets exist at every level. Everyone can point to what they’re supposed to achieve.
Horizontal
The diagonal integration is what connects direction to coordination and builds cumulative capability in both. It answers the question most organisations never explicitly ask: does our management system develop the organisation’s ability to set better direction AND coordinate more effectively over time? This is where the information architecture lives — KPI Trees that trace the logic from process to strategy, visual management that makes cross-functional reality visible, review rhythms that catch misalignment between what strategy intends and what processes deliver. Without it, direction and coordination operate independently. Strategy is set in the boardroom without understanding process capability. Processes run on the floor without understanding strategic intent. The gap between them is managed by middle managers translating in both directions — often losing fidelity each way.
This explains a pattern most leaders recognise: the organisation reorganises every two to three years. Each reorganisation is an attempt to solve the direction-coordination gap structurally — by redrawing reporting lines, creating matrix structures, adding integration roles. It provides temporary relief because the reorganisation forces new conversations across boundaries. Then the conversations fade, the boundaries harden, and the gap returns. If your organisation reorganises cyclically, it isn’t facing a structural problem. It’s compensating for missing horizontal coordination and missing diagonal integration by periodically disrupting the vertical — which is the only dimension it knows how to redesign.
The alternative isn’t to stop setting direction. It’s to build the horizontal coordination and diagonal integration that make direction translatable. When objectives flow down through a KPI Tree that connects to cross-functional process measures, the front line doesn’t need a town hall to understand strategy. They can see it in their daily instruments. When catch-ball dialogue tests whether targets are achievable given actual process capability, strategy becomes realistic rather than aspirational. When the management system develops the organisation’s ability to coordinate and learn — not just to set targets and report results — the reorganisation cycle stops. Not because the organisation stops changing. Because it can change without starting over.
Want to Dive even Deeper
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1
Back to the Drawing Board
Thinking with Meg and Barry
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2
Japan Reconnaissance
Using Japan as a mirror for your architecture
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3
Compositional Hoshin Workshop
Executive Team Based Activity