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Derek Hudson joins host Reed McColm as they launch the new podcast 'Essential Dynamics'.
Join Derek Hudson as he explores Essential Dynamics, a framework for approaching the challenges facing people and organizations. Consider your Quest!
Welcome, welcome to Essential Dynamics. I'm Reed McColm, your pod host and know nothing. I'm here with Derek Hudson, former CEO and present thinker, who's going to tell us a little bit about some of the lessons he has learned in business and Derek, welcome.
Derek Hudson:Hey, Reid, thanks a lot. This is very exciting. I can't believe we're doing a podcast.
Reed McColm:Yeah, it's kinda cool. I like
Derek Hudson:it It's very cool.
Reed McColm:Just some background here, Derek, we've known each other for, well, a lifetime, certainly. We've lived about five houses apart when we were children and have fifty years since then of friendship and admiration on my end, certainly. And one of the things I don't know a lot about is business history. And I'm I'm not sure, Derek. What what are your qualifications in business?
Derek Hudson:Well, I actually have three professional designations.
Reed McColm:Okay. I'd like to hear them.
Derek Hudson:Yeah. So I'm a chartered accountant and chartered professional accountant. I only had to write one set of exams to get both. That's the way this accounting profession is now. I'm also a certified management consultant and I have a degree in business from the University of Alberta.
Reed McColm:And you've been a CEO and a CFO. What's the difference between a chief executive officer and a chief financial officer?
Derek Hudson:Oh, there's a there's a big difference between CFO and CEO and then I've also been a chief operating officer. Chief financial officer, it's a really interesting position because you have the full breadth of responsibility for the company. You see all of it, but you always have this financial lens, this risk management lens, this cash flow lens. The CEO obviously has to really work on the relationships with a multitude of stakeholders. Those two responsibilities are not the same.
Derek Hudson:The CEO and the CFO work work well together when they work well together, it's a fantastic relationship and I had two CEOs that I worked with as CFO or COO that I think we really complemented each other. So that was super interesting for me and I learned a lot.
Reed McColm:What have you learned now that we're going to share in the central dynamics?
Derek Hudson:Let me just start by a couple of things about my journey. One is that the pandemic created an opportunity for a lot of us to step back, right?
Reed McColm:Yes.
Derek Hudson:We had a little more time on our hands, a little more time to be thoughtful. For me, also coincided with the start of my second round of consulting. I see. On April 1, my employment ended and I started my own business as a consultant. That's the second time I've done that.
Reed McColm:So right at the height, right at the beginning.
Derek Hudson:Right at the very beginning. I had a lot of time on my hands. You know what? And it occurred to me early on, I heard someone probably in April say that Isaac Newton had to step away from his studies, I think it was at Cambridge University in 1665. And he went back to the family estate and while he was there, he discovered or perfected calculus and did his initial work on the laws of gravitation.
Derek Hudson:So I thought if I could spend some time this summer thinking about things, I don't think I would change the world of physics, but I might make some progress in how I approach things and maybe there's some value there. Sixteen sixty five, wouldn't that be
Reed McColm:during a plague of its own?
Derek Hudson:It was the London Great London Plague of London, yeah.
Reed McColm:So, alright. Take it You're taking a cue from Isaac Newton,
Derek Hudson:that's great. So take advantage of that. The other thing is that a good friend and colleague of mine, Bruce Alton, who is also an independent consultant, we were chatting early in the pandemic and he said, you know Derek, people will hire you that know you because they know like how you think and you know, how you could help them. Yes. The question for you is how do you explain what you do to people who don't know you?
Reed McColm:Right.
Derek Hudson:So I spent some time trying to figure out what how do I think, how do I solve problems, how would I explain that to someone else. And over the course of weeks and months, I came up with something which I later called essential dynamics. And I I found it I find it so interesting to talk about that I thought, let's let's get me out of my head and into a room with smart people and see what we can learn from this stuff.
Reed McColm:Well, instead, you're in a room with me. But I see you as a different from a different perspective, Derek, because I know you as a friend, a longtime friend, and also a father of four and and a leader in the community. What I don't see, because I haven't been there with you in your businesses, is how you operate as a businessman. And I don't know much. Our our careers haven't overlapped.
Reed McColm:I don't know much about what you've been through. And I really would like to know how business works. And you have a real perspective on that. You think essential dynamics would be applicable to anyone?
Derek Hudson:Well, so that's the thing that surprised me this summer is what I what I set out to do is to figure out how I think about businesses and I have this idea of every business has a business model. There's some like key inputs and processes and outputs and and most businesses could be explained quite simply. They tend not to be explained simply but Yes. It's really great to understand your business model. And I'm interested in strategy and execution and so I'm thinking about those things and I come up with the elements of essential dynamics.
Derek Hudson:And then I start applying them to real simple situations in a family or a person's life. And I went, wow, I think there's some value here that goes way beyond business. Although, I really do like to bring it back to business because business or maybe more broadly speaking how we run organizations is clearly a big challenge that we have in our society today. It's hard to do the right thing. It's hard to figure out what to do.
Derek Hudson:We spend a lot of time talking about what to do, spend a lot of time criticizing organisations for doing the wrong thing. And maybe there's some value in stepping back, thinking more clearly, dealing with some basic principles, and then moving forward with better organizations.
Reed McColm:What's the definition of a right thing in business? Is it always financial?
Derek Hudson:It can't be. It can't be. In fact, when we get to it, I'm gonna talk about the fact that most organizations have at least two separate and distinct purposes. And of those only one can be about making money, it may not be. Making money, it's it's great because it's a bit of a scorecard.
Reed McColm:Yeah. Certainly socially, that's how things are measured.
Derek Hudson:That's right. And you do need to be able to pay your bills and survive. Yes. That's very important.
Reed McColm:So that's
Derek Hudson:personal in that sense. But most of what we do as human beings, I think is because we're trying to do something meaningful.
Reed McColm:So a business by extension should do something meaningful?
Derek Hudson:Well, if the business doesn't do something meaningful, then at least the people in the business have to find some meaning. Or there's or there's no resilience in the business. When things get tough, then everyone's gonna bail one way or the other. Whether they leave or not is a different story, but.
Reed McColm:Well, let's go further with that. What is then the definition of success for any business if it's not just financial? Well, one of the ways One of the
Derek Hudson:things I learned this spring is I was talking to a number of people who own their own companies. And they dealing with the pandemic. And it was, you know, they were in tough spots some of it was challenging.
Reed McColm:The business or the person?
Derek Hudson:Well see that's the thing that I realized is that the business and the person aren't the same. Even if it's a company that's got one owner, he's been running it for fifteen or twenty years. The needs of the business and the needs of the owner maybe have diverged.
Reed McColm:I see.
Derek Hudson:And so that was one of the things that helped me realize that you know there's some pieces that I didn't have together I needed to understand. You talked about some of the challenges that I've had in my business career and we'll probably get into this. But for seven years I was with Edmonton Economic Development Corporation. Yes. It's owned by the city of Edmonton and the shareholder is actually the city council of the city of Edmonton.
Derek Hudson:That's like we read about them all the time. They have a difficult time making difficult decisions. And they're all elected. They're elected, they're accountable once every four years. In the interim they're on their own.
Derek Hudson:There's actually 13 different political views on council, there's no parties. And so I was I needed to kind of decipher what direction was coming from them and in between the shareholder and the company was a board of directors. So very very complex environment.
Reed McColm:Don't they all have divergent, like you say, divergent points of view and and different agendas?
Derek Hudson:Different agendas, yeah. So that's we'll get into that as we unpack essential dynamics.
Reed McColm:Okay.
Derek Hudson:But this idea of having multiple agendas, multiple purposes is part of it. Good.
Reed McColm:Good. I'm glad because I don't know how to reconcile those.
Derek Hudson:Well, you know, I'll just give you a hint. One of the things that I've learned is that if you can take First of all, expose the multiple I don't I don't like using the word agendas, but the the various purposes of an organization or a project or Mhmm. Whatever. If you can expose them and then take responsibility for all of it. Then then you can be creative because you've got this tension.
Derek Hudson:I've got these different forces I have to play with to accomplish something good as opposed to what we see in the political environment generally today in Western society where we're getting more and more partisan, more polarized.
Reed McColm:Yes.
Derek Hudson:And people pick a side.
Reed McColm:Right.
Derek Hudson:I mean, I'll just use an example of environmental responsibility. Okay. It's really easy to chain yourself to a tree and say I don't think any tree should be cut down.
Reed McColm:Okay.
Derek Hudson:I think it's also easy to cut down every tree you see and sell it. Mhmm. What's hard is to figure out how to create value for people in terms of building materials, pulp and paper, economic activity, jobs and preserve, you know, the environment so that you can do that economic activity forever and ever. And so that you've got, you know, carbon dioxide scrubbing and a nice place to walk.
Reed McColm:So, you're finding a median? Are you a mediator? Well,
Derek Hudson:see the thing is is that if you have responsibility for both sides Right. Then it's not mediation, it's creation in my mind. It's creativity.
Reed McColm:Okay. I'll buy that. Alright. So you talked about purposes rather than, say, of agenda. What happen when you have conflicting purposes from the business and the employee?
Reed McColm:Say the employee, the person working in that business, may have a different agenda or purpose. Again, let's avoid the word agenda. What happens when they don't meet?
Derek Hudson:Well, that's a great question. I think that's what human resource departments like and managers spend all their time trying to trying to do is how how can I get these people to think like the way the company wants them to?
Reed McColm:Right, right.
Derek Hudson:I think about it in a few different ways. One is that if you have an organization, typically you have some control over the people that you bring in. Oh. So if you're clear about the purposes that you have, then you can help people determine whether they fit those purposes or not before they even apply to work in your organization.
Reed McColm:Yes, I see that.
Derek Hudson:If you're not clear, then you get what you get.
Reed McColm:Right. Working from a theatrical background, I'm thinking auditioning for a play. If I'm the director, my responsibility is casting well. Is that applicable to what
Derek Hudson:you're saying? Oh, absolutely. Yeah. It absolutely is. And, you know, a lot of the material that I can't quote, you know, talks about you can train people, you can give them new skills but you can't get in their head and change you know their sense of meaning or purpose.
Derek Hudson:So you want to get alignment and then you can train people how to do stuff. So, you know what, and I can say that I experienced that working at Edmonton Economic Development.
Reed McColm:Okay.
Derek Hudson:Because when we ask people in interviews, why do you wanna work here? They would always say, I love this town. You know, it's so cool what you do in Edmonton, I just wanna be part of it. And the cool thing is that was for positions and accounts payable or receptionist as well as tourism promotion.
Reed McColm:Sure. So you hope that because they've expressed a love for the place that they have a love for the business that promotes the place.
Derek Hudson:Well, that's the first step, right?
Reed McColm:Okay.
Derek Hudson:Like you can't sell what you don't believe in. So for me as a chief financial officer, if you wanna go back a little bit further, I realized that when I was looking for I was looking for a CFO job in the tech industry in the mid nineties.
Reed McColm:Uh-huh.
Derek Hudson:And I realized that I wasn't gonna invent the new product, it was kinda disappointing to me. That I wasn't going to create the amazing new technology. So any organization that I worked at, I had to really feel great about the product because I wasn't gonna be creating it. But I would then, you know, be responsible for a lot of it and I needed to be able to throw my passion in to the purpose of the organization. So when I found MicroLine and they were doing world class super small tiny micro machining stuff, then I thought this is the place for me and I was there for thirteen years, was fantastic.
Reed McColm:And yet you didn't actually invent or create a product.
Derek Hudson:You know, one of my disappointments was in thirteen and a half years there, I was early on I thought it would be cool if I got my name on a patent. Never happened. I got my name on a lot of stuff. Let me tell you. There's a lot of checks with my signature on them, but no patents.
Derek Hudson:I understand.
Reed McColm:So how do you how do you create an enthusiasm for the product? If the product is widgets, how do how do you how do the employees maintain a pride in what they are doing?
Derek Hudson:So that goes to this question of multiple purposes. Yeah. So here's an example that I've used to try and explain this and I'll probably get the story wrong but I think you've heard it. Guy walking down a street in Europe and he sees a bricklayer and he says, are doing? And the guy says, I put this brick on top of that brick and then I put that one on top of that one.
Derek Hudson:I do that all day. Goes a little bit further, he sees another bricklayer working on the same wall and he says, what are you doing? He says, I'm building a building. Okay. The guy's got a higher sense of perspective.
Derek Hudson:Carries on down, sees the third guy and asks him what are you doing? And he says I'm building a cathedral to my God. Not all of us are actually building cathedrals. Maybe we're just making widgets. Yeah.
Derek Hudson:And there might but there might be some meaning in that. Yes. And the meaning might just be that you're providing for a family that you love. And if you can get that straight in your head, then that's that might be all that you need. And I think that you see that, I think we see that in our community with new Canadians, like generations of new Canadians who come with you know advanced degrees and they do the job that they have to do so that their kids can go to school here and and get a degree in English and be comfortable in this culture and then away they go.
Derek Hudson:So, I think it can be done. There's you can't force that on employees, you wanna create environment. But if to the extent that as an individual, you can create meaning in all kinds of things. And if you can do that then it just isn't as hard anymore. One of the things I'm gonna talk about in addition to multiple purposes is this idea of drivers and constraints.
Derek Hudson:And when you have a person or an organization that has this sustainable driver, this innate need to do something, there's real power in that. You don't need you don't don't need management systems. You can't create that. Read as one of the reasons I wanna do this with you is because you come from this creative side. You have a drive to create.
Derek Hudson:Tell me about I'm gonna switch channels here. Tell me about that in the sense of where do you get your motivation to write or act?
Reed McColm:Well, it is ephemeral, isn't it? It becomes part of one's own mission statement. What do I want to achieve in my life? I've always been drawn to the creative and not so much to the business and, in fact, have stuck my head in the sand about a lot of business principles that may not have been a great career move on my part, but especially as I moved into management of of theater companies. But I do feel that we have something in common in that I do have now a lot of questions about how those purposes can be aligned, and how do you, as a leader, make those things happen?
Reed McColm:And I'm really looking forward to talking to them, talking to you about them, because your perspective is very different than mine, and yet valuable because what we're talking about today and what we've just been discussing in this podcast is really an introduction to a lot of thoughts and histories that we are going to explore. And I'm very pleased about that because I haven't had that option for some time.
Derek Hudson:Well, I'm excited to have this conversation and I'm excited about the next episode because I think we're gonna share the one thing that I know people can't unlearn after they hear it.
Reed McColm:Okay, I wanna hear that. That's probably a good place to put a put a sock in it for now. You're listening to Essential Dynamics. I'm Reid McCollum, and I'm with Derek Hudson. But you really need to remember the name Reid McCollum because I'll be here next time, and so will Derek, and we will learn more about the principles that make this world happen.
Reed McColm:Thanks very much, and we'll see you next time.
Derek Hudson:Take care.