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Join Derek Hudson as he explores Essential Dynamics, a framework for approaching the challenges facing people and organizations. Consider your Quest!
Hey, everybody, and welcome to Essential Dynamics. My name is Bryn Griffiths, but I'm not the star of this show. Derek Hudson is. How are doing today?
Derek:Bryn, it's great to be with you. Thanks for joining me again.
Bryn:This just feels funny for me that I'm doing this when you do such a great job of this, but it's fun to always be on your show once in a while, especially here in the month of December.
Derek:Well, I don't but I was gonna say I don't like talking to myself. I do talk to myself, but it's probably better To have somebody? Podcast to have a conversation with a real person. Sure. Okay.
Bryn:Well, Hey. I'm We're focusing on artificial intelligence today, AI. And man, oh, man. I'm I'm trying to keep up with it. It's almost impossible.
Bryn:It's crazy.
Derek:Well, there's lots going on. There's lots going on, and it's accelerating as a frantic pace, and I just keep thinking that we're missing something.
Bryn:Okay. Well, let's let's get to it. Everybody seems to be enthusiastic about AI, but I also sense that there's some trepidation about AI as well. And I wonder whether people are not asking the wrong questions. What's this gonna do for me?
Bryn:What's it gonna do for my company? What's it gonna do for the country and the planet? It's just it there's so many questions here.
Derek:Well, I think the biggest challenge that we face right now is that we have this new technology. It's very easy to touch, very easy to get into. And so it distorts our thinking and we're saying to ourselves, how do I use this technology? What do I do with this? And so it's distorting a lot of things.
Derek:And what we really should always be asking ourselves is, am I working on the right things?
Bryn:Right.
Derek:And am I doing it in the right way? And then you can factor AI into that conversation, but instead it's like we have a new sharp tool and we're running around trying to see what we can, you know, poke with it.
Bryn:Well, you say doing it the right way. The problem is everybody's got what they think is the right way and everybody's doing it a little differently, but it seems so far like it's finding its way.
Derek:Oh, yeah. Yeah. But I would say that the the challenges with our society right now and the challenges in organizations are really not that up until, you know, a year ago we didn't have Chad GPT. That's those aren't the fundamental problems that we're trying to solve in an organization. And so it's not the answer to the question.
Bryn:The the one that worries me the most is that I have to double check AI a little bit because I'm afraid it's gonna make a mistake or I'm gonna make a mistake. I'm just wondering how much faith everybody's putting. Can you put a 100% faith into AI? Oh, absolutely you don't.
Derek:And I Brent, I think I wanna try and work on a metaphor Okay. Or or a historical example, historical lesson. And it'll date me a little bit, but if we look at it, I think it might we might there might be some insights that we can look at for as AI comes in. And so I graduated from the University of Alberta, shout out, school business, another shout out Yeah. With with a degree in accounting in 1984 and I started working at Pricewaterhouse, predecessor firm to PwC.
Derek:And for the first year I worked there, this is an international accounting firm. I did not see a spreadsheet. I did not have access to a computer. Wow. And I did not see a spreadsheet.
Derek:Okay. Okay. Okay? Yep. Okay.
Derek:So this is an international firm that's like all about the numbers and we didn't have spreadsheets. Lotus one, two, three, I think it had been invented. It wasn't wasn't quite general. Excel was a number of years away. And so within the first few years what had happened?
Derek:Well, the IBM PC took off. So there's instead of just being a hobbyist thing with Apple IIs, it started to get into business and the VisiCalc got eclipsed by Lotus one, two, three and people had spreadsheets. And then you could add up columns of numbers and you put a formula at the bottom with the total and if you change one of the numbers, the total changed. It actually took a while to ripple down the page, but then the total changed. You didn't get very many columns on a page or many rows because we didn't have much in terms of resolution or memory.
Derek:But it was going to change the world. It was going to change accounting and it was going to change the world. So that was forty one years ago, okay, when I started. So about forty years ago, spreadsheets started to be used in the workplace. So now forty years later, have spreadsheets are ubiquitous.
Derek:We have Excel, we have Google sheets, All kinds of calculations are done, you know, millions upon millions of calculations are done every day by spreadsheets. And guess what? You have to check that work too. And it's not that the spreadsheets have technical errors and can't get the formula. The formula doesn't work.
Derek:It's that we don't put the right formula and we miss a number in the calculating range and so it doesn't end up adding to the total. And that's the little stuff, but the big stuff is that a lot of this is we're making bad assumptions about the numbers that we should put in. We have a spreadsheet to calculate one thing and that information gets then transferred to another spreadsheet for more calculations. Maybe that doesn't get updated. Maybe it takes some time.
Derek:I remember in about 1992 or '93, one of my colleagues was working with an oil and gas company and it was taking them a long time to pull their numbers together to do their month end financials. And they determined, they didn't know this until they went out and looked, that there were 1,000 different spreadsheets or databases that produced outputs that ended up being compiled into that monthly financial report. Wow. So we've got now enterprise systems, ERP systems that incorporate all kinds of activities that the company does, including things that create financial information. But I still ran into companies that take two weeks to close their books every month.
Derek:That everything that goes into the master ERP came from a spreadsheet that someone was keeping on the hard drive of their desktop computer at their desk. And spreadsheets have not created the integrated financial information flow that we hoped they would because they're done locally. Any individual can crank up a new spreadsheet, change the numbers, save it, make a new version, mix it up, use the old version. That kind of stuff is just all over the place all the time. It's not going away because the spreadsheet doesn't solve the problem.
Derek:It it solves one problem, which is it was really hard and painstaking to recalculate numbers if you changed one. Right. You know? And that was a real pain. And when we got that, it changed a lot of things, but it didn't integrate the the preparation of key financial information automatically.
Derek:Now there's some some things that do that really well, but the spreadsheet didn't go away. We still have the spreadsheets and we still use them. And then anyone can pull up and start a spreadsheet anytime on anything. And they might do a good job with it and they might not. And it might be garbage.
Derek:The one thing I guess that I could say about this whole journey is that when we started sharing PDFs and getting two monitors and big monitors and when you couldn't walk down the hallway and give somebody something because you were in lockdown and having Zoom calls and stuff like that, that we got away from paper. And so instead of printing pages upon pages of Excel reports, now we email them and people only look at the part they want to. So they go, that's progress. Yeah. So anyway, my hypothesis is that in a lot of ways AI is a lot AI in 2025 Yep.
Derek:Is a lot like spreadsheets in 1985.
Bryn:There's room for improvement. I don't think there's any denying that. Some people use it for certain things. Some people use it for other things. For me, it's a time saver and it's kind of fun, but I still double check and I still change some of the let's say let's say I write I I will admit this.
Bryn:So when I was hosting the Edmonton Oiler games, I would write my own introduction. Right? And then I would ask AI, change my introduction a little bit. Give me three different versions to see if I liked it better. Often, it did not have any soul to it, but I was finding a use for for AI.
Bryn:I I guess I was really, really looking for a use for it. For the most part, very often, I just went with what I'd already written. But it just one, it's fun for me. Two is I like to see how far I can push it. And then the other one for me is I'm still not a 100% on board that everything that comes out of my computer that's been run through AI is going to be accurate enough for me to use it comfortably.
Derek:Well, one of the best things about AI is how easily accessible it is to people who don't know how it works.
Bryn:Yes.
Derek:Because it has the chat format. You know, like if you think about a spreadsheet or even worse, some kind of coding platform, there's like a blinking cursor and you got to put something in there to make it make sense. But you can get in a chat box and you're already used to texting your friends. And so you pretend there's a person there and you just start and it naturally flows. And so that's that's very, very powerful.
Derek:But but I think what I'm gonna say is that the fundamental shift we need to make and you can I mean, you said it as well and I've done it as well is how do I use this? What is this good for?
Bryn:How does it work for me?
Derek:Yeah. Well, like I want to I've got this new there's a new tool in the shop, you know, what can I make with it? And that's fun and that's fine and that's something you kind of do in the evening after work. But if you're responsible for an organization, for a function in an organization, if you have customers or clients to take care of, the question shouldn't be how do I use AI? The question should be am I working on the right stuff?
Derek:And how do we make this better? And then go from there. And here's the biggest challenge I think that we have with AI is that it is an individual conversation that we end up with. That's how we start. Just like a spreadsheet.
Derek:Yep. And when I listen to and read accounts of people who were applying AI I've done a little bit of reading about how, you know, executives can use AI, it's always about how can I optimize my work here at my desk or my work as a leader? And if anything, we've talked about central dynamics is that we have to see the whole system. And so optimizing your work at your desk is not optimizing the system. So for example, one of the things I saw is that a leader was, you know, prompted with some things you could use for AI and one is, well, you can brainstorm.
Derek:Okay. Or you can communicate better. And so for example, if you if you're the leader and you come up with an idea, then you can use AI to write a better memo to tell everyone what to do. Sure. Or or if you're a leadership team and the problem problem arises, you can sit in your own office and ask AI questions and have it ask you questions and come up with a better idea.
Derek:But what really should happen is you should say, why is my process stuck? And are we unclear on the purpose? Or is there a unresolved tension in our process that's derailing it? And then ask ourselves, is there a solution we haven't thought of before? And either use AI to help you find a solution or AI might even be part of the solution.
Derek:I'll just give you a couple of examples of local optimization. Okay. And this goes back, we refer to the book The Goal Before by Doctor. Golderatt and the premise of the book, it's a novel, but the plant manager's plant's gonna get shut down if they don't pull their plant together and they're late on all their shipments. And they say, but we bought a robot.
Derek:Like we automated this one part of our of our assembly line so we're more efficient now. But the problem, of course, was that the other parts of the assembly line weren't as efficient as the robot. And so the robot's spewing out all of this, you know, subassemblies that aren't being there's just nowhere for them to go to create a finished product. And so if we optimize now we have a leader who can write better, but the people can't do any work any more work except things any faster. We haven't optimized the system.
Derek:We've now just having emails that are better written or maybe even a deep fake video or something like that. But like, we're not changing the system. So we need to step back and say, changes do we need in our system? And then what tools could we use to help that? And you know what?
Derek:It might be a spreadsheet or it might be AI. But if we're running around with the tool, then we're going to be thinking more locally. Anyway, that's my observation.
Bryn:Wow. I just it seems to me well, here's the thing. Do you think people really misunderstand AI? People say, oh, I think I got a handle on it. And I'm not believing that because I don't have a handle on it and I look at it every day.
Derek:Well, you know, for one thing AI is it's deceptive because it is programmed to sound human and to act like it's intelligent and at a 100% isn't human and a 100% isn't intelligent, we're talking about something that deals with statistics of large numbers. And it sounds so insightful, but there's no insight there.
Bryn:I saw an interview with Sir Anthony Hopkins. And of course he was in Silence of the Lambs, one of the most scary characters in movies ever. And they asked him, okay, so the voice that you used there for him, did you steal that from somebody or did you read something? He said, I took that from A Space Odyssey. That's Hal.
Bryn:Oh, wow. And it's nothing more than Hal's voice coming out of a caricature, a cannibal actor, that's absolutely frightening to people because there is no there's no real change in his voice, Derek. It's just and I thought, wow. It just blew me away because so often now if I ask AI to do something and to maybe recite it back to me, I still I can't get that out of my head here. It scares me a little bit.
Derek:Right? Well, and like I said, the problem is it's deceptive. It's not the problem isn't that it's not a person, it's that we start to think of it as a person.
Bryn:As a person.
Derek:Wow. And like, it's just a fantastic tool and and I I need to make it clear. I use it all the time. Okay. But
Bryn:Well, let me ask you this. So what percentage do you think you're using it at?
Derek:Oh, in terms of its capacity?
Bryn:Yeah. For example, it's like somebody says, well, I'm using it at 90%. I'll bet you most people aren't even aren't even 30 or 40% of what they can do Well,
Derek:mean, how much of our brains do we use really? And so, you know, Steve Jobs said that the computer was a bicycle for the brain. A spreadsheet, you know, was a 10 speed. You know, it's it's a force multiplier in terms of our thinking. And I've I've used spreadsheets to do what I think is amazing stuff.
Derek:And I'm amazed because I couldn't have done it without a spreadsheet and, you know, done big business deals and run, you know, large companies based on a spreadsheet that I developed. And that's really like, it's really powerful stuff. It's awesome stuff. You use some of my brain and some of the spreadsheet and I see that, I think I hope I see that in AI. So, you know, for us to use any measurable percentage of the capacity or the potential of AI, we're not I don't think we're hitting the needle yet.
Derek:But it's it's a great opportunity for us to use our own intelligence and a great risk to go the other direction.
Bryn:Yes.
Derek:Right?
Bryn:Yep. Totally get it.
Derek:Early on, we had one of my colleagues was telling me that he had two boys that were in high school at the time, just a couple years ago. And they would go into a JIT CPT session and say, this is the textbook I'm studying out of and this is the chapter. What are the key definitions I need to know? And it would pick out all the key points and then it would define them for the student and then the student would say, oh now quiz me on them. Okay.
Derek:Yeah. So there's that, which is I didn't get enough in class. I'm weak in this area so you know, grill me, make me work, you make me put stuff in sentences and tell me if I'm using it right.
Bryn:Help my focus. Help my focus.
Derek:Yeah. There's that. And then there's the, hey, write my paper that I won't even read before I hand in. Yeah, man.
Bryn:How many times have you heard this where somebody says, how is AI gonna help my company or can I use it and make my business more effective? How many times have you heard that recently? Very many times? Lots?
Derek:Yeah. Yeah. Yeah. All the time. And we're just we're just trying to figure it out and it's so amazing.
Derek:So the point I'm trying to make here is that's not the right question.
Bryn:Sorry.
Derek:The right question is always what are you trying to do that's useful? Like, what's your purpose? Right. What's the purpose of the organization? What's the purpose of this project?
Derek:Why what are we trying to accomplish? First thing, we lose that. It's so easy to lose sight of that. And then the second is, so how do we accomplish that purpose or in our phrasing, you know, how do we create value? And when we create value, there's always something that limits our capacity to create value.
Derek:Otherwise, we'd have all this stuff that we ever want, you know, right here, right now. So there's there's always a limitation. So we need to understand what it is. And then based on our understanding of what the limitation is, we need to either protect that limitation or that constraint and make sure that it's got all the information or material it needs to move things through, that it's working on the right things, that it's got all the capacity that it can and all that stuff. And then to that, we can add something.
Derek:So for example, when my job was to calculate forecasts and tell a company how much if they'd run out of cash or not, my capacity to do that when I moved from paper to spreadsheet went up like infinite infinity.
Bryn:Right.
Derek:Right? So that was then I only had to think about the logic. I didn't have to do the numbers. Right? So that's the kind of thing where automation in the right place, whether that's a robot or a spreadsheet or a thinking tool like AI is going to make all the difference.
Derek:But any other place in the flow, you're not going to make a difference. And I think we're still distracted by the cool things it can do. So if you've got and I've done this, you take Chad GPT and you take the same topic and you write hip hop lyrics and limericks and go back and forth and see which one you like better. And then then turn that into a sketch from the Princess Bride. Like, that's super fun.
Derek:We still have this limitation in our creating value in our organization and that's kind of the question. So the way that I wanna frame it is, what are we trying to do? What's holding us back? And then where can we look for help? And AI, I would suggest has there's two ways you can get help from it.
Derek:One is it can help you think about all of the things you need to think about. And we tend to get locked in patterns and so AI can maybe break you out. And the second, which is probably less likely gonna be the case that the AI is part of the solution to that.
Bryn:Well, on this particular episode, the the big focus for us on this one is what is everybody missing about AI? Can you sum that up in in I don't know. Can would you would you need AI to sum that up or can you do that?
Derek:We're joking right before we got on on recording, Bren, that AI loves to summarize and sometimes that's a real help and sometimes they just hate that. You lose the detail. So I will do this one.
Bryn:Okay.
Derek:And then AI will summarize it after, I'm sure. I think the thing that we miss is that AI is a tool. And it is not a general contractor. It's not a cabinet maker. It's a tool.
Derek:And so if we wanna do something, we have to be really clear on what it is we want to do. We have to understand what forces allow us to do that and what hold us back. And then we can take the right tool and use the right tool for the right job.
Bryn:Wow. You that's pretty good summation by you. I would have to say.
Derek:Thanks. Thanks. We'll check it we'll check it after.
Bryn:Absolutely. And we're gonna do another episode. In fact, we're gonna talk about a new way to think about AI in our upcoming episode in, in a few weeks. But, maybe we can take what we've learned out of the summary that AI produces for us because we also do that with every episode of this show. So I'll be kinda curious to see what AI comes up with.
Bryn:It may come up and tell us that we were both rambling, but you know what? Focus is hard for some people. What
Derek:I would suggest to people if they're listening to this and saying, oh, Derek, I'm not so sure. Just pay attention to what you read about how AI is helping this organization or that business. And you will see what I call local optimization. You will see it helping one person do one thing better, one team do one thing better, and there won't be any discussion about how do we use AI to help our organizations and our institutions accomplish value better. That's my prediction.
Bryn:In your estimation too, I hear a lot of people say, don't wanna use that because I think it's gonna it's gonna take jobs away from people, and it might. Right? I think we're seeing that in some cases, not all cases, but there's a fear factor there for a lot of people. I'm not one of those. Think that it can make you do your job better if you let it.
Bryn:Right? And you're also able to kind of edit. You have to do your own editing. You have to do your own thinking for yourself as well. Can't AI do everything for you.
Derek:Well, if you let AI think for you, then you might lose your job. But I like the saying these days, which is AI won't replace you, but somebody who uses AI well may well replace you.
Bryn:Wow. Yeah. That's that's well put. That's really well put. Now this has been kind of a meandering episode as we try to focus in a little bit, which we will definitely do on the next episode.
Bryn:But what are we missing on this one today? I
Derek:don't think anything, Brent. I just want people to be really skeptical about running off to the next big thing about the AI can do this and AI can do that because there's this tremendous opportunity. It's it's like spreadsheets only, you know, a thousand times more impactful. Right. But spreadsheets did not get us what we thought we would get from them.
Derek:You know, we're still fragmented. We're still doing bad calculations. So let's try again. We got another opportunity with AI.
Bryn:Are you a dip of the toe in the water before you jump in kind of guy, generally?
Derek:No. No. I'm all in.
Bryn:You go in. Head first. Okay.
Derek:Yeah. So I took I took a 30 pound laptop home on the bus. Yeah. But it wasn't a laptop. It was it looked like a suitcase, but a portable computer.
Derek:Boat anchor. Took it home on the bus so that I could learn spreadsheets.
Bryn:Wow. Yeah.
Derek:And now in the in the comfort of my my office with a big monitor and and, you know, high speed Internet, I'm jumping into AI the same way.
Bryn:Hey, if you're not having fun, that's what I'm enjoying and I'm learning new stuff every single day and I think that that's how you gotta live life. Absolutely. For
Derek:And so I anyway, Brent, thanks for the conversation. I needed to get that off my chest. Okay.
Bryn:I I like that.
Derek:The chess.
Bryn:Before we depart here, so what what are we gonna talk about on the next episode, do think?
Derek:Well, I'd I'd like I've got a a new way to think about AI. I was
Bryn:a little bit
Derek:down on this on, like, how we're thinking about it. Yeah. Wrong questions. Next time, let's talk about a new way to think about AI.
Bryn:I like that. That sounds like a great idea.
Derek:Now I
Bryn:can't end this show.
Derek:No. You can't.
Bryn:You have to do it because I I just I'm just a producer here who sometimes hosts.
Derek:Alright. Well, thanks very much, Brent, for producing and hosting. And for everyone else, giving you something to think about, but don't ever lose the opportunity to consider your quest.