Join Derek Hudson as he explores Essential Dynamics, a framework for approaching the challenges facing people and organizations. Consider your Quest!
It's Essential Dynamics. I'm Reed McCollum, your permanent host, making another appearance in the essential dynamics world with my good friend and mentor, mister Derek Hudson. Are you there?
Derek:I'm here. Ready to go, Reed. Let's let's do this.
Reed:I'm so glad. And our special guest today is Ann MacTaggart, who is Derek's, cohort in crime. But, Ann, are you there?
Ann:I am. Thanks, Reed. I'm here.
Reed:Well, I'm glad. Last time we met, I brought up a hypothetical that I want to explore more if we can. So in the in the context of management attention, I want to know, you unconstrained, experts, how does my sandwich shop survive a really good chef who is better with other menu items?
Derek:So, Reed, you you put that out in front of us, last episode, and I thought it was really cool that we have a playwright setting the stage and setting up a scene, and there's motivation behind the characters and stuff. And and I think we can really jump into it. So one of the things that I think you were, getting us to think about is you have a solid board business here, which is lunch. Sure.
Reed:That's what I wanted. That's what I created.
Derek:Basic sandwiches, and and that's the vision of the owner. You've happened to hire a chef who is creative and is coming up with a fancy dinner menu.
Reed:It went from open faced sandwiches into a complete dinner menu. And, well, I haven't allowed it to be a complete dinner menu yet because I only have that, but the customers are starting to starting to notice.
Derek:So when we're talking about this principle of management attention, so there's only so much attention that management can pay, to everything that's going on. And so when they they take on too much, they get diluted, decisions aren't as good, but you have I mean, the business has to run. And so one of the things that we have talked about is stepping back from your business a little bit, separating yourself, and then seeing the business as a system.
Reed:Okay. Tell me how to do that.
Derek:And so this would be my advice to any business leader, is leave your office. Go someplace that you can be alone and calm, and then take a blank piece of paper and start documenting what your business system is. How do you turn inputs into value for customers? What's your purpose? How do you accomplish your purpose?
Derek:What are the steps? And there's usually not actually that many. And then you could start to think about what has to work well for that to happen, and you're just basically documenting what we call your value creation system. And it's not, you in the business doing a bunch of stuff, it's you outside the business saying, what have I built here? What's what's my hypothesis about how I make money and about how how this system thrives in a competitive world?
Derek:That that would be the first thing I would do. Anne, I don't know if you have, other thoughts about that.
Ann:I do. Excuse me. I would only add that, with a focus on considering the whole system. Derek talked about purpose, but on the other end, and the creation of value, but the focus on the customer. And what is the customer value?
Ann:We're not talking about price. We're talking about what the customer needs are and what the demand is for that and how you can look at the system to make it to give your customer more of what they value.
Reed:So in the sandwich shop, I've got customers who do like my sandwiches. It's established. But they're responding to this dinner menu stuff where I don't even serve bread, in in some of those menu items. I'm I'm concerned about that where it's leading me.
Derek:So so your, your evaluation of your purpose might broaden a little bit. And you would say, my purpose is to provide my customers with a great lunch. And then you could say, well, let's talk to our customers. And they say, well, you know, I I leave here with a great lunch, and then I go home and I tell my spouse, you know, you really should have some of, you know, this food, but when we come back in the evening, it's closed. So, you know, you may you may find that your customer has some ideas about value that you haven't understood yet.
Derek:And so your purpose might be to give your customers that satisfying food experience, which wouldn't limit your ability to do dinner. That's not the only part of your business model because if, if you're in a building that closes at 3PM, then your business model is not gonna work very well for dinner. So there's other parts of it that you have to consider for sure. So anyway, my advice on using this idea of attention is let's look at the process by which value is created, the receptivity of your customers to the, you know, the form of value you're putting out there. And that allows you to, to potentially change it.
Derek:Once you know what it is, you can change it. And so we talk about a hypothesis or an experiment, and you could say, well, let's open Thursday nights.
Reed:Oh, I see. And and
Derek:then we'll then we'll do an experiment, and then we'll see, you know, what happens on Thursday nights. What happens on Friday at lunch? Maybe no one comes because they got their fill Thursday night. Maybe it's too complicated to, staff Thursday night. There's a bunch of stuff that you'd learn, and then you could go from there.
Derek:Or you could say, we're going to have, like, special months. We're going to run dinners for a month. And, and then you have to pay attention to a lot of variables to see how they land, and then you can make decisions on that basis, which is typically not what people who are distracted do. They have to go on their gut because they haven't set up an experiment that they can observe.
Reed:Okay. Eric, you were you mentioned earlier, you would advise the manager or the owner to get out of the office and reflect, make a list elsewhere. Why is that an important factor? I can at my desk and think about what I'm doing in the office. Can't I?
Derek:Part of it is mindset, and part of it is actual distractions.
Reed:Oh. Right? We'll talk about that. Why is it important to to I'm really good at handling the distractions. Now am I not?
Reed:What I mean, are you saying I'm a bad manager?
Ann:I think we talked about this, a little bit in the last in the last podcast. If you physically separate yourself as well as mentally separate yourself, that allows better management attention or your attention on working on, as Derek described, what is my company's value proposition or the creation how do we create value for customers? And it's it's that physical separation, allows you space. And, you know, that's kinda nebulous, but it allows you space to focus on. So what are we really trying to accomplish here?
Ann:And you talked about in the last episode, you talked about purpose x and purpose y. Maybe maybe it's more like purpose x fat. Like, it's just bigger. So your original purpose was we're gonna be a lunch providing amazing lunches, and now maybe it's we're gonna provide amazing food for our customers.
Derek:So, Reid, one of the things that I wanted to do with this, conversation is think about this this leader you're talking about, and how to help that leader from a number of dimensions. So one of them, as we said, directly to the leader, you gotta think about your business as a system. So let's say that we're we're maybe talking about this business or another one that's maybe a little bigger, and they have a board of directors. Okay. K.
Derek:So I Anne and I, I think, have some advice to a board of directors on how you help management focus their attention. And my experience is that I have not worked with a board who fully understands their role in helping management focus their attention. And I read Znani has had you been in community theater. You've had boards. Right?
Reed:Oh, well, I've I've had boards. Yes.
Derek:So I would say that my advice
Reed:My board is in theater anyway, frequently gets in the way rather
Derek:than Yeah. So I would say my first piece of advice to a board member or a whole body of a board, for a not for profit, for a small business, for a large multinational, number one, do no harm.
Reed:Sort of like a medical board. Okay.
Derek:That's right. Whatever you do in a board meeting, don't distract management. Because boards have an infinite ability to distract management by asking questions. Because typically, that's the exchange. The board wants information, management goes and gets it.
Reed:Mhmm. Mhmm.
Derek:And management isn't in a strong position to say, you don't need that information. I don't know why you would ask that question. That's that's so hard. I mean, I've been in that position. That's a hard position to take.
Derek:So you say, yes, sir. Aye aye, sir. How high, sir? And you go and you get the information and bring it back to the board.
Reed:And then the board dissects your budget and says, why are you paying this person, this this, why are you in my business, why are you paying the costumer so much? Cut back on that. We're we as a board demand that you cut back on the costumes. And then the show looks like everybody's using the clothes
Ann:from home.
Derek:Fine. It's fine if you're doing Oliver Twist. Other than that, it's so so, yeah, they they have the ability to dive into details and ask for explanations, throw out, you know, crazy new ideas, and and management just kinda has to respond. And so my first advice to a board this is not this is not best practice. This is the it's table stakes is don't distract management.
Ann:So we were gonna talk though in this episode about how. And I would offer up, just as we just had a conversation about the CEO, how to focus their attention, same thing. We talked about looking at the business as a system and then separating yourself a little bit from the system. Now the board is already a little separated, but, if if there is an opportunity to use management's creation while they were focusing on creating or documenting, as Derek mentioned, documenting what is the business, what is our purpose, what is our value creation system for our customers. Because that's why we're all here is to serve a customer or to serve the purpose, the noble cause, sometimes we call it.
Ann:If you can get your board to understand that and it resonates with them, When the board attempts to, distract and ask questions about your budget and cut back this and cut back that, you have a basis to politely and professionally push back with questions with other questions on how does this serve our purpose? How does this make sure our customers are getting the most value out of out of, you know, dealing with us? And so I would suggest that focusing their attention on what is creating the most value then rather than distracting the management to go dig into stuff.
Derek:So so and and looking at that same situation from the other point of view, the board's point of view, the board should insist that management can explain their system for creating value. Yeah. And should insist that that management reflects a clear purpose that has a business case for it. And then the board's job is to hold management to really two things. One, stay focused on that system, and then two, run it well.
Ann:Yes.
Derek:And so you could have some sort of boring, but effective board meetings, because you're always talking about the same system.
Ann:Yeah.
Derek:And you're talking about the one part of the system that isn't going well, or the one opportunity that's gonna make the system better. And you have a very focused board meeting on a particular topic that moves things forward, as opposed to the kind of distractions that we've been talking about. So I think management can play a role in that. But if you're a director, in any situation, you can start the process by saying, could you describe for us, you know, your understanding of the purpose? Could you describe for us the way that you accomplished that purpose?
Derek:And then keep coming back to that. So rule number one for boards is do no harm. Rule number two is get us get us understood system. And then rule number three is help management optimize the system.
Ann:I think it would be really sorry.
Reed:I'm sorry, Dan. I was
Ann:Yeah. I think it would be really cool if boards So you know how when you're on a board, one of the first things that conversation in a meeting is to declare your conflicts. You know, I have a a perceived conflict of interest here or there, so I need to recuse myself here or there. Wouldn't it be cool to at the beginning of the meeting, even before that, that you're actually reminding everybody of why we're here and what the purpose is, who the customer is? And that then takes us out of potentially or sets the level of engagement, but also sets the level of detail that we're trying to stay at as a board so that we're not distracting management.
Ann:We're not going off on a on a journey in that meeting, but we're actually trying to help provide value to that customer.
Derek:That's, that's profound. We're we're gonna get a sound bite out of that, and we're gonna we're gonna start educating ports. I want I wanna, take take another topic though, and this is a this is a bit of a dicey one for us. So we're gonna stay positive on this.
Ann:Okay.
Derek:And this is our advice to advisors of business.
Ann:Oh. Okay. Yeah. Yeah.
Derek:Yeah. On helping management focus. And and again, we could go negative or positive. So maybe a thou shalt not I'm gonna turn it into a thou shalt. Anyone who's engaged as an expert to, to write a set of a report or set of recommendations to management about what they should do to improve their business should factor in to their remarks management's capacity to absorb what they are saying and to implement it.
Ann:And keep it not 45 pages.
Derek:So it there is no value in providing someone with a bunch of recommendations which they don't have time, don't have the, you know, the attention or the even the, like, the capability to implement. And I have written reports like that. Let me tell you. So it's it's not like I haven't done that. But if you really wanna be effective, if there's one or two things that, you think your client could really do to move the ball down the field, then don't give them anything else.
Ann:I would can I I I wanna jump in here? So I have been a receiver of that kind of a report, and it often happens in, the process of a company or a not for profit. We're gonna go do a bunch of stakeholder engagement, and we're gonna find out what's going on in our in our environment and, look for some feedback on how we're doing and what we should be doing and what we should not be doing. And so they go out. They spend a bunch of money and a time.
Ann:They pull in all this data. You come back with 55 recommendations, but they're they're conceptual. This should be better, or this area should be improved. But the people that are required to implement them, they have no idea what the how piece. And so there's there's something missing in that report or the generation of that report or the communication of what it means to the people that have to implement it.
Ann:So if you can I don't know how you how you get better at that, but the tying back through the value creation system before you even start the process to understand what those recommendations are gonna be when they come back, I think, would be a good start?
Derek:So let me give you a bizarre, analogy that just came to mind. I ride, my bike on the bike paths a lot. Mhmm. And we also drive on roads and walk on sidewalks. And from time to time, you'll see a crack in the sidewalk.
Reed:I don't scare about those.
Derek:Where where, you know, it's it's sticking up and it's in the way and it's gonna people are gonna trip on us, stuff like that. And somebody from the utility or the city or somewhere has come with like a yellow spray can or a purple spray can, and they spray the stuff that needs to get fixed.
Reed:And I have so many purple and yellow marks on my body. I can't tell you.
Derek:Yeah. And and I just wonder, I mean, I'm sure there's a good process reason for it, but the but the metaphor is there. It's pretty easy to spray the part that needs to get fixed. It's far more effective to fix one of them. And so if you're an expert advisor, help them fix one, rather than get your spray can out and spray kilometers of roads with, with the, the potholes that gotta get fixed.
Derek:So so I but we talked about being more specific and more helpful. And so if you're an expert advisor, as Anne said, maybe you should take some time to understand the value creation system that the company has, even if they can't describe it. It's there. So as a consultant or advisor, you could try to understand that, and then see where something might be stuck, and then have a conversation with the client. Because our experience is the outside advisor doesn't know enough to recommend how to get unstuck.
Derek:And the client is too stuck to be able to think through how to get unstuck. So what you need to do is put the two together and have somebody ask questions, and go through a thinking process, and have reference points like drivers and constraints, to tease it out. And so then, at some point, what we call a value explosion happens, when the inside of the client starts to move, and they see things in a different way. But the problem is almost always solved with the inside of the client.
Reed:So the The inside of the client.
Derek:The the insight of the client. Like the client's
Reed:wisdom Thank you.
Derek:The client's wisdom is there, but it's trapped because they're stuck.
Reed:And
Ann:because they're unfocused.
Derek:They because they're not asking the right questions. They're not challenging assumptions. And so that's the that's the value of an outside adviser. So,
Reed:You know, I think it's so important. I I think it brings value just to ask the management team and the people employing that management, you know, who are under that management and actually doing it to remind the employees and to and to perhaps they've never even been asked, what is the value of what I do? What are we trying to do? Yeah. And and for some of us down in the trenches, that reminder is inspiring.
Derek:Absolutely, Reem. I've worked for organizations that, every employee identified with the purpose of the organization. Mhmm. And and we've talked about this before. And there's so much you don't have to do.
Derek:Yeah. And if you're trying to, while we talked about the, the boss that has to touch everything, well, that's super that's that's not effective. I've also worked with people who try to create a system for everything. And, a system of food pellets and electric shock, you know. And then you have to design the system.
Derek:Right? Like it's if you want to do behavior modification, that's a complex system you have to design. Or you could just let the people know what you're trying to do, and then help them see the whole system, and then talk about the whole system. So so one of the things that we where and I know we're running out of time, we talked about, like, what's your advice to an employee who's not at the top? And it would be that, now that I'm coming back to it.
Derek:It would be ask your boss, what's the system? Where does my stuff that I work on come from? Who gets it when I hand it off? Can I can I look over the fence and see the whole system? That that would be the the advice I would have for employees.
Derek:It's just this says ask. Try try and get people to see that.
Reed:I think that's
Ann:We've worked with a number of clients to help them, work through building or articulating what the system actually is. And it's really a powerful, piece of work at the end because it can update language. It can reengage. It can validate already people who are already engaged. And, using that then helps them to identify constraints, opportunities, and improve ultimately the the the flow through the system to achieve the purpose.
Reed:That's lovely. I so appreciate that. I think I've done a marvelous job today. I have to say, I am learning more every time I talk to you. And, I am especially grateful for the value, consideration part of what we talked about today.
Reed:What is what is my value to the organization and how do I how do I fit in the big picture is, is something that I think employees and people, all of
Ann:us Mhmm.
Reed:Struggle with at some point.
Ann:And we all need to know where we are in the system.
Reed:Yeah. Yeah. Yeah. Yeah. I I very much appreciate it.
Reed:And, why are you so smart? Where do we find you if we want to get in touch with you?
Ann:Well, I'll just answer question two. You can reach me @getuntunedstrain.com.
Reed:Oh, I like that. And, Derek, I can't imagine anybody wanting to get hold of you, but where would they find you?
Derek:Well, if they can't get a hold of Anne, they just check at getunconstrained.com, and I'll find Anne for them.
Reed:I see. Good. Good. Okay. There's your call.
Reed:Thanks
Ann:for the word confidence, guys.
Reed:We have discussed that. Now we know Derek's value. And, of course, I have demonstrated my value in every word I've said. For Derek Hudson and, Unconstraint, and Anne McTaggart, our special guest today, thank you for the conversation, and thank you to Brynn Griffiths in the studio for facilitating our our little talk. And, until next time, folks, consider your quest.