Executive Interview: Q&A with Derek Hall, Vice Chairman & Chief Executive Officer ECONET Inc.

Derek Hall has been a significant player in the supplements industry for the last 13 years, but as a quiet and subtle presence not usually visible to those outside his immediate circle. His vision of the future as one that requires integrity and room for human values and needs is impressive for a CEO coming out of the pharma industry. As I found out working with Derek on the steering committee for the Natural Products Foundation, he writes one heck of a business plan. 1) You have been in the industry a long time. Tell us about your background.

I’m celebrating 40 years in the healthcare industry this year, a career that has spanned two distinct but parallel industries. In 1993 I joined the natural products industry following 26 years in the pharmaceutical industry where I spent the last 10 years as a senior vice president at the corporate headquarters in San Francisco. Following my joining the natural products industry I have served as President/CEO for Nature’s Way, Botanicals International, Alpine Health Industries (now Ideasphere), and Enzymatic Therapy Inc. I am currently the Vice Chairman & CEO of ECONET Inc., a global family of companies which is the parent of three U.S. based companies, Univera Life Sciences (formerly Oasis), Aloecorp and Unigen Pharmaceuticals, Inc., and four additional companies based in Korea, Russia and China. Besides my board seat at ECONET, I serve on the boards of Primus Pharmaceuticals, Inc., Bastyr University, South Puget Sound Community College Foundation and the Thurston County Economic Development Council.
2) What would you say are the biggest changes in our industry that you have seen over the years?
The growing sophistication of our industry’s systems and products. I see more innovation in new products and increasing research but we still lack in our commitment to human clinical trials to determine safety and efficacy. I am extremely pleased that an increasing number of companies have taken up the challenge to set a “high ground” standard for safety and quality, however there is much work to be done to recover from the early damage caused by unscrupulous marketers of products that simply do not have a positive affect on humans. I sense an opening for our industry to excel as the drug system seems to me to be broken or at least seriously damaged. I feel that we are sitting at the edge of another opportunity to truly shine with the newly proposed AER legislation; it will take courage by leaders of industry to stand up and be counted on this key opportunity to achieve greatness. It’s my hope that we will indeed support this legislation and not let another great opportunity pass us by.
3) Looking back, what are your greatest successes?
I will restrict my comments to business successes. Having the sense to make a career in the health care industry has to be first as it has provided for me blessings that otherwise I would have missed. To see lives change for the better from using scientifically proven and safety tested products is worth all the headaches and grief that accompany business in today’s busy world.
Having the determination to seek the high ground for the products produced by the Companies I have been privileged to lead is certainly up there. The opportunities to market sub-par products abound but I have never had to face any challenge to that principle within the companies I have led.
4) What would you do differently?
I would spend more time working with regulatory agencies and leading them to responsible guidelines rather than wait for the various agencies to determine the laws by which we must live. My experience, after working on the pharma side of health care for so many years, tells me that we would be much better off today had we done so.
5) Would you describe what ECONET, Univera LifeSciences, Aloecorp and Unigen do?
The ECONET is the name for our global family of companies. We currently have operations in Korea, China, Russia, Mexico and the United States. The US companies consist of Aloecorp with farms and manufacturing operations in Lyford, Texas and in Gonzales, Mexico. Aloecorp owns the oldest Aloe vera farm in America and consistently supplies upwards of 25% of the world’s aloe vera. Unigen Pharmaceuticals is the R&D arm or science engine of the ECONET, gathering plants from around the world searching for new breakthrough and patentable ingredients for a variety of industries. Univera LifeSciences (formerly Oasis) is a relationship marketing company which utilizes the ingredients from its sister companies in bringing proprietary and novel consumer products to market. All three US companies are headquartered in Lacey, WA.
6) How would you describe the ECONET’s objectives?
-To bring the bounties of nature to all mankind. We conduct pharma grade R&D on natural products and use the discovery process to uncover unique molecules with the potential to improve the quality of life for all ages. -To globalize the products and become the largest products company for the world by 2011; this we will accomplish both by organic growth as well as by acquisition.
7) What is unique about the organization and its approach?
We spend millions of dollars to do it right. We endorse vertical integration in an effort to control the quality all the way from the “farmer to the family”. Large corporations spend millions on vertical integration with the expectation of a huge return on their investment by controlling the costs. We might actually put cost into the system to ensure the product quality. Lastly, we endorse the culture of servant leadership among our employee base as well as in the Univera Life Sciences distributor organization. We are convinced that this culture of serving others by whatever means is possible will truly define us in the generations to come.
8) How do the ECONET companies interact or apply synergies?
Our vertical model allows each company to support the other. Our companies buy their raw materials from our farms and manufacture the finished product in our production facilities. Our strategy planning is done globally and each strategic initiative cascades down through the company CEOs to each and every employee. Every employee throughout the global ECONET is appraised quarterly on his or her progress toward personal quarterly and annual goals . Each employee is accountable for the completion of those goals and is rewarded monetarily for those efforts.
We have a five generation/hundred year business plan with milestones and checkpoints that will guide us through the years. Our mission, vision and values are clearly defined and will create the scalability and sustainability required to fulfill the objectives of the business model. We require accountability and ownership and facilitate that strategy via the utilization of the BSC. . This, and other internal systems ensure congruency at all levels of the ECONET.
9) What is the biggest challenge your organization faces?
The challenge of growth is sometimes overwhelming…I often feel the company is running me instead of the reverse of that. We are constantly seeking talented executives to join us and share the journey with us but it is a slow process. We look for talented individuals for sure but we want those who are “cause” driven and who are interested in a culture of sharing and giving and who are not afraid of “squishy” words like love, joy, and happiness. We believe our culture, not our financial return on investment, will define us for generations to come.
10) What should industry's leading executives do to pave the way for growth?
Stop thinking about just their own company’s short term return on investment, rather think about what needs to be done to secure the industries success for the next several generations. Executives must come to the conclusion that we are much stronger together than individually. Executives need to put aside the issues of competition and capture the big picture of cooperation and respect for each others’ strengths. If we don’t do this there will be no prize worth keeping. The ECONET will shortly be sending invitations to 50 plus natural products CEOs around the globe inviting them to a, completely underwritten, three day global symposium at an international city to discuss the issues that face us and to leave the symposium with agreements for initiatives that will potentially elevate the global industry to a new level of credibility, quality and science.
11) What frustrates you the most about the current environment?
-Having the greatest products in the world and not being able to tell the complete story is high on my list. Secondly, the seeming inability for our industry to come together on critical issues that have the potential to affect us both positively and negatively for decades to come.

12) What steps have you and the ECONET taken or will you take to help handle these frustrations?

We are spending millions on science to increase the ability to share the story with regulatory bodies and to convince them that the ability to make a claim on a proprietary natural molecule needs to be directly connected to the depth of science and research conducted on that molecule.

13) Should industry take measures towards self-regulation and if so what steps?
I suppose it should never be too late to improve the steps to self regulation. The opportunity was a much easier initiative to begin 10 years ago but it will take a few “high ground” companies to set the standard otherwise we will not be believed…again. We have been out-hustled, out-scienced and outspent by the pharmaceutical industry which decades ago decided to take charge and have done a darn good job at it. It will be hard to steal the ball now but as I stated above there is an opening at present. Self regulation must begin by exposing those that choose to embarrass the industry and support regulations that will run them off. “High ground” companies should strive to be ahead of regulatory especially in the interest of public safety; a concept that big pharma seems to have forgotten.
14 ) What other needs do you see for industry?
Companies give money to causes and initiatives which often gain us nothing. I often wonder what we could do with all that good money if we were to consolidate it and turn it loose on the consumer and spend it on behalf of a coalition of “high grounders” who are looking out decades not just months. Institutional messages on behalf of the “legitimate” dietary supplement industry over a variety of different media would bode well for all of us over time but it is not a short term initiative or a quick fix.
15) What doe the future hold for ECONET?

The ECONET will continue to grow because its mission has meaning beyond the financial aspects. Its initiatives are based in science, focused first on changing lives for the better and secondly for financial return. At present the focus in the ECONET is to gather a team of experienced, cultured, and expert executives that will guide the venture for the next twenty years, and take us far down the road toward our 100 year business plan.

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