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I actually don’t like going away but, when I do, I find that things which were complicated suddenly aren’t.
Here’s what I do to gain perspective:
-exercise 4-6 times per week (20 minutes after I finish, problems miraculously “solve themselves”)
-“move the furniture,” which means getting up from your desk and walking around—for example, when I answer my phone, I get up and walk outside
-organize occasional retreats, either by myself or with key personnel and always in a space that has a high ceiling—for some reason humans are more creative when they are in a place with high ceilings or outside…
-occasional travel to a new city/place
-force myself to meet new people who have a fresh perspective
-get plenty of sleep
-don’t drink too much or take anything else
-be optimistic—every problem is also an opportunity
I wrote this (in 2013) about how to become more creative (in my Entrepreneurs Handbook II, https://brucemfirestone.com/product/entrepreneurs-handbook-ii/):
14.2 Steps to a More Creative You
Here is my list on how to be more creative:
“Sometimes I can’t recall my mental blocks, so I try not to think about them,” Emily Greenfield, 5th year Architecture Student, Carleton University, Ottawa, Canada. September, 2001.
Exactly right, Emily. Think hard about a problem; then if no solution arrives, sleep on it. Let your subconscious mind work on it for awhile. If no solution comes to mind the next time you turn to the problem, repeat the procedure.
* Submitted by Darcy McRae, Eric Sprott School of Business Graduate, 2001.
** For example, an entrepreneur I know in the moving and packing supplies industry built the number one firm in his city in just six years by being creative in an industry not known for creativity.
He did seemingly simple things like offering to deliver packing supplies to the customers of all his moving company clients rather than delivering it to them. In that way, sales people for moving companies (who were previously re-delivering boxes, wrapping paper, tape, bubble wrap, etc. to their clients) could spend more time selling moves and less time delivering boxes to people who had purchased moves from them.
As a result of this innovation, 98% of all local movers became clients within two years. Creativity applies to the processes of business as much as to its technology.
Postscript: In a review of Steven Johnson’s book, Where Good Ideas Come From: The Natural History of Innovation, Harry Tucker identified seven key areas that must be understood in order to maximize creativity:
4.Serendipity – the notion that while happy accidents help allow creativity to flourish, it is the nature of how our ideas are freely shared, how they connect with other ideas and how we perceive the connection at a specific moment that creates profound results.
14.3 Innovation and Survival
The only way to boost your take home pay is to increase your productivity. And by now, just about everyone has realized that in a global economy, the only way to do that sustainably is to innovate. Working longer hours for less pay will also boost a nation’s productivity stats but who wants to volunteer for that duty?
My wife recently introduced me to a new kind of dental floss—it is sold by a major consumer products company. Their dental floss is caked with a toothpaste powder. This is so when you floss your teeth, toothpaste is applied to hard-to-get-with-a-toothbrush areas, namely your gums between your teeth.
Now this might not sound like, say, the equivalent to e = Mc**2 but, heck, I wanted to shake the inventor’s hand. If you think eating nice foods with your own teeth in your 50s, 60s, 70s and 80s (frankly, I am not counting on anything more than that) would be nice, this is an important innovation.
And I am sure it is not trivial to do this. Adding toothpaste powder to a long string isn’t easy: first, it has to stick to the string, second, dental floss is exposed to a lot of different environments and the toothpaste powder must not dissolve when the floss gets wet or is exposed to a lot of humidity and, thirdly, it can’t rot and poison people if it sits around the store for a while and then in your cupboard or (worse still) your shower stall.
Now I have read lots of books on becoming more creative and innovative, and I can recommend a couple of new ones: Think Better: An Innovator’s Guide to Productive Thinking by Tim Hurson (McGraw-Hill, 2007) and The Black Swan, The Impact of the Highly Improbable by Nassim Nicholas Taleb (Random House, 2007).
Hurson has a formula that he applies to organizations to help them become more creative; part of his formula is using Galeforce—writing down as many ideas as you and your team possibly can in five minutes (at least 50) to solve a problem you face. By going really hard at the problem in a short period of time, you prevent group-think from taking over the session or guess-what-the-boss wants behaviours or satisficing (settling for the first likely useful idea before you get any other ideas on the table) or allowing your own or others critical judgment to suppress ideas by saying things like: ‘that sucks’ or ‘that will never work’ or ‘we can’t do that because we have never done it that way before’ or ‘we don’t have the resources to do that’…
Hurson also has a six step Productive Thinking Model that he takes his clients through that looks pretty useful.
But one of the things that I think is missing from his model is provision for Black Swan events. Taleb’s book’s title is based on the idea that just because you have seen thousands of swans and all the swans you have seen are white, that doesn’t mean that there aren’t any black swans. I think that Taleb’s book will appeal to entrepreneurs a lot.
I have flown with Go Travel Direct dot com a few times. Their business model was certainly a sound one in my view. Let people book charter flights and hotels online; fly from my home town (Ottawa) direct to their vacation destinations without having to transit through either Montreal or Toronto (which adds as much as one day to trip times); fly and stay at nice places for not too much money if you book well in advance and fly full planes and get cheap hotel rates because you are delivering a lot of people to the resorts.
They later added to their business model by buying their own airline, Zoom Airlines. This way, they would have more control over their schedules and costs (or so they thought).
On the afternoon of August 28th, 2008, Zoom went bust and we have yet to see what will happen to the older and (I hope) more stable Go Travel Direct dot com. They have an alternative carrier lined up so maybe they will hold on. But clearly, the consumer’s confidence in both has suffered.
I was wondering what could possibly have been done to prevent the demise of Zoom. The business model absolutely requires people to book well in advance. It is the only way to be sure that you can fly full planes. And people who book in advance want certainty about the price they pay and they want low prices.
But who would have thought two years ago that oil prices would reach $140+ per bbl? If anyone tells you that they predicted that, they are probably not telling you the truth. I predicted higher fuels prices over six years ago (which is why I bought a VW Beetle at the time) but there is no way that I would claim I foresaw $140 per bbl.
Neither did Zoom*. Their fuel costs went up over $50 million in less than a year and there was no way they could pass those rising costs on to their customers. This is a Black Swan event of the first order and shows you that sound business models can go south in a hurry and planning can be even more useless.
(* This would make a good case study and I hope one of my student teams will take this on. If Zoom and Go Travel Direct dot com had anticipated the rapid increase in fuel costs maybe they could have built-in an inflation factor into their pricing policies. But I would guess that if they had done this, they would have lost many of their customers and actually may have gone bankrupt even sooner. It is a difficult and possibly intractable problem but, perhaps, some creative genius student will solve the problem in his or her case study. An A or A+ awaits the student who can solve this conundrum.)
Every year between Xmas and New Year’s, I do a bit of goal setting and planning for the next year. As usual, I did exactly that between Dec. 26th, 2007 and January 7th, 2008. I sketched out a plan and put it up in my office where I could see it from my desk. Luckily for me, no one else could see it. I looked at it again at the end of August 2008 (just eight months later) and it was embarrassing. Every one of my plans lay in complete disarray—events had overtaken them and there wasn’t a single thing on my list that had panned out.
In that time, I had: gotten my real estate brokers license, sold an existing business, changed jobs (twice) and had to learn to live with higher interest rates and tighter credit restrictions because of the melt down in the sub-prime market. Things that were going to get done, didn’t and things that were going to get built, didn’t either.
That doesn’t mean that 2008 is a write-off; far from it. I work with really nice people, I am glad I sold one of the businesses so that I could concentrate more on my University work and my work with the Brokerage and I hope for better days ahead. When one door shuts, two more open!
What I am saying is that being more innovative and creative is very important. I believe that you can learn to be more innovative and creative. But part of that is learning to take advantage of unpredictable events—somehow seeing that toothpaste powder and dental floss go together or that getting my broker’s license would lead to a completely new situation in my life, a better one.
Entrepreneurs know that necessity is the mother of invention and, while I wouldn’t wish all of the circumstances I have faced to be replicated for anyone else, I think you have to recognize that chance plays a big part in life. Mind you, you have to be open to change, be able to see how seemingly unrelated things are, in fact, relevant to each other and be prepared to seize the day.
14.4 Theoretical v Practical Education—Plus Ways You can Become More Creative
I teach business modeling but essentially I am teaching the theory of business modeling. Knowledge of the underlying theory allows a student to construct new models to answer new questions.
A practical education involves giving students the ability to choose from a list of standard solutions. This has the advantage of being quick and efficient but not terribly creative.
Students often find it frustrating; some of them feel that a Professor’s job is to tell them what is expected of them then teach them the material so they can successfully complete their assignments and pass their exams. These are the students for whom efficiently producing top marks with the least amount of effort is their highest priority. These are also the students least attracted to and suited for a theoretical education and the drive to become more creative.
Understanding yourself—do you want to be a technician or a theorist—is part of the path to greater wisdom. If you understand yourself better, you will probably be a happier person, first, because your expectations of yourself more closely match your abilities and, second, because you can look inside yourself and work on the things you wish to change/improve because you know what needs changing/improving.
14.5 Ordered Thinking—Creativity Borne of Necessity
In my experience, there are at least three different types (or orders) of thinking. Here is how I categorize them:
14.5.1 First Order Thinking: The Bureaucrat
It’s linear. And circular. And leads us to repeat things and do things the same way, over and over again. Why? Well, here’s how its rationale goes:
We do what we do because we have always done it this way. It will always be done this way because that’s the way we do it and because that’s the way it’s always been done.
Arena designers and stadium owners responded this way when asked: “Why do the people who pay the most (for suite leases) sit furthest away from the rink, floor or field?”
Suites were always developed as ’skyboxes’ because that was the way arenas were always built until Gino Rossetti challenged this shibboleth with some second or third order thinking and created the more intimate and more financially viable modern arena design, starting with the home of the Detroit Pistons, the Palace, in Auburn Hills, Michigan.
Rossetti applied European opera house design (multi-tiered levels of suites) to the arena and revitalized the construction and revolutionized the (private) financing of new buildings in North America in the late 1980s.
When he designed Scotiabank Place in Ottawa, he put in three concentric rings of suites. There were 144 of them and they not only changed the look and feel of the place, they made it a viable private sector project because, if you pre-lease 144 suites for, say, an average $100k per yr each for five or ten year terms, then the developer has a committed revenue stream of more than $14 million per year which they can take to the Bank for a construction loan and then a takeout mortgage.
Prior to Rossetti’s innovation, revenues were mostly from individual ticket sales and most of these are spot-sales, not pre-committed dollars and, hence, cannot be securitized for a lender.
These rings of suites also changed the overall form of these buildings: they brought regular seating closer to the action by creating balconies over top of each ring, which also made the volume of these buildings smaller. This not only reduces cost but makes these arenas more intimate and, therefore, more exciting places to view professional sports or arena events.
14.5.2 Second Order Thinking: The Entrepreneur, the Designer and the (Successful) General
It’s curvilinear and non-linear.
It looks around corners. It sees advantages in problems. It is lateral. It turns problems into opportunities- it is fluid and changes direction, unexpectedly and surprisingly.
Ego does not get in the way of a change. The not-invented-here syndrome is absent.
Lawyers, journalists, politicians and chess masters all think this way as do successful entrepreneurs and Generals (at least those that realize that the best business or military stratagem and plan are those that are flexible in the face of unanticipated developments in the marketplace or enemy counteraction.)
Here is an excerpt from Shogun, by James Clavell, published by Dell Publishing, New York, 1975, p. 548. This is an exchange between Lord Toranaga and Mariko concerning her report to Toranaga on Yabu, Overlord of Izu Province in 15th century Nippon:
“What’s your opinion of Yabu?”
“Yabu-san’s a violent man with no scruples whatsoever. He honors nothing but his own interests. Duty, loyalty, tradition, mean nothing to him. His mind has flashes of great cunning, even brilliance. He’s equally dangerous as ally or enemy.”
“All commendable virtues. What’s to be said against him?”
“A bad administrator. His peasants would revolt if they had weapons.”
“Why?”
“Extortionate taxes. Illegal taxes. He takes seventy-five parts from every hundred of all rice, fish, and produce. He’s begun a head tax, land tax, boat tax- every sale, every barrel of saké, everything’s taxed in Izu.”
“Perhaps I should employ him or his quartermaster for the Kwanto. Well, what he does here’s his own business, his peasants ‘ll never get weapons so we’ve nothing to worry about. I could still use this as a base if need be.”
“But Sire, sixty parts is the legal limit.”
“It was the legal limit. The Taiko (supreme ruler of Japan, Ed.) made it legal but he’s dead.”
Question: can you spot second order thinking here? There are three examples in this exchange. The point here is not to adopt the morals and mores of 15th century Japan but to understand that, for example, sometimes your competitors (your enemies in the case of Lord Toranaga) can be your strongest allies. Why do the Exxons of the world locate next to the Shells or the Burger Kings next to the McDonalds? When I was a developer, I found that when a competitor developed a new office building ‘for lease’ near one of ours, it was good for your business: at least some of the prospective Tenants that came to view their property would cross the street to take a look at ours and we both ended up creating a new office node with a higher market share than if either of us had occupied the neighborhood alone.
14.5.3 Apple Looks at the 3-D Problem from the Screen out to the Viewer not from the Viewer to the Screen
Apple was recently granted a patent for a 3-D screen that will not require those rather clunky stereoscopic glasses. How do they do it? By projecting slightly different images to each eye by detecting where each of your eyes is using a Microsoft Kinect-like device. I am not sure if this is 2nd or 3rd order thinking but it is pretty far out.
(Source: https://www.thoughtgadgets.com/2010/12/what-to-think-of-apples-coming-3-d.html)
14.5.4 Ethical, Legal and Design Challenge
Problem: X Development Company (XDC) would like to build executive travel apartments targeted for use by the tech sector but City of Anywhere’s By-laws state a single dwelling with two kitchens is not considered a regular dwelling unit; instead it will be subject to several sanctions with respect to building code, building permit and zoning.
XDC would rather not incur the extra cost and time it will take to comply with all regulations but, at the same time, they do not want to break the law. XDC is trying to optimize rental revenue and NOI from its travel apartment business but they know that if they follow all City of Anywhere regulations, it won’t be able to.
Possible Solutions: It appears XDC’s options are 1. Break the rules, 2. Spend the time and pay the higher costs (for a rezoning) and greater taxes (two development charges instead of one) in order to meet regulations, 3. Not build in the City of Anywhere, 4. Just build a single (larger) unit with higher total costs and lower revenues.
But wait, there is a 2nd Order Solution: Understand the rules and work with them and around them (legally). Some further thought and some innovative design yielded another option: build one building with three suites that share one front door and a single kitchen but give each micro-apartment its own private, secure areas. Now XDC can build a standard single family housing unit with separate bathrooms, living and sleeping quarters but with shared kitchen quarters that will fit into any single family zone in the City of Anywhere.
Result: compliance with City of Anywhere By-laws, lower costs than first anticipated (only one kitchen and one laundry room required for the three units), higher revenues (three units generating at least 50% more total dollars than one larger unit) and increasing profitability for XDC.
This coop-style residence shares a single entrance, kitchen, powder room and laundry room. Everything else is private.
14.5.5 Third Order Thinking- Quantum Effects in the Human Brain, Quantum Leaps, Breakthroughs: the Scientist, the Social Scientist, the Teacher, the Business Person (Genius can be anywhere)
Imagine telling anyone (that is, before Einstein’s discovery) that matter is simply a form of energy and that the two are related by the square of the speed of light, which is, itself, a constant, fixed and the same everywhere in the Universe and the ultimate speed past which nothing can go? Then you add that as you approach the speed of light, time itself dilates, i.e., slows down, and that, if you were to accelerate yourself to something approaching the speed of light, you would age much less quickly than your children left here on Planet Earth?
e = mc2, Albert Einstein.
Archimedes solved the problem on how to determine the purity of gold in an irregularly shaped object. His focus was improved by the threat of death if he failed.
“Eureka, I have found it!” Archimedes exclaimed when he finally discovered how to measure the specific gravity of an irregularly shaped object. He observed how the level of the public bathwater changed as humans immersed themselves or decanted themselves and realized its applicability to his problem.
Priceline.com discovered a revolutionary pricing model: consumers could name the price they are willing to pay for businesses to accept or not rather than businesses setting their prices for consumers to accept or not.
Quantum thinking is completely different from linear or curvilinear thinking. Humans have the ability to make mental (quantum) leaps, to distill the essence of a thing from the thinnest vapors of prior thought. The sub-conscious mind is undoubtedly involved; many of these discoveries appear to be serendipitous and certainly unplanned.
But they do not come out of a vacuum. They come from training and focus on a problem, sometimes over an extended period of time with respites in between. Then, one day, the idea pops fully formed into our heads.
Leonard Cohen was found one night in his hotel room banging his head on the floor saying: “I’ll never be able to finish it.” He was referring to the words for his anthem, Hallelujah. This is not the preferred way to resolve a creative dilemma.
The good news is you can train yourself to become more creative. Also, you can, through your awareness of different types of thinking, try not to be limited by your past or by past ways of thinking or doing things.
14.6 Measuring the Value of Design and Creativity—Value of a City’s Treescape
This is an analysis I did in 2003; I was trying to show that the worth of art and creativity is significantly under valued by society. The context was a debate we were having at the time about whether the profession of architecture was doing enough to explain its value proposition. This is a debate that extends to all creative pursuits: for many artists, their works become more valuable after their passing.
So I asked the question: “Can we change the equation for creative persons so that: a) death is not a career move for them and b) put another way, can we teach creative persons to more clearly define and value their contributions so that they can get rich while they’re still alive?”
14.6.1 Introduction
We can usually quite easily measure the cost of a ‘thing’ and, as a result, we find it easier to establish a budget for the cost of a new project than to determine, with any degree of confidence, the revenues or stream of benefits that flow from that project.
At Carleton University’s (CU’s) School of Architecture, we are trying to change the School’s paradigm from a preponderant reliance on justifying Architectural Design and related Fees for Service based on the cost of a design to a new paradigm, where the benefits created by excellence in design services are also taken into account.
Gosh, even McDonald’s Restaurants are converting from the Dark Side and spending more on the design of their franchises (at least in France they are). McDonald’s is doing this for a reason—better designed stores are attracting more customers, who are staying longer and spending more per capita.
In other words, better design is a paying proposition. What we want to see is that more of the value created by designers is captured by them through higher fees. Higher fees can be justified to the client by higher Return on Investment (ROI) for clients. Today, everyone should want to be able to measure benefits as well as costs; as they said in Jerry McGuire: “Show me the money.” And get higher fees too.
So here are the three questions we are going to ask in this essay:
Q1. Can we measure ROI from dollars spent on design?
Q2. How much of the ROI can be attributed to greater net benefits derived from design and creativity versus, say, lower costs or higher revenues derived from other sources?
Q3. How can creative persons obtain more value from what they do?
For example, what if we could show by a cross-sectional analysis (i.e. a comparison with other existing museums) that an extra, say, $35m invested in the design and construction of a National Museum would result in an increase in annual visitor count of 2 million at $10 each for admission? Well, obviously, we don’t need to go through the rigmarole of a spreadsheet analysis to know that a $35m additional investment that produces an extra $20m per year in revenues is worth doing.
Folks like former Canadian Prime Minister Pierre Trudeau and Architect Douglas Cardinal understand this at the ‘nano’ scale—they just have a gut feeling about this stuff; they get it intuitively. Mr. Cardinal often describes Monsieur Trudeau as his ‘patron’ with respect to the design and construction of the fabulous Canadian Museum of Civilization. Douglas uses the term in its purest form; he understands that creative people need the support of powerful people and he respects utterly the fact that creative people are entrusted with great responsibility to protect the interests of their patrons and their audience too.
An unbelievable design like this has got to be worth more than just another square box, so higher fees should be justified on the basis of more hours worked on the part of the Architect (clients don’t really care about this) and a better product (many clients don’t care about this either). No, what most clients want is to be shown a higher ROI for their money before they will pay you more.
At CU, we teach our entrepreneurs and entrepreneur designers (it warms my heart to see how many Architects are now taking an interest in these matters) to measure ROI using an Internal Rate of Return (IRR) methodology. The IRR seems to be the most useful and accurate way to measure and to weigh the relative costs and benefits of a new project, design or program. Knowledge of these techniques puts designers on a more level playing field with their patrons so they can negotiate better deals (read higher fees) for themselves.
Value is measured not just on the basis of costs and benefits. Value in a free market is whatever a willing buyer and willing seller agree to. It can be much higher than costs, about equal to costs, or much lower. Obviously, creative persons would prefer not to sell their services or products (art, for example) below cost but this isn’t unheard of.
So we may determine that the IRR from investment A is much greater than from investment B but that has nothing to do with the price one might get for A or B. As we will see later on, the price for a thing (your fees as a designer, the price paid for the art you create, whatever) is what you negotiate for it. By knowing a thing or two about ROI and IRR, maybe you can negotiate higher prices because now you have more leverage from having more knowledge about the stream of benefits relative to its costs that will flow from your work.
What we are going to learn from the model I created for the following example of planting ordered street trees in my community surprised me—we are going to see that almost all the increase in value from an improved treescape is derived from the act of creation and design and not from, say, decreases in air conditioning costs. And also, we are going to conclude (unfortunately) that you don’t necessarily get what you deserve in this life. Read on, Dear Reader.
14.6.2 Constraints
My wife, Dawn, and I were chatting around the dinner table one evening last week and she asked me: “What is the value of a better streetscape, umm, treescape here on Zokol Crescent (where we live)?” Well, she didn’t actually put in quite this way but the message was—if we got all our neighbors together and planted trees along our road, that would be … nice.
So I left the room and booted up my PC and created a spreadsheet right away to see if we could measure the value of a creatively designed treescape for Zokol, which you’ll see shortly.
The constraints I put on this exercise included:
14.6.3 Valuation
So how do we go about measuring the value of an improved treescape? Well, first of all, let’s not reinvent the wheel. Let’s look at what a Google search turned up (https://www.arborday.org):
“Trees can boost the market value of your home by an average of 6 or 7 percent.” -Dr. Lowell Ponte
“Landscaping, especially with trees, can increase property values as much as 20 percent.” -Management Information Services/ICMA
“Healthy, mature trees add an average of 10 percent to a property’s value.” -USDA Forest Service
So, OK, let’s use the low end of the range for value increase—a mature treescape adds, say, 6% to property values with emphasis on the word ‘mature’. Let’s further assume that the streetscape is mature at 20 years using, say, maples and oaks, which happen to grow very well in the clay soils around where I live.
So we can hypothesize that we will see value increases something like:
Year 0 $400 per home (i.e., the cost of two self planted trees per home in the do-it-yourself program)
Year 5 10% of the ultimate value
Year 10 33% of the ultimate value
Year 20 100% of the ultimate increase in value of 6% per home
We could make other assumptions than these but this seemed reasonable to me. As it happens, the ROI is not too vulnerable to these assumptions.
Of course, there are other benefits of planting trees in city spaces like, for example:
“One acre of forest absorbs six tons of carbon dioxide and puts out four tons of oxygen. This is enough to meet the annual needs of 18 people.” -U.S. Department of Agriculture,
or
“Trees can be a stimulus to economic development, attracting new business and tourism. Commercial retail areas are more attractive to shoppers, apartments rent more quickly, tenants stay longer, and space in a wooded setting is more valuable to sell or rent.” -The National Arbor Day Foundation,
or
“Trees properly placed around buildings can reduce air conditioning needs by 30 percent and can save 20 – 50 percent in energy used for heating.” -USDA Forest Service
and
“Shade from trees could save up to $175 per year (per structure) in air conditioning costs.” -Dr. Lowell Ponte.
(Unfortunately, as so often is the case in research, the data used here are US based.)
I have based the increase in property values from an improved treescape on a biological growth curve—values tend to increase slowly from Time 0 (where the increase in property values is presumably just equal to the cost of planting them) to about Year 10 when a faster annual increase in value sets in culminating in a maximum increase in value at Year 20.
I wanted to try one more case—I wanted to see if savings in, say, annual AC (Air Conditioning) costs might have a significant impact on the IRR (I use Internal Rate of Return and ROI as interchangeable terms in this essay but I am actually calculating the IRR here).
I was a bit lazy and used straight line approximations to calculate the annual savings in AC costs rather than generating a true biological growth curve. So I assumed constant increases from 0 to 5, from 5 to 10 and from 10 to 20 years. Given the number of assumptions used here, it doesn’t really matter. Also, because Ottawa is such a northern shelf city (it is a sunny -27 degrees Celsius as I write this and the sun is heating up my home office nicely, btw), I reduced the savings in AC costs from Dr. Ponte’s $175 USD number to, an arbitrary, $75 CAD in Year 20.
Well, you can see from the spreadsheet included in the Appendix below, the impact of a reduction in AC costs (Case 4) on the ROI. It changes the IRR from 20% p.a. to 21% p.a.—a pretty minimal change. Clearly, the most powerful impact of street tree planting is the increase in property values that arises from the perception that this street is a more desirable place to live, a more aesthetically pleasing place to come home to.
I also tried the model with a much higher cost base—I included a figure of $800 per home, which specifies professional tree planting. The IRR dropped from 20% p.a. to a still respectable 16% p.a. (17% if you include annual AC savings). However, convincing our neighbors to get on side with a program that calls for spending $800 each doesn’t seem too realistic, so we are likely stuck with a do-it-yourself planting solution that starts at $200 per household.
14.6.4 Conclusion
These kinds of techniques are being applied everywhere today. It seems to me that folks are quite risk averse these days—reluctant to invest in anything without being shown that it will pay off for them. Whether we are talking about a tech investment or an investment in better design or a more innovative and diverse functional program for a new construction program or whatever, people want you to be able to prove that it is worthwhile for them and you can’t do that without doing this type of analysis.
I believe that at the end of the day, everything creative people do—building cities, for example— require faith, or if you prefer, belief. City-building or enterprise-building are optimistic kinds of endeavours and, no matter what the numbers may say, before anyone commits to anything, they also need to feel in their ‘gut’ that it’ll work out somehow, more or less as planned.
There is an important lesson in this for all manner of creative people to learn—that much or even most of the value in a ‘thing’ is in the eye of the beholder. Creative people involved in design and invention tend to undervalue their contribution to the economic well being of their society. In this example, 95.2% of the increase in the ROI (i.e., 20%/21%) can be attributed to the act of creation and just 4.8% can be attributed to the actual measurable change in benefits (that is, the annual savings in our neighbors’ AC bills).
I have to admit that what CU’s Dean of Engineering and Design, Samy Mahmoud, said to me a few years ago seems to be true: “You don’t get what you deserve (in our society); you get what you negotiate.” So architects, landscape architects, industrial designers, interior designers, artists, musicians, actors, writers (hmm), directors, decorators, set designers, photographers, videographers, graphic artists, even engineers (hmm) and scientists take note, you need to say: ‘More please, Sir.’
Of course, there are many other benefits derived from tree planting than we have included above. However, we have enough of a justification, at least for the residents of my street, to consider implementing this program, just from the economic benefits included here. Very few people tend to be ‘other directed’ (i.e., motivated by something other than money and self interest). But that’s OK, because if they follow their own personal interests in this case, they neatly coincide with the greater social good too.
Postscript: Zokol Crescent Treescape Model– Rate of Return (or why trees are a good investment)
The Do-It-Yourself Model
Case 1 20 years
Year Cashflow
0 ($400)
1 0
2 0
3 0
4 0
5 0
6 0
6 0
7 0
8 0
9 0
10 0
11 0
12 0
13 0
14 0
15 0
16 0
17 0
18 0
19 0
20 $ 19,500.00 100%
IRR 20% p.a.
Average House Price
$325,000
House Price Increase (Low Estimate)
6.00%
Case 4 20 years
With AC Savings
Year Cashflow
0 ($400)
1 $5.50 7.33%
2 $6.00
3 $6.50 $ 0.50
4 $7.00
5 $7.50 10%
6 $10.42
6 $13.33
7 $16.25 $ 2.92
8 $19.17
9 $22.08
10 $25.00 33%
11 $30.00
12 $35.00
13 $40.00
14 $45.00
15 $50.00 $ 5.00
16 $55.00
17 $60.00
18 $65.00
19 $70.00
20 $ 19,575.00 100%
IRR 21% p.a.
$75 AC Savings
Zokol Crescent Treescape Model– Rate of Return
(or why trees are a good investment)
Experts-Do-It Model
Case 1 20 years
Year Cashflow
0 ($800)
1 0
2 0
3 0
4 0
5 0
6 0
6 0
7 0
8 0
9 0
10 0
11 0
12 0
13 0
14 0
15 0
16 0
17 0
18 0
19 0
20 $ 19,500.00 100%
IRR 16% p.a.
…
[feature image by Wladyslaw, CC BY 3.0, https://commons.wikimedia.org/w/index.php?curid=12113382]
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