Transcript: Return on Humans in the Built Environment

Human-centered design is really what's important for creating the workplace of the future and creating a level of employee engagement that's necessary. One of the transformative trends in real estate, I think that smart cities, workplace wellness, focusing on the employee experience and understanding that the dynamics of work are changing. If you can get ahead of that, really setting yourself up for success in the future. Human-centered design for the workplace and smart city, Vic Bangia from Varam Consulting hits the nail on the head. I'm Brittany Campbell-Turner and this is the Constructor Podcast.

Today we are in episode 99 reviewing the best of podcasts for this year focusing on the topic of human-centered design. If you're a long time listener to this podcast, you will know that in my summary, I typically will say that this podcast is for real estate owners who want to build more trusting relationships and keep cost, schedule and quality at a high value. And last but not least, exceed the end user's desires. Today we are focusing on building more trusting relationships internal to organizations and within cities.

And in addition to that, meeting the needs of people, the humans who inhabit the built environment or simply our cities. We are in a changing age with changing expectations. To me, real estate is the first thing that a potential employee or new recruit to your company is going to see. I've been consulting clients on using their real estate as a brand. The example I give in a lot of my speaking engagements is about how I would go in to an employer if I was looking for a job.

I would go in and hand them my resume. I would sit there across the table from an HR director and I would say, here's my resume. Here's the background, my work history, all the things that I've done in my career. This is why you should hire me. Well today, a lot of younger workers that come into the workforce will hand over that resume and say, this is my background, this is my skill set, this is what I've done.

Tell me why I should work here. And what that's done is it's turned the tables in the whole employment and employee recruiting scenario to one where the HR department has to show and prove to that prospective employee why they should work for that particular company. And the way they can do that is they can use their real estate as a brand. They can say, this is the work environment you'd be working in. Here's how we collaborate.

This is the technology that you'd be given to work here. You can see all the way around the facility that our brand or our company mission, vision, and values are everywhere you look. And once an employee really feels connected to their workspace and to the company that they work for, they'll become a more productive, happier, more engaged employee. When I accepted positions in previous employers, I was really never shown my desk until after I accepted the offer and started my job and came in on day one of being the new employee.

These days, you have to prove that to the prospective employee before they accept the offer. There's a Deloitte study that was out that said only 28% of younger workers believe that their employer is making good use of their skills, which if you flip it on its head, that means 72% of employees don't feel their employer is making good use of their skills, which means they're out potentially looking for a job. So if you want to retain those employees, you have to give them a sense of significance in the workplace.

You have to give them a sense of connectivity in the workplace. And you can do that through real estate as a brand. You can do that through technology that allows them to have a better workplace experience. And you can do that through leadership and showing the employee that they're in a place where their input and their dedication and their work means something to the company. So there's a lot going on that's actually bringing real estate and HR together.

I hear from Vic that it's not simply real estate and HR, but built environment on a whole and human initiatives combined. It's quite ironic as I came upon a similar Deloitte study that actually discussed even the changes of company and hiring organization perceptions from the millennial generations and generation Z. I'll post that in the show notes. Similar to Vic, I saw a perspective on utilization of skill sets. But in addition to that, the generations are looking for companies to have a social cause, do social good.

Thinking about all generations for a moment and the global economy, human focus becomes even more paramount. Rex Miller gives an indication of why from a well-being perspective and does quite well in his book, The Healthy Workplace Nudge. As a nation, 50% of our population has some form of chronic disease. And it's rising at about a 7% compounded rate. Health care comprises about 18% of our gross domestic product.

And it's rising at about a 7% rate. So it doesn't take a genius to do the math on what the compounding of that is. So within the next 10 years, we will go from 18% GDP to 36% GDP. In the early 20% range, our economy will begin to implode. And it's the first time in my life I saw a true existential threat to our country, not only to companies, but our country, that the way we've traditionally done wellness programs has failed and will continue to fail.

Now, the stress at work is the key driver. Because 78% of employees say that work is the number one cause of either high or very high stress. When you think about it, what are the key coping behaviors people have when they're burnt out, stressed out, or just unhappy? So what drives the stress? And what are the environmental factors?

And what can people do to reduce the friction of work? 90% of your life is in some form of built environment. And we're just beginning since 2013 to understand the implications of what the environment is doing to our health. And we go through kind of your whole body system and how the built environment actually interplays with that. The cost of that is incredible when you consider that the average cost of implementing a wellness program is approximately $700 per year per employee, and it doesn't include all the soft costs.

So when you do that, it's a couple thousand dollars per employee a year. To improve your building, especially if you put it in the cycle of building maintenance and upgrades, it's about $500 per employee as a one-time cost. 100% of your employees get to benefit from it. Now 50% of our population has some form of chronic disease. It's diabetes, it's early heart conditions, all kinds of autoimmune conditions, all these lifestyle type of drivers.

And it's rising at about a 7% compounded rate. The data on all of the ripple effect and how chronic disease leads into heart failure, hip replacements, early Alzheimer's, all these things that it affects and what it's doing to our economy. Health care comprises about, well, now it's 18% of our gross domestic product, 18% of GDP. It's rising at about a 7% rate. So it doesn't take a genius to do the math on what the compounding of that is.

So within the next 10 years, we will go from 18% GDP to 36% GDP. And Dr. Royzen is projecting that somewhere when we hit in the early 20% range, our economy will begin to implode. And we will have higher disparities between incomes, those who can afford health and those who can't. So he's projecting in the next five to seven years that we're going to start seeing this kind of unraveling of the social structures that we have and the ability to do this.

Then you pick that up in the book on how dark this is because when you've got 50% of the population and it's moving, how do you slow this steamroller down? And it's the first time in my life I saw a true existential threat to our country, not only to companies, but our country. I had to come back and ask, so where do we go with this? And how do we shift this? And what's it going to take to do that?

160 million people work for companies. Another 130 million go to schools. So those are the two key areas that I researched and the two key areas I'm trying to bring this message because if companies can get it right and if schools can get it right, and I shared with you earlier about a university both of you and I know that the average age of an 18-year-old freshman, they give everybody the real age assessment. The average age for a freshman is 28 years old. 22% of freshmen are coming into college either overweight or obese.

42% are leaving college overweight and obese. 75% of our population is either overweight or obese, which leads to metabolic syndrome, which leads to chronic disease. Started showing us that the way we've traditionally done wellness programs has failed and will continue to fail. Rex paints a picture that indicates if we as a society, at least in the US, don't respond to the information that we have available about health and companies, that we have more concerns than just hiring the millennial or the Generation Z. It's about accommodating all working ages, ensuring that they are healthy enough to produce any productivity and contribute to our societies.

Here from Kevin Flanagan from PLP Architecture that supports his perspective, talking about how to restructure the approach to the design of built environments. What type of spaces, what type of organizational systems optimize and work best for people and allow them to create the exchange of ideas that are so needed to drive new economies. So if the buildings can be designed quite less hierarchically, but much more allowing for flexibility of movement and the free exchange of ideas, then you have different type of ecosystem of design. You have people who are looking first and asking first, what is best for the employee in order that we can retain them and all that effort and money that we put into their training can then find fruition five to 10 to 15 years down the line as they become leadership of some sort.

The buildings and the design are really fundamental. Incorporating natural space into these buildings is really essential only because it allows people to perform better in terms of their thinking, they relax better. Rex piggybacks and supports that focus more specifically on health. From his perspective, he speaks of Ahmed Sur and his focus on happiness. And what we found is that 80% of our health costs are driven by five lifestyle challenges.

It's smoking, it's drinking, it's abusing drugs and alcohol, and it's a sedentary lifestyle. What we didn't realize or didn't connect the dots is that all the efforts to eating better and taking steps and all of that doesn't matter if you're not a good fit for your job and if you have a boss that you don't like. When we went to the Mayo Clinic and met with Dr. Ahmed Sur, he started shifting our whole focus and saying the real focus should be on happiness first or well-being.

That is the precursor or leads to wellness. And so the industry, for lots of good rational reasons, has it reversed. We've got the cart before the horse. And so the stress at work is the key driver. And when you think about it, what are the key coping behaviors people have when they're burnt out, stressed out, or just unhappy?

Michael Lake of Leading Cities talks about the importance of happiness in cities. Leading cities, as you already mentioned, our mission is to improve the quality of life in cities. And one of the ways we do that is by creating sustainable cities. We define that sustainability in three different areas, sociological, economic, and environmental. Frankly, sociological is the human-centric piece of Smart City Solutions.

And I think it is a critical piece because we can never forget the fact that cities, first and foremost, are about the people who live, work, and visit them. So a smart city is a city that keeps its people at its center. In speaking about Dubai, What I love about it, they have put human happiness, individuals happiness, as the central tenet of their plan and their strategy. I appreciate that because, as I said, first of all, it's a human-centric approach. Second, happiness can be defined very broadly, and it can take into account just about every aspect of life within a city.

Whether you're talking about how happy you are during your daily commute, to how happy you are with the quality of your child's education, to how happy you are with the sense of safety you feel from a secure city, how happy you are with the quality of job that you have access to, and how happy you are with your ability to live in a community and to not just work and contribute to the well-being of the community, but to also be able to save and build wealth for yourself and for future generations of your family.

That's an area where I think cities often don't pay enough attention to, but the quality of the city is directly related to the ability for its citizens to build wealth, a society where families can live, can work, and play, and afford to stay. I'd be remiss not to share Rex's experience about insurance premiums to further highlight the ability to really manage oneself financially. But in addition to that, plan for supporting your well-being in all areas. I just got my premium for my family, which is $3,900 a month for four people with a $12,000 deductible.

That's $50,000 a year. I'm not sure how many people can afford a $50,000 a year bite of insurance. In that respect, I can't afford it, so I use a health co-op as my backup and insurance. Now, if I can't figure out how to make this work and companies are bearing the burden of most of this, at some point there's going to be a breaking point in all of this. So Ron Becker, Kevin Flanagan's colleague at PLP Architectures, speaks about the edge in Amsterdam and the uses of that building with the focus on people.

To have a building that helps attract talent is quite valuable. The application letters people send in, something like 75 or 80% of the people writing in for a job actually mention as one of the reasons for applying that they like to work in the building. We also know that there seems to be a real drop in sick time. Some people have said 40% compared to modern office buildings in the Netherlands. When you talk about construction costs, that means nothing anymore.

As you know, the cost of talent and staff is almost 10 times as high as the cost of real estate for companies like that. It's worth it. It's kind of a new notion as well and it's really bizarre that it is. People are now talking about people when they talk about buildings and the buildings actually are there for people. But we haven't actually built many buildings yet that are designed as productive places for people or healthy places for people.

If you really start focusing on what works for people, the success of the Edge is because everything was integrated. We've made a connection between the users of the building and the systems of the building. We can get enormous productivity out of this relationship. And also you spend half your life working. If that was a wonderful experience with new things happening and new ways of doing things, new ways of communicating or expression, that's something that I think we have not really started with yet.

We're on the beginning of a very interesting path. There's lots to do. Ron says there's a lot to do and I think exposure is a big part of that. So I'd like for us to remember from our past guests the importance of sustainability, but some of the specific design elements that can really support the transition to truly human centered design. You'll hear from Kevin Flanagan starting to speak with us about cross-laminated timber.

It also sequesters a phenomenal amount of CO2. So for the very large oakwood timber tower in the Barbican, it sequesters and is a replacement for about 10,000 human lifetimes of CO2 that would normally be created. So if you can use this product over a large scale, where its benefits can become quite clear because you're bringing component parts that are interchangeable and pre-manufactured and very light, and you can bring components, very large components, and build using a robotic platform to assemble, you can really build very, very quickly, very inexpensively and create a living space that we understand may be even more helpful by virtue of the fact that the timber has some psychological benefit.

Cities are very hard, and if it's possible to create a softer atmosphere, softer materials that have a stronger association to nature, that can't be anything but good. There's a lot of now anecdotal evidence and science evidence as well from studies that including timber finishes internal to classrooms for students who have learning disabilities. They do better on tests. It's thought that it's because they're able to concentrate better, their heart rate goes down, their stress goes down. And a corollary to that is that people are thinking now that because of this reduction in stress, allowing people to reside in buildings that have this timber, that they may in turn become more sociable because they're less stressed.

The urban environment is very stressful, and you probably know that populations will increase over the next 30 years, probably about double, for about 145, 143 major cities of the world. So you're going to have a huge increase in population that requires new residents. What we're looking at is that if nothing is done and we continue to use the typical materials, we'll have a problem firstly with CO2, but at the same time, you're going to have this congestion and any of the world's aggravations that exist because of people living too closely together will be exacerbated.

So if you can find a building material that reduces the CO2, but at the same time has the potential of creating more sociable settings for people to live in an ever more condensed condition, then I think you have a material that has a lot of benefits, not simply ecological, but also social. The other thing that was anecdotal that was mentioned is that in hospitals in Scandinavia, they found that hospitals with the timber using this timber construction method particularly, people recuperate better. I'm not clear why that is, but it could be that the stress levels are reduced as well, and that helps people recover more quickly.

I think that it was about 10% more quickly or something. So it's a very interesting material, not simply because of its ease of construction, its lightness, but the fact that it really will promote the use of computer cutting and precision applications. But it has the ability to transform our cities and urban life and make that better. We don't all have the ability to create new parks and major city centers, but maybe the material that is used for the buildings themselves can be strongly associated with adjacent parklands and create the sense of still being sort of out of doors and that we live in tree houses as opposed to concrete or steel industrial buildings, which is the case presently.

We really want something of the 21st century to solve what is now going to become an ecological cataclysm caused in many ways by older technology, but also older manufacturing processes. Stephen Cutter of the Wuji Foundation talks about a different source for materials using hemp that can provide many of the benefits that Kevin speaks of. The hemp sign, I feel like it's a way more valuable product than trees, especially since it grows so fast, takes less water and regenerates the soil. So it actually is a carbon negative process compared to concrete now is one of the largest carbon emitters on the planet.

So maybe also make a plastic that's twice as strong as normal plastics. It's a pretty incredible material. So I've been passionate about hemp when I got into sustainability. One of the first things I realized is that there's a crop out there that has no THC value that takes no chemicals, less water, can regenerate soils and produce all these different things and it's illegal. I thought there was always something wrong with that, but I think there's about 13 total states that are legal to grow industrial hemp now.

So it's starting to actually show a lot of promise and come back. But to further the discussion about improving the lives of people in cities and their benefits, Michael Lake shares here about sustainability, some of the impacts to the environment that cities are making on its citizens. Cities utilize 66% of the world's energy. They emit 70% of the CO2 emissions. They consume 80% of the world's resources and cities only make up 2% of the Earth's land.

Far disproportionate to our size, I'd say the biggest challenge outside of climate change is just urbanization itself. The fact of the matter is 1.3 million people around the world are moving into cities every single week. I mean, this is putting tremendous demands on the existing infrastructure and ability of cities to provide services to those individuals in addition to the people who are already living in cities. Cities are being forced to do more with less and smart city solutions help them achieve that. The opportunity for buildings at all scales is just starting to open.

We are not even looking at a fraction of the opportunity that exists in better building design, construction and management. The type of opportunity and value that the building is providing its occupants is what determines the value overall. Well let me start by saying that when we talk about environmental impacts of cities, two of the top offenders within a city is transportation and the built environment, buildings. I think that there is a huge opportunity, huge potential for developers, property managers, property owners to really dig in and really have an impact, a positive impact on how we can turn around this challenge of carbon emission.

I mean there are a number of new building technologies that are being developed. In fact I think one of the bigger challenges that property managers for instance have is knowing which technology to use, how it will fit in with existing technologies, they're using the interoperability of those. Those are real challenges and of course there are consultants out there that will help individuals navigate that. The fact of the matter is buildings do provide a huge opportunity for cities to reduce their carbon emissions. The United Nations believes so deeply in this and frankly because of the Paris Agreement and the goals that cities have set, buildings are absolutely on the table.

They're a huge part of the equation in order for cities to meet those goals. So the United Nations has already started looking at ways that they can support the efforts of property managers and developers and so on and so forth to achieve more efficient building. Now to put this in my perspective, as we build smart cities, smart cities are kind of like the central nervous system of a community. It's building that infrastructure to connect the city and if you think of that in terms of human anatomy, the infrastructure the city is responsible for is like your central nervous system.

Buildings are like the accessories we add to our body. So if you think of the technology shift in terms of wearables, we moved from watches with a battery and a tick-tock to things like smart watches that not only tell you the time and I'm not necessarily talking about the connectivity to your email or your text messaging, but I am talking about things where it connects to your quote central nervous system, where your watch is keeping track of your physical location or your heart rate or things like that.

This is the opportunity that buildings have. Buildings have the choice of being an old tick-tock watch or a smart watch and whether they're going to connect into the infrastructure that cities are building, whether they are going to connect their own infrastructure within a building to better understand and monitor the efficiencies or inefficiencies of their building. There's a startup out of Massachusetts Institute of Technology that has designed monitoring systems to better understand how people interact with space and what spaces are most utilized and why, and therefore allowing the better design of space within a building.

But there's also the connection of a building to a smarter grid, for instance, in terms of energy usage or production. Certainly buildings have the opportunity to produce energy as well with rooftops, solar arrays and things like that. Connecting to a smart grid is a choice that buildings have if their city has made the investment in that infrastructure. It goes hand in hand. I think building owners and operators have to work with city officials to design a smarter city, a more connected city.

And ultimately the goals that cities have set for themselves in the Paris agreements can be met through the reduction of carbon emissions from building. Not buildings alone, but it's certainly a huge step in the right direction. Michael speaks about the MIT startup and technology integration to support that building functionality. Next, we'll hear from Ron Backer, designer of the edge where Deloitte is the major tenant. He discusses how the different elements of design, including the elements of sustainable design, are integrated with smart buildings.

Listen in. So what happens when you need to do that is you start with a really good energy diagram for the building, which has to do with the winds and the sun and the orientation. Very simple formula that says daylight is good and sunlight is bad for office space in Western Europe. In Western Europe, you need to allow as much daylight into the building as possible. And then you have to have a very good energy source.

In Europe, you need to allow as much daylight into the building as possible and as little sunlight as possible. So the building was designed to do that. It has a north facing atrium to the north. We don't have to shade the east, south and west of the building are shaded because of the way the facades are designed. The balance between the two makes easily 20, 30% saving on the energy used to cool buildings for three quarters of the year and to light buildings.

So that was a big gain that you don't pay for because if you orient your building properly and the massing is well considered, then the building already does that passively. So that was a big step. And then the client really wanted to reach pre-empt excellent, which is a very high standard. We found that when we toted up all the credits that we thought we had a chance to reach, we found that it was quite easy to get the pre-empt excellent. So we raised the bar.

And then from that moment on, we started to really sort of consider almost everything that one could do to make buildings more sustainable. So we looked at the energy production of the building. Building uses groundwater at 130 meters below the surface as an annual battery by storing heat in the aquifer in summer and pulling out cold water for cooling and the reverse in winter. So warmer water comes out in winter and cooler water goes in. So over the four seasons, the energy use of the building is zero for heating and cooling.

There's no energy added to this process apart from a little bit of electricity to pump the water around. It's not a new system, but if you use it properly, normally it takes care of part of the heating and cooling of a building. But if the building is really well conceived, in other words, if it uses very little energy anyway, or heating and cooling, then you have a chance to cover this amount of energy by the aquifer system. You can imagine the pre-empt list of credits is almost like an Excel file.

All the issues on there, you tick them off, which ones can we do? They have a cost column to them. Some things you can actually do, but very, very expensive. There are credits for innovation, which are very, very hard to get. If you invent a truly innovative of looking at anything from a material to a way of managing construction on site, if it's purely innovative, you can get credits for that.

Typically, a country like the UK gets maybe 10 or 15 of these credits per year in the whole country. But in that building, we had many, many innovation credits. I think that's an interesting way of looking at sustainability, too. It's development ideas. The overlap of sustainability and smart building, that's where the biggest innovation took place.

Because the smart building part of the design came from a different angle. Initially, it came from an organizational perspective, a realization that Deloitte, as a provider of consultation services, felt they needed to be the first to really understand what it meant to do business in the digital age. Internally, they invested lots of energy in looking out their consultancy, but they also wanted their building to be part of this. We invented with them new ways of working that were relying entirely on digital systems to organize them.

And in the end, it created a digital hub in the building, which connected loads of different aspects to the building. It's the way the lifts work and the air conditioning and the lighting system and the coffee machines and the photocopiers, they're all connected through this hub through the internet. This is real IoT stuff. But then there are the tenants parts to smart system, which have to do with allocation of seats, finding your colleagues, booking a meeting room, lockers, lunch, the gym, anything that has any technical or any chip in it, which is pretty much everything we have these days has a little bit of a brain in it.

They're all connected in the building and they're all functioning together. They all come together in an interface that people deal with, and it's either a web interface or it's a smartphone interface. All these technologies are connected in the end. I'm going to give one example of this innovation part of it. People in building work flexibly, which means nobody has fixed seat and you discuss your workspace needs with the building through your application.

Come in in the morning, the building has a copy of your diary, so the building knows when you're going to be there. And when you have meeting rooms booked, for instance, it has the capability of learning a bit about your habits. If you always have lunch at 12.15, then the building will actually understand that and know that you're not going to be at a desk. But in a company like Deloitte, where people are often on the move and in meetings and they work at their clients, the use of space is very sparsely.

And they found that only 25% of people typically are ever at their desk. By making workspace flexible, they could use space much more productively and efficiently because the spaces are allocated to people who are actually there to work. And then the benefit was that you could then make a variety of spaces that were better for work. Sometimes a desk is not the best way piece of your work. Sometimes you need to be in a comfortable chair.

Sometimes you're in a meeting room or in a quiet place or in a busy place. And because people work flexibly, we can make that decision. People can discuss that decision with the building. But what it also means is that the building, everything in the building is connected. Each ceiling panel has sensors, measure movement and temperature and lighting levels and CO2 and humidity.

So the building knows exactly what happens everywhere on all the floor plates. So it can make decisions about the most efficient energy use of the project. So it will favor areas of the building that need less energy to function. On a very hot day, in the end of the morning, the south east of the building is less populated. It's actually the part that needs most cooling because of the solar heating of that space.

On the northwest of the project, where the daylight is particularly good, you don't need to switch the lights on to be able to work. Building can, by placing people in different parts of the day in different positions, can save energy just by doing that. This is the total overlap of sustainability and smart buildings in a nutshell. Because we've made a connection between the users of the building and the systems of the building, we can get enormous productivity out of this relationship. So you've heard it.

The integration between sustainability and technology driven by human desired experiences is key. But sometimes it's still very difficult to start. It's difficult to sell the idea to more traditional organizations that are not on the innovation edge. For even cities who know that their biggest money makers are based on inefficiencies in their urban design, how do you shift that thinking? For those who need some logical prodding, present the numbers.

Vic Bangia has his experience on acquiring funding and Brian Berthold from Cushman and Wakefield has a very analytical approach to assessing experiences from people. It really boils down to who you're bringing to the table. Companies often operate in a very siloed organizational structure. What I've always advocated to the real estate department is to bring in those other groups, the HR, the IT, operations and finance. Think of real estate as an infrastructure service, a group that pulls in all these stakeholders, gets them on board early and gets them talking about what's important to them so that at the end of the day, everybody feels like they've had a voice and they've been able to be a participant in the future of the organization.

I think everybody within a company wants to be involved in these types of initiatives and wants to feel like they had a chance to give their input. When you find out who those influencers are, it's really important to create that influencer web because a lot of times you can't work directly with a particular person, but you might know who that person trusts and who that person uses for their guidance, and then you can talk to that individual. One of the things I've done successfully is I've used the HR department to help make pragmatic real estate decisions because oftentimes it's the HR department that can go to the CFO and say, we're having trouble recruiting, and the HR department can say, well, we need real estate to create a more collaborative workplace.

A good example of that is one where I went to the CFO and said, we need to create a more collaborative workplace, but I could not show my CFO an ROI. When the HR department went and asked for the same end result to create a better workplace, the CFO said, absolutely, we need to make this happen, and then the HR department was asked what do you need? The HR department said, well, we need real estate to get their act together and get going with this initiative, and then I was given a call saying, why aren't you doing this?

At the end of the day, I was asked to do something for which I was thrown out of the office two weeks ago because I couldn't show an ROI. Not that the HR department doesn't need an ROI, but they have a real world problem with a real world pain, whereas oftentimes real estate is looked at as somebody who just wants to spend the money to create the workplace without having a very crystal clear outcome. I find a lot of what we do is we design things and then we walk away, but nobody necessarily was educated on how do we maintain that experience for people.

We really have a big employee engagement problem across our corporate landscape. Employee engagement has been flat for about a decade now, with only about one third people actually engaged in the workplace. It's 13% globally. If you're not aware of those stats, it's really alarming. In fact, half my clients last year for experience per square foot came through HR departments.

It's kind of a wake up call to our industry that if you're not there doing it, another business line may be stepping in to take ownership. We created a product that we call experience per square foot. What we realized is our starting point for any project is to really understand the nature of how people are working today. Call it kind of the good, bad, and ugly. What's working well?

What are those things that we can improve? And are there total misses? It could be an amenity or a feature within a workplace that would really enable people to flourish a lot more. Our starting point really and our challenge we faced when I got here was part of my background. I'm an analyst as well.

We wanted to really figure out how do we capture what the experience of an employee is. I wanted to do it through rich data and doing deep dives so that it was actually measurable. I've seen a lot of surveys and things, kind of happiness meters, but they don't really give you meat on the bone to know what are those actions that we need to take. So experience per square foot enables that. So we actually can measure the experience of an employee and then we can turn around and we have about 40 different attributes that cover everything along the journey, whether it's your workplace design, the technology tools that you give for people, both on a personal level and how teams get together, the amenities that you give them, wellness programs, things that they can do to reduce stress.

It's also going through how do you operationalize these things? So how do you service the people? I find a lot of what we do is we design things and then we walk away, but nobody necessarily was educated on how do we maintain that experience for people. We also factor in the location. What I mean by that is your experience when you go to work starts when you leave your house.

It has to do with neighborhood amenities, your commute, how do you park? We factor all of those things in, as well as the culture and brand of the company. We've kind of shifted the paradigm. I think traditionally we looked at the things we do as solving real estate problems and what we're doing is turning it to actually solving the business problem. And then how do we do that through real estate?

One of the terms we've coined is our one whole simple idea is how do we improve the lives of people through real estate? It's not a subtle change or may sound subtle, but I think lots of times we try to improve real estate for the sake of people. Then we just focus on the stuff. And what I witnessed in where we are in 2018, we really have a big employee engagement problem across our corporate landscape. Employee engagement has been flat for about a decade now with only about one third of people actually engaged in the workplace.

It's 13% globally. If you're not aware of those stats, it's really alarming. And what we're finding is they're looking for real estate companies are to help improve employee engagement. That's kind of the starting point that gets people interested. If you think of employee engagement, traditionally it's done usually through HR, through a survey, and they ask a lot of questions that may have to do with your comp, your organization, the job you do, the people you interact with.

They never ask a real estate question. I always found that alarming that this is where we spend most of our waking hours. The experience that you have in the workplace definitely impacts your experience with the company and your engagement level. So having that conversation with the C-suite clicks for them and being able to offer them an ability to actually measure that with real data and then showcase what are the real estate related items that are driving that. And what's surprising is maybe 20, 25% of the things that you're delivering, whether it's a new space design or technology or amenity, only about 20 to 25% on average actually drive an employee experience.

Helping both the company and real estate professional realize what's the priority and what are the things that are making that impact. I should add of those 20, 25%, maybe half of them are not performing well. So it gets really laser focused on the things that we need to improve. So gone are the days of waste. I mean, how we utilize space.

Like across our client base, we're only about 58% utilized, so 42% of the seats are empty. Or you create amenities or social space and nobody's using it. I see if those are very keen that that's just not effective in today's competitive market. How do we maximize the use and leverage of our space, but also do it in a way that attacks the thing that is going to drive the experience of people. That conversation with the C-suite is very robust for them.

It clicks and it immediately then drives them to, well, okay, how do we do that? So really it's about building trust with those decision makers so that essentially you give them the right information, building the case for the people, communicating in a way where the decision makers can understand. And I think Scott Moldaven from the Moldaven company can really articulate that well from the numbers perspective. You'll hear from him next speaking about the calculating of the cost benefits per person, the technology and science integration to support that argument for value creation and its cost effectiveness.

When I got involved in sustainability about 12 years ago, I saw that there was almost no financial analysis and all the information and the way that it was presented didn't actually speak to the actual corporations or investment managers or others who had to make the decision. So the work I'm doing actually is about really being that translator between the financial side of the decision makers. The average corporation today spends about $700 per person per year on wellness programs, let alone the $10,000 per person they spend on health care.

And so now for a one-time investment of approximately $400 per person in the well-building standard or health and wellness types of activities, you can get all of these benefits, a lot of them very passive benefits. And so from a company's perspective, it's a really powerful way to deal with health and wellness. And so we're at a really interesting time where the technology and the science, incredible demand by employers and employees for this health and wellness, not just that sustainability broadly, that we can actually implement things that are both cost effective and powerful value creators.

When you do an analysis of energy features that you might implement, there might be things you could do to the windows or an HVAC upgrade or better technology or even more innovation in a variety of areas, but you often can't do that because it costs too much. By looking more carefully at the value, it enables you to make some investments in things where short-term energy cost savings alone would not justify the savings. I often, when I'm talking to people, I ask them, what's better, a 5% return or a 15% return?

And obviously, it depends on the risks. If I can buy a Google Lease building, I might buy that for a 3% return. But if it's a building that has a lot of market risk, has a lot of construction or retrofit risk, then it might be a much higher rate of return. So every financial decision, what sustainability or energy retrofits are, requires an assessment of risk. And so the first thing, if you're an architect or an engineer or a consultant, if you think about all the things that we do as people in this industry, to make sure that the forecasts of savings and costs and everything are as good as possible, we get the best people, we do all kinds of things to actually reduce the risk of our forecasts being wrong.

The problem is, is that much of that is not presented and organized effectively and presented to decision makers, which is standard due diligence. So there's a lot of things that you can do. And also, there's specialized green building due diligence through green leases and some kinds of transaction things and other things. So there's a lot of stuff. But most importantly, so think about yourself as a, let's say you're an investor of an office building.

And when you make that investment, you invest because you think you can get a return. If I do this, I can get a 10% return. But I don't know for sure. There's certain risks. I think that they're normal.

So think about sustainability or a deep retrofit. It actually provides all these, what I call positive risks. So here's the potential. If I can really attract the tenants or if I'm a corporation, if I can really make my workers more productive or reduce health costs or make recruiting and retention easier, if I can actually do those things, then the value proposition and the return on investment goes into the hundreds of percents. And so what you need to do, and it's a standard part of due diligence, is you not only have to talk about the bad things that can happen, but you have to talk about the good things that are going to happen.

And you have to provide enough data and support to benefit those. But there's all kinds of risks. If I'm a corporation and I invest in energy retrofits and our sustainability, then I am getting significant benefits due to my reputation or brand risks, talent shortages and staff retention, pricing pressures. There's all these kinds of things that are benefiting. So the trick in all of this is not just to be able to talk about it or do a list, but to actually integrate it into the decision making and the way that you present it and the way that you calculate it in a way that people can monetize these benefits.

The trick is, well, how do I actually quantify it and what do I need to do to make it both property and or company specific? So when talking about the benefits of an energy retrofit or well being, I'm just going to use the term sustainability. I mean, I wrote a book seven years ago called Value Beyond Cost Savings. And that's where I came up with my ideas around deep retrofits. The determination was that if you're going to go deep and actually do real energy savings, what we need to do for some of our societal challenges, then you have to integrate health and wellness into the equation.

That's what I'm doing. So when you think about the benefits, you have to separate corporations from investors because obviously a corporation that is an owner and a user, if you have employees that are more productive or employees that have better health and you can recruit them, you get those benefits directly. So the way that you actually have to calculate it and think about those benefits is different. If you're an investor, I can only benefit if the companies appreciate what I'm doing in my building and will pay higher rents or increase the occupancy in my building, better leasing advantages and sales prices.

So it's kind of a secondary analysis. So the benefit for a corporation is very direct. But the real juice when it comes to occupants by far is with recruiting and retention and worker productivity. And so let's just talk about that a little bit. And in my financial model, if you have a productivity increase of 0.5%, you have returns on investments of 300%.

If you actually get a 2.5% increase in productivity, an 800% internal rate of return based on the cost for the investment. So I just list, under indoor air quality, there's a whole slew of studies which on average the Lawrence Livermore Labs worker indoor air quality group has said that they believe as much as a 10% increase in productivity based on a whole slew of indoor air quality things. A study that was done by Harvard and Syracuse recently where they have shown a cognitive white collar workers to improve 60 to 100% in spaces with improved ventilation, carbon dioxide levels and lower volatile organic compounds.

I mean, there's huge benefits. Lighting studies showing on average by doing daylighting in a better way, you can have productivity gains of 5.5%. Comfort, a 4% drop in performance if temperatures are too cold, 6% if it's too warm. And you can go on. If I can attribute only 0.5% productivity increase, I end up having rates of return over 300%.

We've been focused on companies to date as it relates to data and analytics. But Carl Piva has some interesting perspectives on learning from others. I talk a little bit about learning from platforms to enable a different economic model and the talk I did with MCA or Mechanical Contractors Association to their engineers the other day at a luncheon. So if you haven't listened to that episode yet, check it out. But the way we look at platforms should be shifting the way we review the experiences that we have in life.

And Carl Piva has a really wonderful approach to describing cities as a platform. Listen in. The smart city movement is just one of those areas where you will see technology meeting urban challenges in new and very exciting ways and could lead the charge in many of these transformations that we're seeing. So taking you back again, Brittany, to the city as a platform manifesto, we launched this manifesto in China. It's really a set of 10 core principles that guide both cities around the world and global suppliers and local suppliers on what they need to agree on in order to successfully launch data economies in cities that can drive resident services.

With data economies, we really mean establishing a platform business model in a city where you have data consumers and data producers all making a living, offering outcomes that are good for the city and good for its inhabitants. We took a very close look at the platform business models in the private sector, you know, the Airbnbs, Ubers of the world, and we tried to map what we could reasonably expect to work in a city context based on the extreme successes of these models in the private sector, keeping in mind that cities are much more than just making ends meet about solving problems for real people.

And the mission is quite different. First of all, we realized that these are the platforms that are being put into cities. They must have a purpose, and that purpose should be to improve the quality of life in cities, benefiting the residents, the environment, but also helping to bridge various kinds of digital divides within the city. The interesting thing is when you look at cities today, they are in a very similar position as say telecoms companies were 25 years ago. 25 years ago, if you were a telecoms company, you were serving the national market, you did it, and you built your entire system structure using a lot of homegrown systems and local suppliers of various kinds.

And everybody did it their own way, which was very inefficient, very costly, and it really didn't drive a good usage pattern across the world, right? But over the last 20 years, this has shifted. So now you have a set of global suppliers who can accommodate all these different service providers around the world. Cities are in the same place. They are currently running a scenario where they have a broad local ecosystem providing solutions to the city, lots of systems within the city that have been developed within the city and developed by local stakeholders.

And they are just now in this moment, they are looking out, they are actually looking at how can we embrace the global supply chain in a better way? How can we pull this together and be more efficient and of course serve our constituents is better than we are today. So in a sense, cities are on fairly similar evolutionary path as service providers were 25 years ago, all based with a kind of a different mission in mind, of course. But from a technological kind of perspective, there are lots of similarities.

And I think what strikes me to be common is that some people think it needs to be a gigantic investment that they will never see the return of. While there are in fact many things you can do that will carve out money for you to invest in other things. We run an annual conference every year in China where we bring together people from around the world. It's a tier three city in China. It's one of the smartest cities in China called Inchuan.

It's right south of Ulaanbaatar. It used to be the capital of the Xiqsia Empire back in the in the glory days before Genghis Khan. But these guys have done something interesting, I think, when it comes to launching a funding approach that actually works. They have created a joint venture between the city and private business, and they co-invest into this joint venture with the objective of launching it on a local stock exchange within a preset timeline. That way, they're taking a calculated risk.

They are investing into something that streamlines local government operations. So for instance, taking out manual routines wherever possible, replacing it with online approvals permit processes, for instance. In their example, they go from maybe 600 people doing manual type processes around that to roughly 40, 50 people who manage an online much, much more effective process. Actually simplifying people's lives and making permits appear in hours rather than months. So by liberating resources and assets through means like that, you're going to become more efficient.

It's part of the game when it comes to changing the way you do business. It's part of your digital transformation as well. And yes, it will hurt in some parts of the city when it happens, but the overall result will be good for the city. And there is going to be savings, efficiencies, and so on, or for that matter, better service to residents. And the very interesting aspect, I think, of this in-shuan example is when they launch this company, once it's met its key KPIs, this will be a valuable company that will have a revenue stream over years to come from their local government.

And they will have a pretty good return on their investment, both the city itself and the businesses who invested into it. It turns out to be a sound business investment that both the city and the local enterprise did. So I would propose to cities around the world to take a hard look at what they can do, not just a piecemeal approach, try to start a small initiative in a corner of the city, because it could be really hard to get your money back if you are not prepared to break down some barriers or do a proper digital transformation of part of the business that you're in.

You sort of have to be brave enough to approach use cases that are simply either error-prone or inefficient, extremely manual. And when you do that, you will see returns if you are smart about it. And there are many people who are smart in the world. So the problems, I think, sometimes with the way we run local governments in our Western countries, I think, is we tend to not be able to come to consensus on making sweeping changes like this. I would look for some signatory achievements.

I would be looking for something that affects residents in a very clear and obvious way, something that makes it possible for me as, say, a mayor or something like that to have a chat with my citizens and actually see that they understand what I did. I would not start with something that's too complex. I would start with something that's easy to understand and obvious. And then that would be the thing that makes it possible for me to take the next step with something that might be a little bit more complex and a little bit more time consuming.

Start with something that affects the residents' lives. I saw some pretty good examples from Boston, for instance, where you pull together some good resident services that actually improves people's lives, makes them appreciate that, oh, can this be achieved? Then you become more positive towards the whole idea of creating a smart city because you get stuff that actually benefits you. So rather than trying to approach something that's too hidden away, I would go with something that affects people immediately, something that actually touches people. So probably that means, I think, will be to start with a citizen design process, you know, designing around the citizen and just pick the lowest hanging fruit that you could find, depending on your current situation.

First of all, I want to thank all of the guests that I've had on the show and their beautiful perspectives on human-centered design for those who live in built environments and who live in cities. Without them, I wouldn't have been able to put together this recap in episode 99. But I just want to leave you with three key points of things I learned. On the day-to-day, in companies, we should be caring about the well-being of the individual, thus holding well-being as having the essential value. And on the broader scale, think impact on the larger ecosystem, the city, and how partnerships can enable that.

And last but not least, keep thinking of ways in which technology can support the human's well-being, our well-being, and the future generation's well-being. With that, I hope you enjoyed this episode. If you learned something valuable, check out all the referenced episodes in the show notes. You can find all the links at constructor.com slash ep99. You can also let me know if you enjoyed this episode by connecting with me on Twitter at Brittany underscore ct or find me on LinkedIn.

You can email me too at Brittany at constructor.com. That's B-R-I-T-T-A-N-I-E at construct double R dot com. We're going to continue the 100th episode party next week, pulling the best snippets from the Constructor podcast this year. I look forward to celebrating with you next week. If you haven't already subscribed to the podcast, what are you waiting for?

You can do so at your preferred podcast player. I look forward to connecting with you next week.