Iterating the Neighborhood: The Big Returns of Small Investments

Sometimes, in our depleted and cynical times one hears, “Well then, what is your genius plan?”

Here it is, finally, with extraordinary force and clarity: a genius plan.
— Andres Duany

Excerpt from Strong Towns: A Bottom Up Revolution to Rebuild American Prosperity

Chapter 8: Making Strong Investments

For a private investor using the barbell approach, the high-risk investments that create the portfolio’s upside potential are a series of little bets. An investor might pick a dozen companies, each of which has the potential to take off, but each of which also has a realistic chance of going completely bankrupt. It’s impossible to know up front which are the winners, and which will fail. The strategy is to diversify the small bets in the hopes of landing a few that provide that huge gain.

Layered on top of an aggressive maintenance strategy, cities need to make many small investments throughout a neighborhood, all aimed at improving the quality of life. The goal is to nudge private capital off the sidelines by responding to the struggles of people already living there. Make their lives better and things will get better.

This involves a simple, four-step approach:

1.  Identify where people in the neighborhood struggle going about their daily routine.

2.  Identify the next smallest thing that can be done today to address that struggle.

3.  Do that thing. Do it right away.

4.  Repeat the process.

Identifying where people struggle requires a humble form of public engagement. Those making these investment decisions need to literally walk in the footsteps of the people they are serving, to be present as they experience the city. Consider it product testing: to observe how people are using that which has been built.

Computer algorithms monitor how users interact with apps and websites and use that information to iteratively improve a program’s interface. Programmers try different things, test them out, then keep and expand what works. We need to do the same thing in cities, to iteratively improve the interface of our human habitat.

Decisionmakers must observe and, better yet, authentically experience where people struggle. This means getting out and experiencing the city with intention. Walk alongside people. Observe where they go. Humbly ask them to narrate their reaction to their environment. I’ve done this; the results are astounding.

I walked with a mother who was pushing a stroller in the ditch. She told me she needed to go to the grocery store, didn’t have a car that day, and didn’t feel safe walking along the street, so she was taking the ditch, knee-high weeds and all. I observed the well-worn path she was treading and realized this was a struggle being shared with others.

I met an elderly woman going down the street using a walker, climbing over mounds of snow left by the snowplow. She told me she had no choice but to get to the pharmacy that day. She pointed out that the street was cleared of snow but the sidewalk wasn’t, so she was walking where she had to.

I ran into three kids walking through the alley on their way to school. It had rained hard the night before and so the alley was full of mud and filth. When I asked the kids why they chose the alley, they told me that their parents instructed them that people drive too fast on the streets so they should stick to the alley. The alley was deemed safer.

Each of these struggles is a lived experience, one I would not have been aware of had I not been out to observe them. More importantly, I could have convened a public meeting and asked those who showed up to list their top priorities for improving the neighborhood and it’s very unlikely any of these struggles would have come up. They are the kind of thing people accept, the gradually diminishing expectations of a long decline. The high return on investment we are seeking on this end of the barbell comes primarily from reversing expectations.

This return also comes from limiting our approach to little bets. A common reaction for a local government that has identified a problem is to seek a comprehensive solution: Put large amounts of money into fixing it once and for all. A city dedicated to intensive maintenance is not going to have a large amount of money for comprehensively addressing each localized struggle. And even if it did, a large project may solve the immediate problem only to reveal that solution creates more serious and urgent problems. That’s the way complex human habitat operates.

It is critical that the responses considered are the next smallest thing that can be done. There are a lot of improvements that can be made with paint, straw bales, and a shovel. Working at this scale—using a hacker mind-set—allows quick action. There is no need for years of study or deliberation. Little bets can be quickly undone if they don’t achieve the desired results, or if they have unanticipated negative consequences.

This allows a neighborhood to iterate. We can try things and see what happens. We not only receive direct feedback on our work, but we can learn from mistakes when the cost of failure is low. This is the mechanism that smart, adaptive systems use to assemble themselves.

Most importantly, working quickly through small iterations changes the relationship between residents and those who would make change. Instead of customers who pay taxes expecting a service, people become collaborators, their actions and responses dictating the next set of public improvements.

With local government responsive to the struggles of the people in a neighborhood — instead of grant programs, big developers, or bureaucratic processes — residents gain confidence in the direction of the neighborhood. Give people confidence, and a little bit of room to be creative, and amazing things happen.

Chuck learning from Mike (literally) on the streets of Memphis.

Chuck learning from Mike (literally) on the streets of Memphis.

I met Mike Lydon, one of the authors of Tactical Urbanism: Short-Term Action for Long-Term Change, back in 2010, when his ideas for iterating rapid change were forming. I must admit, I was still doing some traditional engineering and planning work then and the stories of pallet benches, pop-up parks, and temporary crosswalks Mike shared seemed fun, but frivolous. I quickly came to recognize how wrong I was.

For a fraction of the cost of an engineering study, Mike and his team transform entire streets. Their do-it-yourself approach has unleashed a flood of creativity and initiative. I’ve witnessed their work and seen a block of empty storefronts transformed into a bustling economic hub, dangerous streets made passable, and empty spaces turned into wealth-radiating gathering spaces, all on a tiny hacker’s budget.

These are real financial gains from very little investment, turning community assets from underperforming to wealth generating, all while improving the quality of life for people. This is how Mike and his colleague Anthony Garcia describe the process in their book, Tactical Urbanism.

Tactical Urbanism is frequently applied to what urban sociologist William “Holly” Whyte called the “huge reservoir of space yet untapped by imagination.” Today’s reservoirs — vacant lots, empty storefronts, overly wide streets, highway underpasses, surface parking lots, and other underused public spaces — remain prominent in our towns and cities and have become the targets of entrepreneurs, artists, forward-thinking government officials, and civic-minded “hacktivists.”

Such groups increasingly view the city as a laboratory for testing ideas in real time, and their actions have led to a variety of creative and entrepreneurial initiatives realized in the rise of food trucks, pop-up stores, better block initiatives, chair bombing, parklets, shipping container markets, do-it-yourself (DIY) bike lanes, guerrilla gardens, and other hallmarks of the Tactical Urbanism movement.

None of these projects were the result of a master plan, the formal process cities go through to envision change. Instead, these quick and responsive hacks create changes that can actually be experienced — not just imagined — by the people they impact, a way more powerful approach to making change.

The related work of Jason Roberts and The Better Block Foundation is similarly inspirational. Jason, a website designer from the Oak Cliff neighborhood of Dallas with no technical experience in city-building, started doing projects to transform entire blocks as a demonstration of what was possible. He told me that they started with the Dallas book of codes and, “tried to see how many we can break.”

Of course, this was not done in pursuit of deviancy. Quite the opposite. Jason would invite city council members to witness the temporary neighborhood transformation — bike lanes, street trees, shops open for business, street art, music — and ask them if they liked it. With dozens of smiling constituents milling around enjoying things, the public officials would always voice their enthusiasm. This is when Jason would give them a list of the rules they were breaking, the regulations preventing the transformation from becoming permanent.

The Better Block Foundation now travels to cities helping train local leaders — both inside and outside of government — to make these iterative changes themselves. They developed an entire open-source catalog of hacks and improvements and made it available at Together with the Tactical Urbanism toolbox, there are proven models for incremental approaches local leaders can use to make high-returning investments in any neighborhood.

The keys to making this work are to take cues from an observation of where people struggle, seek to respond quickly to address those struggles, observe the reaction, and continue to repeat. With little bets, we’re not seeking a solution; we’re humbly iterating responses to cultivate a wealthier and more prosperous place.

Maintenance secures a community’s wealth; little bets are how to expand it.

Mentioned in This Excerpt

Further Reading from Strong Towns on Tactical Urbanism, Little Bets, and Public Engagement

Podcasts and Videos