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You may have heard or seen the puzzle of Cheryl’s birthday: on TV  , in newspapers and on Twitter. Lots of people around the world are discussing this problem from Singapore.

Even if this puzzle does not seem to be related to anything in real estate, I think that problem, and people’s varied reactions to the problem, is fascinating. If you think about it, real estate businesses consider an amazing range of problems which need solving, from fixing a broken pipe to developing a business which can survive the ups and downs of a business cycle to some of society’s big problems (such as affordable housing or traffic congestion). Different problems represent different kinds of puzzles, use different types of knowledge and produce different kinds of solutions.

Even if they do not recognize it, the lessons from the birthday puzzle are especially appropriate to high school students who are now thinking about choosing a university. They expect that they will be exposed to a range of problem solving methods. They may not realize that a university education such as ours is also about seeing many different types of problems in order to recognize which method should be used when asked to “solve” any particular problem.

So, let’s start simply. The day to day activities of somebody in the real estate business (or any other business) is all about solving problems of some kind.

If a water pipe breaks then calling a plumber is a pretty good solution. If the electrical wiring is not working as expected then calling an electrician is a pretty good solution. Being able to solve this kind of problem is incredibly useful but it is an entry level problem since the goal is to take something which is “not working” and fix it so that it “works”.

Another puzzle may be overlooked. Why did the pipe break? Why is the electrical system acting oddly? Maybe the simple fix is not a real solution. A more permanent solution would consider the system; e.g. is the water pressure too high everywhere or should the voltage of the system be increased overall? In either case, knowing how to fix the problem depends on technical knowledge of how the relevant system works.

Cheryl’s birthday puzzle sort of fits into this category.  It is harder than a puzzle in arithmetic.  It is a puzzle in mathematical logic which require people to figure out the system.

Still, being able to solve technical problems does not mean that you can solve all problems in real estate. As the saying goes, if all you know is how to use a hammer then all problems looks like nails. A fix-it-type problem is “relatively” simple. (I may not be able to solve a plumbing problem on my own but it is simple in the sense that it is relatively well-defined.)

Sometimes, the problem is not just repairing the pipe but doing so efficiently or at the lowest cost. The previous distinction between “working” and “not working” seems relatively clear and people who are successful with these kinds of puzzles can become frustrated when they do not recognize when the puzzle changes to one of optimization: e.g. within the category of working, there are better and worse solutions. An optimization problem would ask people “how much are you willing to spend to make the plumbing work?” or “what quality of piping do you want to use and how long until you will be forced to repair it again?” Answering these kinds of questions mixes technical knowledge with the concepts associated with value and willingness to pay. This shift in emphasis is why good engineers often find puzzles in business or economics hard to understand.

For people who find these business puzzles easy, the discipline of real estate has another type of puzzle waiting for you to consider. Once a decision problem is well defined, many techniques are available to solve it. People who are used to solving decision-type problems can become frustrated when they do not recognize that the puzzle is system-based.

Projects in real estate often involve many partners who need to cooperate in order to succeed. For example, the person with the idea needs to cooperate with the people who have the money and they need to cooperate with skilled tradespeople after reaching an understanding with the local government and the people who live nearby. This is not a command-and-control process where one decider expect others to follow orders. The independent partners have their own interests, their own constraints and think that different bits of information are important. Getting all of them to share information and to move in the same direction is not easy.  They they are likely to disagree that a puzzle has been solved to their satisfaction. How to achieve any reasonably good outcome in this situation is a real puzzle which takes skills beyond the “fix it” skills of a technician or the optimization calculus of a decision maker.

So, the reaction to the puzzle of Cheryl’s birthday illustrates what it means to try to solve a problem. While most people think that the way to solve a puzzle is to start looking for an answer, the message of this posting is that, like many puzzles in real estate, it helps to spend a moment to identify the true nature of this puzzle.

The next posting will add to this thought, will note how the reactions of others to this puzzle and will note what the different kinds of “creative solutions” say about the nature of problem solving.