Hello and welcome to the session in which we will discuss section 179 deduction. Now, what is the big idea of section 179 deduction? Because if you understand the big idea of sections 179, you will start to understand the concept. The idea is to give businesses a deduction. A deduction to do what? More expenses to reduce their taxable income. But how? Well, you will encourage them to do what? To purchase property, plant, and equipment. And this deduction is specifically targeting, you're gonna see small and mid-sized businesses. It's encouraged them to invest in themselves by purchasing equipment and technology. And by doing so, you can have a tax deduction. And that tax deduction is called section 179. So go ahead, buy more equipment. Why? Because if you buy more equipment, the manufacturer will have to hire people to manufacture those equipment. And they'll have to pay them. And once they pay them, those individuals, they'll spend money in the economy. Once they spend money in the economy, other businesses will have to hire more people and we will stimulate the economy. Now, the idea is the company can elect. Notice it's an election. You can take it, you don't have to take it. To immediately expense up to $1,080,000 of business-tingible personal property. Now, first of all, the amount is for 2022. So if you're looking at this recording in 2026 or 2023, 2025, the amount will be different. It's gonna change from year to year. But the point is, there's an amount that you can immediately expense. And it has to be tangible, means physical, and it's a personal property in contrast to real property, which is building. Now, you cannot use section 179 for real property or production of income property, which is rental property. Now, certain rental property items are okay. So although the building itself, you might not be able to take a deduction for it, but roofs, heating, ventilation, air conditioning, fire protection, and alarm system, those are considered separate from the real property. Those are considered kind of personal property for the purpose of 179, they're okay. But the property itself is not.  And of course, it's going to, just like what we learned in makers. And by the way, if you don't know what makers is, mid quarter and mid year convention, please go back to the prior session because this session would imply you understand what makers is. But it's basically the depreciation, modify accelerated cost recovery system, makers. And same thing with makers. Once you expense an asset, you have to reduce your basis. Now, any elected section 179 is taken before what we call additional first year depreciation, which we'll see this in the next session. We'll talk about first year depreciation and before makers. And to be more specific here's what's going to happen. First, you can take section 179, then you can take the additional first year depreciation, first year depreciation, then you go into makers. We already covered makers. Now we're covering section 179, and in the next session, we'll cover first year depreciation. Now, obviously just like with everything that we learned in taxation, the election is phased out and a subject to limitation, subject specifically to taxpayer business income. So not every penny you spend, you'll be able to deduct. We're gonna see its subject to two limitation. One is how much asset you purchase for that year, personal property, and what's your taxable income. Before we proceed any further, I have a public announcement about my company, farhatlectures.com. Farhat accounting lectures is a supplemental educational tool that's gonna help you with your CPA exam preparation as well as your accounting courses. My CPA material is aligned with your CPA review course such as Becker, Roger, Wiley, Gleam, Miles. My accounting courses are aligned with your accounting courses, broken down by chapter and topics. My resources consist of lectures, multiple choice questions, true-false questions, as well as exercises. Go ahead, start your free trial today. Let's take a look at a simple example with no limitation whatsoever to just kind of put you in this idea. What's the benefit of section 179? Well, let's assume John purchases and start using business equipment, a five-year class asset on February 1st, 2022. Well, John paid 100,000 and this is the only asset that John purchased in 2022. Well, what can John do? Assuming no limitation, John can opt, can choose, can elect to take this 100,000 as a section 179 and have a 100% deduction for the 100,000. Excellent. Or John don't have to do that. He can depreciate this asset using makers. He can recover his cost over the next six years. Like this, the first year, 20%. The second year, 32%. The third year, 19.2%, 11.52%, 11.52% and 5.76%. Now, if you don't know where these percentages are coming from, this is the table for five-year class, half a year convention. So that's why I told you at the beginning you want to be familiar with makers for this session. So you should not be able to understand section 179 if you don't understand makers. So I assume you know what otherwise, go to Farhat Lectures and look at the makers mid-quarter and half-year convention, or mid-year, half-year or mid-year convention. Now, obviously, as I mentioned, every time you take a deduction, whether that's a makers or section 179, it's gonna reduce your basis. So let's kind of give you an idea how the section 179 reduces your basis. Assuming John sells the asset in 2024. Well, if John elects section 179, what's a John basis for this asset? The basis for this asset is zero. Why? Because the cost, the basis started at 100,000 and immediately John deducted the 100,000, therefore the basis is zero. Therefore, if John sells this asset for five dollars, the full five dollars is gained. Any amount he sells it for, it's gonna be again taxable to John. If John elected to use the makers depreciation over three years, year 120,000, year 22,000, year three, remember when we talked about in makers, you will take the full amount times a half a year because we assume we dispose of the asset mid-year. Therefore, the basis for John will be 100,000 minus the depreciation taking. The basis will be 48,250. Now, if we sold this asset for 50,000, we're gonna take 50,000 proceeds minus 48,250 and the difference will be what? Will be the gain, will be the gain that John will have to record a taxable income which is 1,750. If he elected section 179, the whole thing, the 50,000, if he elected section 179, the 50,000 will be gains that's taxable. Why? Because you would recapture that depreciation. Let's look at a quick lesson or history lesson for section 179. It started at 10,000, in 2001 went to 24, then it was increased to 100,000, then it was increased to 250. In 2010 it was half a million, and in 2015 they made it a permanent, so this way it's a permanent deduction because it was always a temporary one. Now it's a permanent. In 2018, part of the tax cuts and jobs act for President Trump, they went up to a million. Always there's a phase out or threshold, we'll talk about that later. But the point is, it started small and it was a temporary deduction, then now they make it permanent. And now again, as we saw now in 2022, it's 1,080,000, again it could be a different amount in future years. Now Congress is generous, but they're generous to a point. What does that mean?  As we said, the expense is 1,880,000, but that amount is reduced by the amount of asset you placed into service. And once you exceed 2.7 million in asset, for every dollar more, for every dollar more, you reduce $1 of deduction. Well, what does that mean? It means you can go from 2.7 million up to 3,780,000. But once you exceed 3,780,000, it means that's 1,080,000. Minus 1,080,000 you would lose all your deduction. You would lose your deduction. You can no longer use it, why? Because now the key is now, you have so much money, you don't need a tax deduction. That's the point. Once you exceed 2.7, you will start to lose it. Every dollar you purchase more, let's assume you purchase 2.8 million worth of asset. It means $100,000 more than the starting in the range. The range goes from 2.7 to 2.78. If you're 2.8, 100,000, then you would lose 100,000 of section 179. For example, if a taxpayer placed in service, 2,775,000 worth of property, that's 75,000 more than the limit for 2022. Well, guess what? That's $75,000 more, and that's gonna be reduced. That's gonna be reducing the 1,080,000. It means for that year, you can only get 1,00,000 and 5,000. Now, there's another limitation, which is called the business income limitation. Section 179 allowed for taxable year cannot exceed the taxpayer business income, to simply put, well, this is the first limitation. So the maximum you take is 1,00,000 and 5,000, as long as you have income of 1,00,000 and 5,000. If you have less income than that, then you are limited. Don't worry, we'll look at an example. As I mentioned on the first slide, there's a priority for section 179 deduction. It means it's taking first. It's taking first section 179 first, then first year depreciation first, then maker third. So let's assume Adam put half a million worth of seven year makers asset into service in 2022. He has the option to take the full half a million if he chose to, but he did not. He chose to only take 300,000 instead. So what he did, he took the 300,000 and combined the other depreciation with makers. Now we're ignoring the first year depreciation. And this way, Adam was able to reduce his taxable income to zero. Why? Because Adam wanted to defer, although he invested half a million for section 179, I said, I'm going to need 300,000. I'm going to keep the 200,000 for the future. Why? Because in future years, maybe his marginal tax rate is higher. So as a result of this, here's what's going to happen. Section 179 is 300,000. Then we're going to take half a million minus 300,000, which is section 179. The remaining is 200,000. Multiply at times the makers rate, 0.1429. If you don't know what this is, again, go to makers half a year convention. We'll give us 28,580. So the total cost recovery or the total depreciation we'll take is 328,580. Now let's talk about the limitation of investment. Let's assume Adam puts in service 1,445,000 worth of section 179 property for his own accounting consultancy in his business. Can he take the full 1,080,000? And the answer is yes, he can take the full amount because you don't lose any of the 1,080,000 until you placed in service 2.7 up to, you would lose everything at 3,780,000. So remember, Adam is qualified to take 1.8 million, assuming no other limitation. So since the property placed in service, maximum of 2 million was not reached because only 1,445,000, Adam can still invest more actually without losing a penny of the 1,080,000. He could invest up to 2.7 million before starting to lose any deduction. Remember, up to 3,780,000 for 2022 and this amount could be different in future years. Let's take a look at another example. During 2022, Noah places 3.4 million of section 179 property. Well, guess what? 3.7 million is higher than 2.7 million in his manufacturing business. All assets are seven year makers because Noah placed more than 2.7 million. He must reduce his section 179. How? Well, we're gonna take 3.4 minus 2.7, so he is 700,000 above the limit.  The only thing he can take for section 179 is 380,000. Therefore, section 179 is 380,000. Now he's gonna take sections 179 and which is, it's gonna be 3.4 million minus 380 because he took section 379, multiply by the makers and that's gonna give them 431,558 if my math is right, four makers. Let's assume Noah placed in service a building worth 1.5 million. What's the effect on section 179? None. Remember, section 179, a reminder, applies to tangible, personal property. A building is not that. There's another limitation, business income limitation. The deduction cannot exceed the taxable income of the business. Now what is the business income? There's a term called business income and any amount that exceeds the deduction must be depreciated over several years. In other words, if you have excess depreciation, you can take it later. Simply put, section 179 cannot create a net operating loss. It cannot take you into a negative or if you are into negative, and oh well, it cannot increase your net operating loss. Now the term business income, it include not just the income generated by the sole proprietorship, it also include income from wages and any other business income assigned to the taxpayer from a partnership or an S corporation. It has to be a partnership or an S corporation. So your wages from those are included in this business income definition. Again, an example would illustrate this point. In 2022, Adam operates a sole proprietorship that provide consulting services resulting in an income of 70,000. Would that be taken into account as business income? Of course. That's A, that's a business income, clearly a business income. Also, Adam owns 30% of a management consultancy that operate as an S corporation. So he has his own business and owns 30% and another S corporation. Now the S corporation pays Adam 50,000. Is that included? Sure, because that's his salary from basically his own business. And the S corporation reported 80,000. Now of that 80,000, he owns 30%. His share is 24,000. So Adam business income for this purpose is 144,000. How? Well, the $70,000 from his own business, the $50,000 wages from the S corp and the 40%, the 24,000, the profit from the S corp. Now, access 179 amount above business income also carried forward. You don't lose it and you combine it with other eligible expenses in future years. However, also the future years is also subject to limitation. There's always a ceiling on this amount. There's always a ceiling. So although it's a future, you carry it, it's subject to the same rules. So let's take a look at a business income limitation example. Noah, a sole proprietary of a computer service company and in 2022, his taxable income was 165 prior to taking section 179. Assuming he spends, Noah spends 2.9 million on new equipment. So notice here, Noah spent 2.9. He would start to lose section 179 at 2.7. So how do we compute how much they can take? Well, let's start with the limitation of section 179. He was 200,000 above the limit. So if we start with 1 million and 80,000, we reduce it by 200,000, 880,000 remaining for section 179. So that's the first limitation. Can Noah take 880,000? And he would like to, but he can't. Why? His business income is 165. Therefore, of the 880,000, he can only deduct 165 and the remaining 715 is carried forward as section 179, carried forward to future years. Now there's also one additional, I call it bonus. It's not really a bonus, but I call it bonus because kind of what section 179 is generous, but we're gonna look at another truly bonus in the next session, the first year bonus depreciation, that's different, but section 179 is generous. If you guys remember, we have two type of convention for personal property, the half a year or mid-year, half a year or mid-year, mid-year or mid-quarter. And hopefully you know that mid-year will give you more depreciation than the mid-quarter. So mid-quarter convention computation is carried after applying section 179. So when you are trying to find out, do I qualify for the half a year convention or mid-quarter convention? Well, the first thing you do is you take section 179, but here's the good thing. When you're taking section 179, you can select, you can say what? I wanna take section 179 and apply it to the asset that I placed in the fourth quarter. Why the fourth quarter? Remember when we have fourth quarters, one, two, three, four, when they use the mid-quarter convention, we use the mid-quarter convention when 40% of our assets are placed in the fourth quarter. So section, if you're using section 179, it comes first, you would say I'm applying section 179 to those assets, therefore you would remove them from the computation to reduce that 40% chance. In other words, when you reduce your asset from the fourth quarter, there's a more chance that you're gonna be using the half-year convention. And this way you would avoid the mid-quarter convention using the mid-year or half-year convention. The best way to illustrate this is to look at an example. No manufacturing places the following asset in 2022. All assets are five-year class assets. Asset one purchased March 3rd, which is the first quarter. Asset two purchased June 28th, second quarter. Asset three was purchased October 10th, which is the fourth quarter. Now, total of 2,112. Right now, assuming there's no section 179, we would say 1,100,000 was placed in the fourth quarter. Divide this by the total asset placed, 52% was placed in the fourth quarter. You will default to the mid-quarter convention. And as a result, if you compute your depreciation using the mid-quarter convention, if you don't know where these percentages are coming from, it means you don't know how mid-quarter convention works. Go to my mid-quarter convention lesson, but simply put, you will total 292 in depreciation. That's fine. Now, if you elect to choose section 179, what you will do, you will apply section 179 to this asset. You would say, you know what? I have 1,100,000 of assets placed in the fourth quarter. I'm gonna be using my section 179 to reduce it down to what? To reduce it down to 20,000, right? If I reduce it down to 20,000, now 20,000 placed in the fourth quarter compared to the other assets, it's not 40%. So what I will do, I will expense immediately 1,080,000, assuming no taxable income limitation. And as a result, what I'm left with is 1,032,000. Well, if I have 20,000 left, and if I compare this to the remaining asset, it's not 40%. So I'm in good shape. Now I skipped the mid-quarter convention. I default back to the half-year convention. Therefore, I will take 1,032,000, the remaining asset times 20%, the half-year convention equal to 206,400. Well, what's my total depreciation? Total the cost recovery expense or depreciation? It's section 179 that I took plus makers, which will give me 1,286,000. And that's a huge difference from 292,000. Simply put, I added a million dollar, almost more than a million dollar. Let's say a million dollar for the sake of illustration real quick. I added almost a million dollar of deduction, which if I'm in the 30% tax bracket, I saved myself 300,000 in taxes by just electing section 179, assuming section 179 will have no other limitation. What should you do now? Go to Farhat Lectures. Look at additional resources, lectures, MCQs, true, false. We need to learn also about, the next topic we'll talk about about first-year bonus depreciation. You need to learn about makers, which is prior to this session.  This topic is important. Good luck, study hard, and of course, stay safe.


Hey there lads and ladies, it is Petrifying Pumpkins here and I am back with volume numero or umero for, I don't know, I don't speak Spanish, of your top firewall zero hour plays. But before we get started, let me thank each and every one of you who submitted a clip. Even if you didn't make it to this list, I still appreciate it and I'm sorry if yours didn't make the cost, but don't give up, there's always next time. The next thing I want to say is that if you want to submit a clip for a future volume and you don't know how, then just check the video description down below for instructions on how to do that. Follow the rules and keep in mind I'm looking for some really unique stuff. So while an ace is impressive for example, I usually get about 5 ace submissions every time so they're not really that unique. So do your best to give me something a bit different if you can. One last thing I want to say before we start is that these clips are in no particular order. The reason for that is that I want you to tell me in the comments below who you thought had the best entry for volume 4. So with all that housekeeping out of the way, let's jump right in. Playing with number 10 from PSV or Assassin, T-Bagging has evolved into something else. Number 9 is J. Orr Bullets Vior as he loops around to decimate his enemies with the EHG shotgun. At number 8, MechVenom uses his Scouts ability to deadly effect.  The Fener 32 makes a case for the EHG being completely overpowered with their number 6 entry. At number 5, Zaiolo Rastaman shows us that you don't need the instant karma skill to deliver instant karma. PSV or Assassin is back yet again on this list by aiming for the hole at number 4. At number 3, Miner's 71's patience pays off in a big way. Our number 2 entry for today sees Hearn shadow the gamecast give this enemy a boost over this wall. And finally, at number 1, PSV or Assassin makes his fourth appearance on this video with this artillery strike. And that's it for volume number 4 of your top firewall zero hour plays. Be sure to let us know in the comments who your favorite was and once again, big thank you to everyone who submitted. Also a big thank you to you for watching this video. And if you liked this and want to help me out and the channel out then please consider doing all that usual shite. I will see you lads and ladies in the next one, bye bye for now.


So welcome Welcome to my session. Thank you for choosing this session out of all the sessions at Drupalcom I always do this off the off the beat talks about something philosophical You know, I'm never I'm never pulling like the big crowds. Maybe you know in the future. Anyway, and I want to talk to you about complexity and About complicated systems and about what all of that means for the world that we're living in and how it's changing everything and then seven models because you know all good things come in sevens maybe That that can help you to apply that to to real life and how to make better businesses better communities and so on But before I I start I'd like to say thank you And because And this is not the Drupal community. This is another community, but I'm now 40. Yeah, Denise Cooper. Yeah, so I've been 14 years in the Drupal community. This is my first real big community and Communities taught me so much and that And this like the Drupal community right now the inner sourcing community is one of them where I'm learning So I'd like to say thank you to the communities that are teaching me this stuff because without community I would be You know a lot more stupid I wouldn't know a lot of things and I'd like to say thank you to my colleagues because because of them I can do the traveling that I'm doing It's very easy to forget about the people that are making it possible for the people that are presenting I think Without them, I wouldn't be able to do all the traveling I wouldn't be able to do all the learning that I'm doing as I'd like to say thank you to them and to my family because they've been missing me a week and a half now and There's somewhere in a museum today but Normally my daughter would have joined me, but in the end we decided to do different So Now I'm sure you you didn't think that the word digital transformation was going to show up in a talk about culture and You know complexity But there it is digital transformation. I know I think it's kind of like a buzzword today But I for me digital transformation has a lot to do with complexity and I'll explain you why a little while ago Forbes did this article about the Copernican Revolution and was this idea that Somehow there's it seems there's something changing in business business is becoming more people centric Like there's agile, there's self-organizing teams. There's a lot of this stuff happening and So it was like hooray, you know business is finally seeing the lights and becoming more human and When I when I was looking at this I was like, yes, but I don't think it's because they want to be human. I Think there's a really good business reason for it and And I think it's it's actually about complexity and because So I asked earlier like well, what is the difference between complicated and complex? It's kind of a mind bender because for a very long time for me these were two concepts that were the same But The way that the easiest way to understand this that complicated systems are like cars and machines like clockworks They're really really efficient at doing what they're built for and If there's an expert about that machine, they can completely understand how it works But as soon as you start changing a little bit in the environment like if you drop that watch or if you put some potholes in the roads They're very quickly break down like if you take one piece out of an engine of a car. It just it's game over and Complex systems are like ecosystems like flocks of birds like communities You can do a lot of really abusive things with complex systems and they'll still keep on functioning until a certain point and And What white postulation like my core concept what I'm starting from is that within building businesses and governments and Like pretty much everything like complicated machines for efficiency For all of our lives all off since the the industrial revolution This has been the big way that we do things we built complicated systems We create processes where we put people in a little box where you know, you have to do exactly as I tell you what to do and And that's no longer working Because the environment has changed because What we used to do like we used to have an environment that was fairly stable Yeah, new things came up once in a while But it took enough time come companies were slowly adapting And you you had time to change your processes and your procedures to adjust to whatever was coming up But now all bets are off the world has become so much more interconnected that the massive increase of interconnection is Increased the complexity of our environment so much that these complicated machines no longer work These large enterprise companies that were built, you know with this very hierarchical structures With these very strict procedures where it takes a year a year and a half two years to change vendors all of this stuff is just too slow and And the world needs to adapt because like, you know, it's just a lot more complex And so what I want to go through in this presentation is through seven areas where you can see the fault lines of Systematic failures in complex systems complicated systems where we can start to see that complex interactions are changing the way things work and Yeah, talk talk about seven fault lines and then a bunch of books that I've read that Like help me to see the world this way And these are two of them Thinking in systems is an interesting primer to systems thinking. Have you heard of systems thinking before? some people okay It's like Most of the time, so I don't like Disney movies Because they're so black and white. So my kids they started watch their first movies were Ghibli from Miyazaki There were movies that were talking about Yeah, they're doing awful things But there's a lot of reasons why they're doing awful things and they have to look at the whole thing and don't don't just say like oh They're evil destroy them So that thing that that was That's an interesting book to look at the other one is understanding complexity It's a new new book that I just read it talks about how to How to actually drive complex complex behavior like what makes systems become complex Very very interesting and exciting Okay, so complexity So why are companies struggling? I think already gave you the way a little bit in what I was describing earlier I think The key thing that I want to highlight here if you're into self-organizing teams two books on the right are very interesting The middle one is why you should think about self-organizing teams. The one the right is how? So if you're if you heard about self-organizing teams and restructuring your business as a self-organizing team brave new work is probably the way to go if you want to do it the other one is is more the kind of like the why but this first one talks a little bit about boundaries and And like and how to restructure and why to restructure the organization Because traditional companies are structured like hierarchies Where there is a hierarchy of leadership and The leadership is doing all the thinking and the people on the bottom are doing all the execution and the leadership decides What has to be done and the people on the bottom? They just execute and The problem with this is that you have a signal cascade that you need to follow and And it's just too slow because by the time leadership has learned the way the environment has changed the environment has changed again and And now they're optimizing for the wrong environment so and and the organizing for complexity book they talk about how You should be structuring your organizations more like an interface with the environment where you try to have all of your like where the people that are interacting with customers the people that are interacting with the environment where things are changing that they are doing the learning and you're trying to learn from that and Change your behavior as a system based on that So that instead of being like an oil tanker that just has this massive mass and this calm turn You become like a more like a hive that is really adaptive and I can adjust In mid course and change the way that it's doing things So and I think the core the core thing is that if you want to thrive in this new way of doing things You have to be a complex adaptive system Have you heard of complex adaptive systems before? Okay, wow great, so Complex adaptive systems, it's it's a It's a whole science about systems that are behaving that there are based on agents That are interconnected and that are collaborating I'll have a few slides at the end of my talk where I talk a little bit more about like how you structure that and how that works but the interesting thing is that Organizations have always been complex adaptive systems. It's very I'm doing the black and white thing. I'm doing the Disney thing It's not that black and white we've always been somewhat adaptive I think where you can find complex adaptiveness in currents Organizations is in culture So when people talk about culture beat strategy every time that's what they're talking about I think what we need to do now is to make our Organizations even more complex adaptive and create more space for people to do that behavior That's helps us to adjust to changing environments Next is motivation Why do we do what we're doing? Why as a community are we contributing to open source voluntarily? This is one of the things that I'm a little bit is afraid with some of the decisions that I've made in the Drupal community, but Basically, we've had this we have this magical thing right as a Drupal community. We have We've built a whole lot of people probably Hundreds of thousands of people that are interacting with us Using our tools Contributing back to some extent just sometimes in very small ways by being present in our communities by doing stuff and And all of that for the most part is voluntary We have so many camps happening that are for free that are you know, just Give people a place to be together and and and share what they know and and and you know be community together and And if you think about that it's kind of that doesn't fit the standard economical model right in the standard economical model The whole idea is like you have a transaction and I've got something you've got something and you know We we need to we need to give to each other somehow and So no two books that really changed my perspective on all of this was a drive and punished by rewards I think Drive is kind of the basic model of Extrinsic versus entering sync motivation and I've added belonging in there in the middle. This Katrina Nova Kovic Who I met in the inner sourcing community? She talked about this how they saw this at redhead as a driver for open-source communities But I think the core thing is and I think you've all seen this model right the intrinsic versus extrinsic intrinsic is good extrinsic is bad To some extent yeah, but That if you start giving people extrinsic motivation rewards Then it starts reducing and eroding their intrinsic motivation now We all need money to survive we all need to make a living I think there's ways to combine them I think I like to think I like the way Airbnb does it you have the Transaction that happens before the stay so you order a room you pay immediately and by the time you have the experience It's kind of forgotten that you've exchanged money So you have the transaction happening separately from the intrinsic Parts where you're building community and you're you know when your host is giving you recommendations Yeah, maybe you're gonna give them a better review But it's not they're not gonna get paid for that and that is helping to build social capital and Yeah, and it's a different way of interacting So but the core thing is motivation is not about sticks It's also not about carrots and that was for me the shocker like punished by rewards recommend highly recommend it it talks about how actually giving rewards can be damaging like the whole The whole bonus culture in the US is probably Like one of the most crazy things you can do if you want to keep people motivated Next is cooperation Do you know this you know what this is? It's an ant nest that collaborates with a plant It's like a very magical symbiosis and I'm a biologist by education. So How do communities corrupt cooperate without budgets or bosses now and for me big transformational book for that was adept and It's by David Graber People call him the anthropology wait The anarchic anthropologist He says that you shouldn't call him that but I still call him that It's interesting because he's been looking at Cultures before money Communities that didn't have money and that introduced like and how do they talk about interactions with people? because What he found out that there's this economical founding myth You know imagine a world where I have cows you've got chickens and you know We can't really exchange how are we going to do that? Like you have to give me like 10 chickens and I or I give you half a cow and that doesn't work, right?  They just give to each other if you have a small tribe people Just you know when you need something. I'm gonna give you what I need I'm gonna get something if there's someone who's always taking and never giving back they get banned out of the village and So what what he what I realized what I learned from that is that there's this Assumption that we're making about society That it is only possible if it's based on transactions and transactional relationships that is fundamentally To some extent flawed like yes, I think it's a great it's been a great model to scale society Because without transactions you kind of stuck in a small small village And you can't really collaborate with people because if there's bad actors it doesn't work Without transactions you wouldn't have kids I think that's another talk, but But I think My theory is and this is kind of a big theory but my theory is that we need a new technology to help us collaborate at scale that is non transactional like The monetary system and the monetary wave cooperating should remain like it's good It's great for creating freedom, but right now. It's also Damaging us and it's it's eroding our social capital in all our societies Today even communication has become transactional Somebody's making money on what you're saying to your friends and family and and that is actually destroying our civil society and I think I Think it's the power of technology that is driving driven too far in making all our interactions transactional I think that we need something to balance that. I don't know what it is. I have some ideas, but it's 100 theories But guess what we've been doing this in Drupal Right The magic of Drupal is that it's not transactional The magic of community is that people just give I Think oh, yeah, there's always reasons I And those reasons are transactional and I give and I get back way more than I give yeah And that thrives my career, which means I get money which means I can have a nice house I can give my kids So there is definitely a yeah There's an external there's an extrinsic, but I think I have I don't have that in this slide act But I call this quantum thinking is that you have to have both at the same time so you can't have transactional or Fully like altruistic fully altruistic gets exploited and the people that are Preaching the most about altruism are typically psychopaths Right like if somebody is like oh you should just give and it's normal that you're giving and trust me This are normally signals of be careful But as I think what what we need is that we need to we need both we need So I call it quantum thinking where you can have both models at the same time So that you can have the freedom that money gives you and that transactions give you But you can also have the social capital that's build building up of relationships gives you and I think the danger is when we drive everything towards transactions because that's the only thing we understand Because we are Are we're so much steeped into it that we don't we don't realize what we have like when like for example in your family when you have kids Please don't pay them for doing housework It's a really bad idea because you you need that Collective fission of the family as a counterweight when you when you when you're being paid for everything you do You are losing a lot of meaning a lot of motivation And and it's it's true. We need payments because else we can't survive But we need both I think I think that a lot of the loneliness and a lot of the psychological problems We're seeing in society today are driven by by this transact transactionalification of everything So yes, definitely Communication This is a really big one for me is this polarization in conflict Yeah, I'm not gonna go too much in politics, but But For me transformational books were these two First one was the anatomy of peace that helped me understand the problem It's kind of like the why and the other one was nonviolent communication was a solution to the problem And that's a nice piece is basically This was transformational for me for a lot of my relationships. I'm I'm a like eternal optimist and I thought that was a good thing Until I realized that it was forcing people around me to be more pessimistic because when you have a relationship you're you know the magic happens in the middle and When one person is going one side the other person has to go the other sides to keep it in the middle So and and in this book they talk about demon dialogues, which is basically about They talk like also dr. Seuss talks about this if you if you want another book about that this more personal relationships And that's how many pieces more about You know in society but This idea that like if you read your significant other this it's such a Yeah It's such a I'm looking for the word but you know this right the slew we call in Dutch we call it a slew the Husband and wife and there's such caricatures Because the one is doing something so extreme that the other has to do the other things so extreme like One person completely without power the other with all the power that kind of dynamics That's what I call a demon dialogue and in the book they explain how you get into that where When you have especially with your significant other You have this bond together and when somebody is doing something irrational They're basically asking like hey do we still have this bond and then if you react badly on that then you're basically saying I actually know we don't have this bond and then you get this conflict spiral. That's that goes out of control The other book non-violent communication talks about a model for for dealing with that and it's basically When you hear people talk they will often start from Personification you are always like this or you're such a blah blah blah and And that's really bad because you're you're forcing them to be one thing and people are not one thing people are quantum They're multiple things at the same time And the other thing is the I think we should do XYZ like I've got my strategy And now I'm going to keep talking about my strategy and I'm not gonna listen to you even if you have another you know So those are two really bad anti patterns that you shouldn't use the good patterns is You know you say something the other person like comes back slams Like you start feeling a conflict you listen to them and you say oh well when you say that I feel like this I think that this is what you need This is what I need Is there some way well first? I think this is what you need. Is that correct? Yes, or no. I actually my needs are different then you come back with this is what I need Can we find a solution together that fulfills both our needs so that we don't try to shoehorn? The other person's needs in in our strategy that we've come up in this in a split second That probably is completely wrong and that we we try to listen to the other and come to conclusion And I think that the key is that it when you focus around feelings and needs instead of image and strategy and identity Then it conflict is actually a good thing I'm a massive conflict of order. I'm a yes person. I Really don't like conflict Or I'd used to not buy conflict and I've learned to love conflict because every time I have a conflict I learn and And by avoiding conflict. I was actually destroying my relationships little by little, you know one kumbaya at a time And Language can you spot what's wrong with this picture? How can you recognize good communities and this is also company communities company culture is similar I love this book tribal leadership which was about This thing Which is a model for how people talk and what it means about the culture of that order Organization or that group or whatever It's this idea that's So when people when people start when people say like, you know the world sucks They're in a really bad place. It's really hard to work with them Then they graduate like them they move up a little bit they get into my life sucks, but theirs doesn't Then they go I am great, but you're not we are great, but they are not and then there's the world is great And it's just awesome What was really interesting in this is recognizing that when you have people saying I'm great That it means there's a bunch of people that are hearing. I'm not When like I love looking for this in events when you have presenters that are Trying to pretend that they're so much better than everybody else and like you have to work with me because I'm so much smarter than you Basically, they're saying I'm great and you're not they're terrible people to work with A lot of cultures are like that Often in hierarchical systems. It's very much like that You can look at as a leader in your organization you you try to go up So we are great is easier the world is great is hard because you need a lot of money If you have enough money you can get into the world is great But I think what's interesting is that language is an indicator of culture It's not like looking for this language patterns in your different cultural environments And I can when people are switching between them and how they're switching between them can be an indicator of this of something that's going wrong and And then also like that in the most in the most performant cultures competition goes away. I think that's amazing We have this idea of the world as this Darwinistic You know Survival of the fittest, but it's not true. It's not survival of the fittest. It's survival of the sufficiently fit and For for very long time that was how the Drupal community operated. It's been there's been some shifts. I feel and Well, we're specialized and we're in our own little niche so that we don't have to compete I don't like competition, you know, yes person But um, yeah Value I was looking for a good question to follow the pattern kind of weird question, but if you look at software projects It's hard to find the bottleneck because it's kind of shifting and I read this book which is about Yeah project of products I Think the core thing I got it from it was this which is We used to be in running organizations as singular value flows like value streams that were linear and now We're running value networks that are you know, they can root around problems and And it's also a lot more adaptive and like I probably we should be looking you need some linearity To get efficiency, but you should also have this network around it in your organizational design And it's an additional businesses are value networks rather than value streams It was interesting because it shows you if you start looking at a business And you see it's a stream then probably they're still in the old paradigm You start like good businesses are are more adaptive and are acting more like networks Last one constraints This is a really hard concept I read this book I spent like a whole summer trying to understand it I Think the key question is this is like how do self-organizing systems protect themselves against failure? How does low life survive like how do we how do you keep going and? The This first book this is a one that's open this for me Jeremy Sherman leader goes to the machine. It's quite accessible It's a it's based on the work of Terence deacon and it's a concept of He basically talks about how do you get from non-living matter to living systems and How does that work and how do and and he's talking about constraints as a way that that works What I mean with constraints you saw the month We all recognize this and we know what it does It's an affordance. It's an affordance is a capability for holding liquids and it doesn't matter what material it's made of and It's not constraining the liquids in the exact same place The liquid does not have to become a crystal to stay in place Because there's an open affordance that allows the liquids to go in as long as you know You don't do crazy things it stays but it stays put That's how life works That's also how I think you built really good adaptive organizations is there are constraints that protect the system But the people inside are free. They're free to move and to you know adjust and they're free to learn and to to To adjust to whatever is happening on the outside But there's a lot more to it You can build affordance platforms or like you know You can put multiple affordances like this together like engine is enough is a good affordance There's a lot of constraints that together create a capability that you can reuse It's too much for this stock, but I think digital transformation is about affordance platforms and now I'll yeah, I'm still working on that, but The the key thing is that Cells and biological systems they Have these constraints that's helped to catalyze Transformations and they have this multi-cell or modus where individual units can fail and it's this model of hyper constraints organelles like Mitochondria Where all the energy is being produced? Combined with the cell where there's a lot less constraints Where you can store lots and lots of lots of DNA? Because you have so much more energy That's combination is I think a really interesting model to look at for for the way we structure businesses and society probably also With you know using machines for the hyper constraints parts and the humans to create the adaptivity that allows us to be more Adaptive to whatever we're doing so I don't force people into a straight jacket You know you can make them part of a process But help let them rotate out so that they can be adaptive because that's what we normally would like to do and So I think that the key here is living systems are just enough constraints with fallible substructures to gain immortality There's a lot more but that's that's a core concept conclusion There's another way to grow systems. There's another way to grow businesses using constraints and affordances and I'll share the slides afterwards also So we can go from complicated machines to complex organisms that are much more adaptive that are you know learning in communities and things like that and As a result this can help us build better businesses and communities also better software of healthier relationships, I think We are only just starting to understand how Biology actually works It's probably going to be very hard to really understand everything because it's emergent and a lot of the behavior is it's just not deterministic But if you better understand it if you better understand systems thinking if you understand how communities work how Ecosystems work we can avoid some of the mistakes that will destroy our ecosystems like what we're doing with the planet that can you know really Destroy our communities also if we if we don't watch out what we're doing like if we make everything extrinsic We lose a lot of that internal motivation Like to end with some more books if you like a really poetic book I Love the simpler way. It's available in audible. It's like listening to poetry, but it talks about all this Systems way of thinking and it's it's there's a lot of different concepts that are being shown and explained And it's a bit of meandering is beautiful. I really loved it the The that one is about how to use systems thinking to change organizations the little one and the last one is another one by Margaret Wheatley which is a Leadership and how to how to do that with systems thinking Thank you, and I have I have some more because I've added I wasn't sure if I would have time so How do you do this? How do you use complexity? How do you become more complex? I? Think the key is emergence behavior like this is a stick merging. This is what aunts do so it's like it's about become a complex adaptive system and This is from a book that I mentioned earlier about understanding complexity. There's four Parameters that you can tweak to tune complexity, which is really interesting is the interconnection interdependence diversity and adaptivity You cannot go this should not be zero and it should not be infinity. There's too much of either of them It's no longer complex so I think there's some way to tune complexity by tuning these things by tuning maybe even pruning Relationships or by creating boundaries by There's there's something here. There's a science for complex adaptive behavior that could help us to create more resilient systems and more resilient communities and Yeah, we do death portals, and I think this I think maybe there's a way to tune that some organizations, but There's a bunch of references, but Yeah, that these are like the images that I'm using On that notes, that's all are there any questions that you have We have a few a few minutes Yeah, yeah, I'll go repeat it. Yeah Yes Yeah I Not competitive. Yeah, it's playing a bit more. Yeah, sure So I think at first question was how do you become complex like what's the first step to becoming complex adaptive system? Yeah, what's what organizations can do? I think one interesting area is Something called in like depends on how big you are if your enterprise big a really good place to start is something called inner sourcing Which is using open source methodologies and tools to start opening up internally So that instead of having silos you start creating crosslinking between between the different compartments in your organization I talked about those four parameters Inner sourcing helps you with interconnection interconnectedness and interdependence and Adaptivity to some extent because what you're doing is you're saying I've got a piece of software that I'm producing for our organization And you're my customer. You're my internal customer You're using this piece of software if you need something to be changed in that piece of software just to pull request and we'll we'll accept we'll review it and we'll accept it and And that way you can start crosslinking and create more interconnections and that could be a first step. There's something else about Boundaries and signals. I think API's are a good way to start Reorganizing your your your signal infrastructure so that you can create better boundary systems internally I Don't know yet exactly what that means. This is very theoretical. I'm approaching this from a philosophical perspective In the practice we help companies with API's and and with API documentation and with portals that help them with this stuff I don't talk about that because it's it's a very it's a different thing, but But I think that's some part of that is there also is like I Think software is transforming the way we we communicate internally like things like slack for example using or or an open-source alternative using Like instant communication to create more interconnection But be careful because if there's too much interconnection and interdependence it also fails, right? So it's but I think that's that's probably a good place to start And then doing that with what I call a bright spots and FOMO methodology Where you start creating a bright spot so you find somebody in the organization that you're like You're gonna be my champion and I'm gonna help you to to make this change towards more openness And then you use them as an example to drive fear of missing out to bring other people on board your other question was This competitiveness. Yeah So this book if you read the book about Yeah, the book that I said when I talked about that They thought that the best cultures were the ones where they said we are great And then I found some cultures where like a startup was doing so groundbreaking stuff or like a company was doing such groundbreaking stuff that They were basically just forgetting about competition And they were so far ahead of everybody that they didn't have to worry about Who are we competing with and are they gonna steal our secrets and and they're just like we're great Sorry, we love the world is awesome, and we're doing this awesome stuff for the world And I think this is how we've been in as a Drupal community for a very long time. We were just We're doing this awesome stuff and and everybody just come and join like, you know we're we're not competing here and and I think When we Start that we've had a scarcity moment in the community Which triggered a lot more competition, and I think this has been for me at least this was something that was Something that really hurts the community at least what I can see So I think thinking about how can you how can you go beyond competition? I think that's that's the idea Okay, I have more theories. I have like a theory about creating a value graph As a way to communicate about what we think is valuable as an organization So that you can move beyond transactions as a way to communicate what is valuable right now You need someone to say I'm gonna pay you for whatever you're gonna do to be able to say This is a valuable thing and because of that a lot of very valuable things like having kids and Teaching people and all of these things that are really really important They're treated as non-valuable because they're not scarce our current way of valuing things is it has to be valuable and it has to be scarce And if it's not scarce, it's no longer valuable and that's crazy So I have I have ideas about how we could create a value communication infrastructure To communicate about value so we can have a collective understanding of what we value as an organization or as a society And use that to drive our behavior collectively But it's still I don't know exactly how it looks like it's still early early days Then value systems Has to be scarce. Yeah. Yeah, you're setting up in a situation where Yeah Whatever it is. Yeah Yeah Yeah, we can move the discussion further outside if you if you want to follow up a little bit. Thank you very much for


The neighbor just told me earlier that someone had taken the windows and stuff out of it last summer. No utilities hooked up in the home, so it is suspicious. We've had a problem in Williamson over the past several years of squatters, just finding an empty home somewhere to get in out of the elements of the cold. They sometimes are either inebriated or whatever and sometimes be able to fire inside to stay warm. It gets out of control on them.