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Experience and the Turnaround

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While at a business conference earlier this year, a fellow I had just met mentioned to me in an offhand way that they (his business unit) had just hired a young guy out of a prestigious business school program to “fix” their business, which has been on the decline for the past three years. They hired this guy as a permanent employee, and the CEO had great hopes that he would bring the company back into the black by the end of this year, using the latest business strategies. He reports directly to the CEO, not the head of the business unit.

After all, he did have a perfect GPA at the B-School he attended.

I hope that works out for them, but I did give him my business card. “Just in the instance that the task turns out to be a little bigger than you thought”, I said.

Now for some business-style preaching:

When managing a business turnaround, there is a great deal of reliance on data, on forecasts, on costs, on efficiency, on quality, etc. And many of the things you do to fix the company are the things taught in most business schools and/or internal management training programs at large corporations.

So, any young over-achiever right out of business school with the most up-to-date academic knowledge can probably fix what’s ailing your business and get it turned around pretty quick, right?

I’m waiting…

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Will Your Business Need A Turnaround Soon?

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Four times in my business career I have answered a telephone and someone else on the other end asked if I could help them turn their business around.

I accepted the challenge each time, and have a success rate of 75%. Three of those businesses were turned around successfully; one was not. Each business was at death’s door by the time the call was made to me. Each person in charge of those businesses waited until the last minute of the last hour before deciding that it was time to “do or die”, that it was finally the right time to accept the wrenching changes that would be necessary to give their respective business a fighting chance at survival.

I don’t wish to belabor the obvious here, but it sure would have been easier to bring back the commercial concerns in question if there had been earlier recognition of problems at those businesses, as well as an earlier willingness to act to fix the problems. Believe me, I would have been happy to come on the scene earlier, be given a set of more manageable problems concerning the health of the business, and, spared the client the experience of living inside the pressure cooker of uncertainty regarding the survival of the company, even if it meant far less billable hours.

But, that’s not how it usually works. Business owners are human beings, and human beings tend to develop inertia and be resistant to change. Business tails off, but it’s not off by a lot, and then it gets a little worse, but, you know, things are still okay, and then things are just okay for quite awhile, until they’re not.

I’m reminded of the passage in Hemingway’s The Sun Also Rises, in which one character asks another, “How did you go bankrupt”?

“Two ways”, the other man says. “Gradually, and then suddenly”.

Yes, that’s how it usually happens. Businesses almost never explode and fail, a la the CFO running off to Bolivia with the company’s working capital, or an ugly public relations fiasco, or the CEO and founder perishing in a plane crash. Nope, most companies that die simply wither away slowly.

Will this happen to your business?

It’s possible; many businesses fold, and disappear under the waves of commerce every year. But, if you’re paying attention to the basics, your chances of sticking around get much, much better.

The basics include, but are not limited to:

•Paying attention to what your competitors are doing – not only does this give you a way to match/exceed their offerings, there might be something they have that you want to emulate.

•Paying attention to market trends – even if you’re not first with the product your customers desire most, a fast second will usually save the day (and sometimes rule the day).

•Being cognizant of overall economic trends – if all you sell is trucks that get 10 mpg and gasoline climbs up to $5 a gallon, there is trouble on the horizon.

•Making it as easy as possible for customers to buy what you’re selling – Example 1: Client had the national distribution rights to a product (machinery) that the target market definitely wants and needs, but the acquisition cost was high and many customers could not afford the one-time expense. The solution was to find a small-ticket lessor that would offer lease financing to prospective buyers on a private-label basis (leasing branded with the client’s name). The client not only moved more product at higher margins, they also made fee income from the leases generated through the arrangement. Example 2: Client that does custom web development wanted to sell website templates of their own design to customers that want a different look than most sites, but do not have the budget for custom work. Unfortunately, many of these prospective customers have little or no technological expertise. The solution was to offer different packages with different degrees of required customer involvement at different price points. There was no “take it or leave it” attitude in terms of the product being offered; in fact, our client offered enough different levels of “do it yourself” packages so that it the average prospect found it highly likely that they would find a package that suited their skill/desire level.

•Conducting regular business strategy sessions – If you’re a very small company, this may seem almost laughable to you, but replacing those conversations you have after hours with your three employees over take-out food with a scheduled strategy session led by someone with experience in business strategy can usually produce better results. And, if you’re a large company, and you’re doing okay in the market, and nothing (product, competitors, size of market, etc.) has changed in five years, there probably doesn’t seem to be a pressing need for business strategy at corporate headquarters, but again, it can prove to be quite valuable to put a day aside and sit in a room with your peers and talk about just where you want the business to go in the next couple of years.

•Always thinking about a strategic alliance – it’s a cold, brutal business environment out there, and having another ally when facing off against your competitors always helps.

•Reviewing your marketing assets on a regular basis – there may be value in data or relationships you already have. I had a client that acquired a much larger, poorly-run competitor in order to get their retail locations and their commercial contracts, and ignored the list of 45,000+ consumer customers that came with the acquisition for over two years, despite the fact that it was a higher margin business that that the client was then trying to build up in a separate business unit. I was told, “They’re not our customers. There are some very unhappy campers in that portfolio”. Meanwhile, good money was being spent to send out direct mail pieces to new prospects.

•Constantly improving your business processes – reducing costs, reducing cycle times, increasing profits and increasing customer satisfaction are all very good things that should be done on an ongoing basis, not just when a crisis is looming.

•Having business financing always available – don’t wait until the moment it starts raining to get an umbrella, have one ready. Establish lines of credit before an emergency situation, not as a result of – the terms will be better, and access to the funding is immediate.

Now, all of this may seem pretty basic to all of you. It is. And, as I noted above, this isn’t even a complete list, there are more basic things businesses should do in order to not need a turnaround specialist in the future. But I think you would be surprised at how many businesses, large and small, ignore the basic blocking and tackling that they should be doing on a daily basis. Lethargy creeps in; the living organism that is the business is fat and happy, and habit takes over in terms of day-to-day activities.

Let this serve as your alarm clock if your business is one of the sleepy ones, and your senior managers are conducting their duties in a soporific trance. I’m happy to come over to your place and help you with a turnaround, but really, I think you would be happier if you didn’t need a turnaround in the first place.

Brendan Moore is a Principal Consultant with Cedar Point Consulting, a management consulting practice based in the Washington, DC area, where he advises businesses in marketing, sales, front-end operations, and strategy. Cedar Point Consulting can be found at http://www.cedarpointconsulting.com/.

Stodgy Old-Fashioned Dull Obsolete Antique Outdated Sales and Marketing

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What I need is a really cool website.

Online marketing is the only kind of marketing I want to do for my company.

Who needs salespeople when you have the web?

Who needs a call center when you have the web?

I hate actually interacting with someone face-to-face and I’m sure all of my customers hate it, too.

Isn’t everyone on the Internet now?

Digital marketing is always cheaper on a cost-per-account basis.

Everyone just throws out direct mail solicitations.

Outdoor media? You mean, like billboards and stuff? Wow, that’s really old-school, isn’t it?

Why would I bother offering sales training to my customer service employees and my other employees? That’s not their job.

Industry conventions seem like a massive waste of time and, plus, they’re a huge pain.

IF you talk to companies about sales and marketing, you’ll frequently hear comments and questions like this, because everyone’s dream these days is to have a virtual organization that does all its sales and marketing over the web, or on mobile phones, or whatever. You know; the kind of organization where you just click on keys, your advertisements go out, customers respond to your website through an online checkout, and you make millions of dollars with less than 10 employees, and very little overhead.

That’s the kind of marketing plan I want, companies will say.

Well, sure.

I want to date Halle Berry, have my own island, and have Warren Buffet asking me for advice about investing, too. The chance of even one of the items in that scenario occurring for me is about the same as all of the pieces falling into place for the kind of company to happen. Yes, occasionally the planets line up and your idea that turns into your product that your company sells is both irresistible and is able to be sold over the internet in such large numbers that you then have articles in The Wall Street Journal and The New York Times business section written about your firm.

But most of the time, the results are less lofty. The internet is merely one small part of all the moving parts that make up a typical successful company, and that’s not how most business comes in the door. Some small companies have less than a dozen employees, but large companies have hundreds, or thousands, of employees. Everyone in the company works hard, because they’re competing with other people at other companies that are working just as hard in the same segment, and that hard work eventually makes for a good living and a good return for the company’s shareholders. It’s not exciting and notable enough so that it’s newsworthy, but it’s a good result. That’s what usually happens.

The reason I’m noting this is because many companies, in their rush to embrace Web 2.0 technology, are now giving short shrift to perfectly good customer acquisition platforms that they’ve successfully used for years, things like a field sales force or radio advertising. Seduced by a younger, more attractive face, these businesses are abandoning their long-time partners for a tempestuous fling with digital marketing. They’re doing this even if that doesn’t make sense in terms of their revenue, profit and strategic goals.

Now, just to be clear, I would not advise any client to eschew a meaningful presence on the web. If you’re in business, your customers need to be able to find you on the web. Much of the work we do for clients is in the area of bolstering their presence on the web, whether that’s through SEO marketing, developing a better website for them, developing a blog component for their corporate site, etc. So we are strong cheerleaders for a healthy web presence.

No, what I’m saying here is that traditional marketing and sales may still be where your company’s bread will be buttered, and there is absolutely no reason to cut back or discard those customer acquisition platforms simply because they’re “not new”.

For many companies, those “old-fashioned” methods are still the most cost-effective, despite all the infrastructure needed, and the blocking and tackling needed to execute, and frankly, with a little tuning up and focused process-improvement work, those old-school platforms can be made even more attractive from a cost-acquisition ratio.

Furthermore, there is absolutely no reason you cannot keep doing what is bringing you good business results currently, and, beef up your profile and capabilities on the internet at the same time. In other words, there isn’t any way to do too much marketing in too many places.

There is an optimum mix of traditional marketing and digital marketing, specific to your company’s needs and goals. Find that mix and your company will prosper. Because, despite what you read in the media about the latest company to set up a website, and 18 months later, launch a $6 billion IPO, most companies still need the combination of traditional marketing and digital marketing to thrive.

Brendan Moore is a Principal Consultant with Cedar Point Consulting, a management consulting practice based in the Washington, DC area, where he advises businesses in marketing, sales, front-end operations, and strategy. Cedar Point Consulting can be found at http://cedarpointconsulting.com

Five Signs of a Power Brand

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By Red Slice on December 21, 2010 – Reprinted here by express permission of Red Slice

Clients often ask us, “How will we know when we’ve got a winning brand?” Rather than telling them, “You’ll know it when you see it” there are some guideposts along the way to tell you your brand is moving in the right direction.

At first, it starts small: increased website hits, increased referrals, uptick in positive social media chatter – even anecdotal evidence like more positive comments from customers or partners. You can look at metrics like newsletter signups, store visits, or customer phone inquiries. Obviously, it all leads to “more sales” but, let’s get real: the sales cycle is like courtship. You don’t propose of the first date, but there are little steps along the way that you must take to get to marriage.

If you launch a new brand or rebrand an existing one, you can put feedback mechanisms in place to see if you’re going in the right direction: focus groups, email surveys, sales trends, even just good ole fashioned talking to your customers and partners. Seek out unbiased feedback but make sure it’s from people that matter to your sales. Asking your 15 year old nephew or your spouse what they think is fine – if they are your target audience. Believe me, more often than not, they are not the right people to be asking, no matter how much your respect their opinion.

Here are some signs of a power brand to which you can map your progress, at whatever scale your business operates:

1.People are proud to say they work, partner or shop with your company: If customer, partners or employees find that they get greater cache when they sport your brand on their website, paycheck or shopping bag, you know you’ve got a winner. Your brand is transcending into a world where people want to identify themselves as part of your tribe and bask in your brand “halo effect” to make themselves or their business look good. Sort of like hanging out with the cool kids at school. Examples” Apple iPhone and iPad, Harley-Davidson

2.Your customers are advocates, spreading your story: Word of mouth is key and if customers are going around – unpaid – doing your advertising for you, then that is the holy grail of marketing. Are they chatting you up on social media, sharing unprompted referrals with friends (“You have GOT to shop at Zappos! They have the best customer service.”) creating “spoof” videos on YouTube, or even inking themselves with your logo (hello, Harley)? Then you’re doing everything right. Examples: Disney, JetBlue and Virgin Atlantic (ie customer-generated YouTube “ads” vs. other airlines).

3.Some people (outside your target) don’t like you: When you are effectively creating a brand, you have a clear ideal customer target and you serve them. This naturally means there will be those who don’t “get” you. And that’s okay. The Justin Bieber craze annoys me to no end, but it doesn’t matter: I’m not the target audience. Having people who don’t like you means you are not trying to be all things to all people. Examples: Dunkin Donuts v. Starbucks; Hyundai “Beware of 16-year-olds” campaign.

4.You can elegantly recover from occasional mistakes: If your brand has enough “brand good will” built up, it can withstand some gaffes and missteps along the way. It’s like a bank account: the more you put in, the more confortable you can be withdrawing every now and then. As long as you recover with dignity and transparency, a strong brand can withstand a lot. Examples: JetBlue during their infamous winter flight debacles, Apple’s recent flubs with the iPhone.

5.Articles about your company talk about your impact on the industry and/or the world: Rather that just talking about what you sell, press and organizations seek you out as a thought leader and innovator. Examples: People quote Zappos when it comes to innovative online customer service, not just shoes and accessories. Having transformed the coffee category by emphasizing flavor and experience, Starbucks last year introduced value packs in the supermarkets, which allowed them to stay competitive during the recession.

Maria Ross is the founder and chief strategist of Red Slice, a branding and marketing consultancy based in Seattle. Her passion is storytelling and she has advised start-ups, solopreneurs, non-profits and large enterprises on how to craft their brand story to engage, inform and delight customers. Maria is the author of Branding Basics for Small Business: How to Create an Irresistible Brand on Any Budget (2010, Norlights Press).

Cedar Point Consulting Opens New York City Office

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To serve its financial services and technology clients, Cedar Point Consulting LLC has announced that the company has opened a new office in New York City. The new office, on the 26th floor of the beautiful and iconic Chrysler Building, is located at 405 Lexington Avenue, in the middle of New York City’s vibrant business district.

Brendan Moore, one of the principals at Cedar Point Consulting, stated, “We have a focus on financial services firms in our practice, so it’s only natural that we would want to secure some new Class A space in New York City, the financial capital of the United States. We’re quite pleased with our new office, and the location thereof, and look forward to servicing Cedar Point’s clients from there in the future.”

Based in Washington, DC, Cedar Point Consulting provides consulting services in these areas:

•Business Planning, which includes business plan development, e-business planning and e-marketing planning
•Strategic Planning, which covers strategic plan development, strategic plan review and strategic planning support services
•Marketing and Sales, which includes traditional marketing and advertising, Internet and new media marketing and sales management
•Management, which consists of project management, program management, project methodology selection, and project governance, including tough project turnarounds
•Operations, which encompasses customer/member acquisition, technology support staff, call center units and their technology support staff, customer service, underwriters, processors, fulfillment, as well as specific issues like efficiency and quality management
•Process Improvement using Six Sigma, Lean Process Improvement Tools and Business Process Re-engineering, and
•General management consulting advice, including vendor selection, off-shore teaming and other unstructured or general business analysis, including business turnarounds.

Interested parties can learn more about Cedar Point Consulting at http://www.cedarpointconsulting.com, or reach the firm at 1-866-CEDAR-34 or via our contact page.

Are You Planning to Crash?

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Nearly every experienced project manager has been through it. You inherit a project with a difficult or near-impossible schedule and the order comes down to deliver on time.  When you mention how far the project is behind, you’re simply told to “crash the schedule”, or “make it happen.”

As a long time project manager who now advises others on how best to manage projects and project portfolios, the term “schedule crashing” still makes me bristle. I picture a train wreck, not a well-designed product or service that’s delivered on time, and for good reason. While schedule crashing sounds so easy in theory, in practice schedule crashing is a very risky undertaking that requires some serious evaluation to determine whether crashing will actually help or hurt.

In this article, I’ll explain the underlying premise behind schedule crashing and describe some of the typical risks involved in a schedule crashing effort.  Then, I’ll provide seven questions that can help you assess whether schedule crashing will really help your project.  Combined, the schedule crashing assessment and the risks can be brought to executive management when you advise them about how best to proceed with your project.

Schedule Crashing Defined

As defined by BusinessDictionary.com, schedule crashing is “Reducing the completion time of a project by sharply increasing manpower and/or other expenses,” while the Quality Council of Indiana‘s Certified Six Sigma Black Belt Primer defines it as “…to apply more resources to complete an activity in a shorter time.” (p.V-46). The Project Management Body of Knowledge (PMBOK), fourth edition describes schedule crashing as a type of schedule compression, including overtime and paying for expedited delivery of goods or services as schedule crashing techniques (PMBOK, p. 156), though I generally think of overtime as another type of schedule compression – not crashing.

From a scheduling perspective, schedule crashing assumes that a straight mathematical formula exists between the number of laborers, the number of hours required to complete the task, and the calendar time required to complete the task. Said simply, if a 40-hour task takes one person five days to complete (40 hours/one person * 8 hours/day=5 days), then according to schedule crashing, assigning five resources would take one day (40 hours/5 people*8 hours/day=1day).

The Risks of Crashing

Frederick Brooks had much to say about the problems with schedule crashing in, “The Mythical Man-Month“. In this ground-breaking work about software engineering, Brooks explains that there are many factors that might make schedule crashing impractical, including the dependency of many work activities on their preceding activities and the increased cost of communication. This phenomena is now referred to as Brook’s Law–adding resources to a late project actually slows the project down. I personally saw Brook’s Law in action on a large program led by a prestigious consulting firm where the client requested that extra resources be added in the final two months of the program; because the current resources were forced to train new staff instead of complete work, the program delivered in four more months instead of two.

Additional risks of crashing include increased project cost if they crashing attempt fails, delayed delivery if the crash adversely impacts team performance, additional conflict as new team members are folded into the current team to share responsibility, risks to product quality from uneven or poorly coordinated work, and safety risks from the addition of inexperienced resources.

In short, schedule crashing at its most extreme can be fraught with risks. Managers at all levels should be very cautious before recommending or pursuing a crashing strategy.

Making the Call to Crash

So, how can a project manager decide if crashing will help? Here are seven questions I ask myself when deciding if crashing is likely to succeed:

  1. Is the task (or group of tasks) in the critical path? Tasks in the critical path are affecting the overall duration and the delivery date of your project, while tasks outside of the critical path are not affecting your delivery date. Unless the task your considering crashing is in the critical path or will become a critical task activity if it substantially slips, crashing the activity is a waste of resources.
  2. Is the task (or group of tasks) long? If the task is short and does not repeat over the course of the project, then it’s unlikely you’ll gain any benefit from crashing the activity. A long task or task group, however, is far more likely to benefit from the addition of a new resource, as can tasks that require similar skills.
  3. Are appropriate resources available? Crashing is rarely useful when qualified resources are not available. Is there a qualified person on the bench who can be added to the project team to perform the work? If not, can someone be brought in quickly who has the needed skills? Recruiting skilled resources is a costly and time-consuming activity, so by the time the resource(s) are added to your team, the task may be complete and your recruiting efforts wasted.
  4. Is ramp-up time short? Some types of projects require a great deal of project-specific or industry-specific knowledge and it takes time to transfer that knowledge from the project team to the new team members. If the ramp-up time is too long, then it may not make sense to crash the schedule.
  5. Is the project far from completion? Often, people consider crashing when they’re near the end of a project and its become clear that the team will not meet it’s delivery date. Yet, this may be the worst time to crash the schedule. Frederick Brooks told the story about his schedule crashing attempt in “The Mythical Man-Month” where he added resources to one of his projects at the tail end, which further delayed delivery. In most cases, schedule crashing is only a viable option when a project is less than half complete.
  6. Is the work modular? On many projects, the work being delivered is modular in nature. For example, in automotive engineering, it’s possible for one part of the team to design the wiring for a new vehicle model while another part of the team designs the audio system that relies upon electricity, as long as points of integration and dependencies are defined early. Through fast-tracking, or completing these tasks in parallel, it becomes beneficial to also add resources, crashing the schedule.
  7. Will another pair of hands really help? All of us have heard that “too many cooks can spoil the broth,” but this also applies to engineering, software development and construction. Consider where the new resources would sit, how would they integrate with the current team, would their introduction cause an unnatural sharing of roles?

If you’ve answered these questions and responded “yes” to at least five of the seven questions, then you have a reasonably good project-crashing opportunity; a “yes” to three or four is of marginal benefit, while a “yes” to only one or two is almost certain to end for the worse.

Alternatives to the Crash

Fortunately, there are alternatives to schedule crashing that may be more appropriate than the crash itself.

  1. Increase hours of current resources. For a limited time period and within reason, asking current team members to work overtime can help you reach your delivery date more quickly than schedule crashing. When considering overtime, it’s important to remember the caveats, “a limited time period” and “within reason”. Asking resources to work 50-60 hours a week for six months is unreasonable, as is asking resources to work 70 hours per week for a month for all but the most critical projects.
  2. Increase efficiency of the current team. Though it’s surprisingly rare on projects, examining current work processes and adding new time-saving tools can improve the productivity of a team by 10% to 50% or more if a project is long. I once led a team that increased it’s productivity by roughly 30% simply by re-sequencing work activities and adding a single team member to speed up cycle time at a single step in the process.
  3. Accept the schedule. In some cases, it’s better to offset the downside effects of late delivery rather than attempt to crash the schedule. In some cases, this amounts to using a beta or prototype for training rather than a production-ready product.

A Final Caution About Crashing

Because it’s rarely well understand by anyone other than project managers, schedule crashing is often recommended by co-workers who really don’t understand the implications of the decision.  While they see an opportunity to buy time, they almost never see the inherent risks.

As a result, it’s critical that project managers not only assess the likelihood of success when considering crashing as an option, they also educate their stakeholders, their sponsor and other decision-makers about the risks of a schedule-crashing approach.  Doing anything less perpetuates the myth that crashing is a panacea that cures all that ails a late project, potentially creating much bigger problems for everyone down the road.

Donald Patti is a Principal Consultant with Cedar Point Consulting, a management consulting practice based in the Washington, DC area, where he advises businesses in project management, process improvement, and small business strategy. Cedar Point Consulting can be found at http://www.cedarpointconsulting.com.

Cedar Point Adds DC Office on Pennsylvania Avenue

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Cedar Point Consulting LLC has announced that the company has opened a new office in Washington, D.C. The office is located at 601 Pennsylvania Avenue Northwest, suite 900, six blocks from the U.S. Capitol Building and ten blocks from the White House, near the heart of DC.

Donald Patti, one of the principals at Cedar Point Consulting, stated, “With existing clients in the Washington Metro area and we more prospective clients from this area contacting us all the time, it seemed only natural that we would want to secure some new Class A space in the city. We’re quite pleased with our new office, and look forward to servicing Cedar Point’s clients from there in the future.”

The new office can be conveniently accessed off the Metro Green Line, one block from the Archives/Navy Memorial Metro stop.

Based in Maryland, Cedar Point Consulting provides consulting services in these areas:

•Business Planning, which includes business plan development, e-business planning and e-marketing planning
•Strategic Planning, which covers strategic plan development, strategic plan review and strategic planning support services
•Marketing and Sales, which includes traditional marketing and advertising, Internet and new media marketing and sales management
•Management, which consists of project management, program management, project methodology selection, and project governance, including tough project turnarounds
•Operations, that which encompasses customer/account/member acquisition, such as e-commerce sites and their technology support staff, call center units and their technology support staff, customer service, underwriters, processors, fulfillment, as well as specific issues like efficiency and quality management
•Process Improvement using Six Sigma, Lean Process Improvement Tools and Business Process Re-engineering, and
•General management consulting advice, including vendor selection, off-shore teaming and other unstructured or general business analysis, including business turnarounds.

Interested parties can learn more about Cedar Point Consulting at http://www.cedarpointconsulting.com, or reach the firm at 1-866-CEDAR-34 or via our contact page.

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