Understanding the Skills Challenge in Effectively Managing Change in Public Sector Organisations Final Report for UFHRD Martin McCracken and Hadyn Bennett Department of Management and Leadership Ulster Business School University of Ulster 07 October 2011 Contact Details: Dr Martin McCracken and Dr Hadyn Bennett Department of Management and Leadership University of Ulster Shore Road Newtownabbey N. Ireland BT37 0QB Tel: 028 903 68346 / 028 903 66454 E-mail: m.mccracken@ulster.ac.uk / hrv.bennett@ulster.ac.uk 1 Research Background and Goals According to recent research in Northern Ireland (agendaNI, 2009; McCracken and Bennett, 2010) many public sector organisations in the region have invested significant resources to enhance the effective implementation of change. In the intervening period since this time, the process has accelerated, in large part as the result of the change of government in the United Kingdom and ongoing pressure for efficiency savings and public spending cuts. In much research into managerial skill and competency requirements the issue of managing change has been categorised with other more generic skills such as leadership, communication, mentoring and coaching, and problem solving abilities (O’Brien and Robertson, 2009; Thompson and Harrison, 2000; Winterton et al. 2000). However, with the exception of some quantitative studies and conceptual pieces from the USA, designed to stimulate more debate on the area (Carter, 2008 and Giley et al, 2008), the more specific skills needed to effectively manage change at all levels (from senior managers whose primary role is in the initial formulation of change strategies through to line managers / supervisors who are responsible for actually implementing the change) have not been explored in sufficient depth. With this in mind, real value can be derived for the HRD community from research designed specifically to investigate these skill and competency requirements. Given the above, the goals of this research study were: To identify what key organisational stakeholders, including senior managers (drivers of change); line managers (change implementers) and employees (change receivers) perceive to be the most important Knowledge Skills and Attitudes (KSAs) for successful change implementation To provide practical recommendations to the HRD community, both academic and practitioner, regarding how these key KSAs can be developed in the future Data Collection Access was secured to collect empirical data in five Northern Ireland public sector organisations which had recently implemented planned change initiatives. However, major developments within three of the organisations created additional sensitivities surrounding access, and hence research in each of these organisations is still ongoing. This report therefore briefly details the findings from two of the organisations – a public sector agency and a local government department. After completing the desk-based research and literature review, field research was carried out with a sample of employees in both of these organisations. 2 In both participant organisations, a series of semi-structured and in-depth qualitative focus groups were held with key organisational stakeholders across all hierarchical levels. This included: Director / senior management; middle management; operations staff; and, where appropriate, specialist change management project and training and development teams / experts. The researchers developed a checklist and research protocol drawing upon the main messages arising from the generic change literature (leadership, communication, mentoring / coaching / training, and problem solving abilities) to produce a framework to ensure that a consistent set of issues were addressed across both the case study organisations. Data collected from the interviews was transcribed, and analysed in light of both the literature and the research objectives to produce a series of themes. Two distinct case studies were then written up, before this cross case analysis was produced. Summary of Empirical Findings The main issues emerging from the research study are discussed below. Many of these findings are inter-related, and solutions to one may actually reside in interventions aimed at a separate aspect. For example, enhanced understanding of the cultural context will facilitate the selection of more appropriate communication channels and media. Senior Management Awareness In both organisations lack of senior management understanding and awareness of operational realities emerged as being a major obstacle to the successful implementation of change. This extended to both formal and informal aspects of organisational functioning. In fact such lack of overall awareness was confirmed within one of the organisations (the public sector agency) in follow up discussions held with the senior management (at which surprise was expressed at a number of the findings). In terms of operational issues (formal aspects), senior management in both organisations appeared to lack essential understanding of operational functions and routine activities, and the operation of formal mechanisms such as communication processes; in the case of informal aspects this included, for example, lack of understanding of prevailing organisational cultures (employee values and attitudes, and goals and aspirations), and patterns of teamwork within the organisations. Initially, this suggests a need for the development of enhanced techniques for organisational analysis prior to change, especially in respect of the ‘softer’, more informal aspects of organisational functioning, as part of the change planning process and the implementation phase. 3 Suggested techniques for developing senior management awareness include: Implementing ‘back to the floor’ or job shadowing programmes for senior and middle managers to enhance understanding of the more informal aspects of organisational functioning, and to develop an appreciation of organisational realities for operational employees Cultural awareness training Leadership training for senior managers to enable them to better understand internal boundaries in the organisation (functional and hierarchical) and how they can manage boundary relationships more effectively Communication Issues Management in both organisations studied were found to be overly reliant on formal communication processes when implementing and managing the change programmes. While operations staff in both organisations recognised that a high volume of communication did actually pass from senior managers to staff, it was frequently criticised for being too generic / and based on a ‘one-size-fits-all’ approach. Allied to this, the communication media and channels used were also frequently criticised, especially the over-reliance on electronic media and ‘team briefing’ circulars. The volume of information was also criticised, with operations staff frequently commenting that important and relevant information was overlooked or ‘lost’ as a result of the sheer volume of information. Finally in this regard, issues were found in both organisations in respect of the direction of information flow, with staff at lower hierarchical levels often citing a perceived inability to contribute meaningful ‘upwards’ communication. In both organisations we found evidence that serious efforts had been made to address the issue of managing communication in times of change (especially in terms of volume), but that these efforts had been concentrated on the establishment of ‘cascade’ processes to ensure that information was simply passed on. A significant skills gap was thus observed in respect of the development of meaningful two-way communication and using media and channels tailored to the demands of the situation. Once again, this reflects to an extent a lack of understanding of cultural issues, with the significance attached to both the source and media used in communicating change often not fully understood. Further, the reliance on top-down, formal communication was found in both organisations to perpetuate myths and (often inaccurate) beliefs between both senior management and lower grade employees regarding the roles, agendas and functions of the other. In summary, it appears that while managers and change agents in both organisations understood the importance of communication during organisational change, neither 4 was successful at understanding the communication environment, and that as such communication has been manifested in many instances simply as ‘information’. Suggested techniques for developing more meaningful communication include: The development of skills to help managers and change agents better understand the impact of differing communication media Training in listening skills for senior and middle management to facilitate better upward communication Developing awareness of information needs, particularly at lower levels within the organisation in order that communication can be more effectively targeted Interpersonal communication training for senior and middle managers, including for example Neuro Linguistic Programming which could be used to ensure more effective message delivery. Training and Development The importance of training and development to allow for the effective implementation of new processes and systems was also highlighted. One of the organisations (the public sector agency) had attempted to introduce ‘just in time’ training, whereby training in new systems and processes was delivered immediately prior to the system ‘going live’, thus addressing retention issues. This process, while well regarded by staff, had failed in many instances in its implementation, mainly due to subsequent delays in systems implementation. Other criticisms of training arose around the issue of the use of ‘text book’ cases, which were often reported as being at variance with the operational realities and contingencies which staff face daily in their roles and which mostly involve dealing with unpredictable scenarios from the public. Thus, skills gaps were identified in both the development of training materials, and the scheduling and implementation of training programmes. Suggested techniques for developing more effective training material and programmes during organisational transition include: Involving operational staff in the design and development of training materials, thus enabling trainers to utilise real life cases and scenarios Closer liaison between those responsible for operationalizing systems change and the training and development function to ensure that ‘Just in time’ training operates effectively Providing staff with more time to reflect upon the changes and using tools such as reflective learning logs / diaries to help ensure retention of learning, lessen resistance to change, and provide staff with the opportunity to internalise the changes 5 External Stakeholder Issues In both organisations a lack of concern in respect of external stakeholders was observed in the planning and implementation of change. Instead, the process tended to focus on internal aspects, which in many cases was found to create difficulties at point of service delivery. This highlights a need for the development of enhanced skills in the area of community engagement and involvement on the part of both senior managers and change agents as part of both the change planning and implementation processes. Suggested techniques for developing more effective external stakeholder engagement include: Formalising mechanisms for enhanced community engagement including for example, community fora and closer links with elected representatives The development of profiling skills in terms of community analysis (including for example, socio-economic factors), to allow senior managers to better understand the needs of service users in the local community when designing major change initiatives. Reinforcing and Sustaining Commitment to Change Concerns were raised in both organisations around the areas of reinforcing and sustaining commitment to change. Also in this regard, change fatigue was prevalent, with repeated programmes of change being found to have eroded staff commitment to ongoing improvement processes. Senior management visibility and accessibility were highlighted as being key factors in generating commitment to the process, but in both organisations it was reported that while high during the initial stages, such behaviours tend to dissipate over time. Mechanisms should therefore be developed to ensure such behaviours are maintained throughout the process. More effective mechanisms for reinforcement and sustaining commitment to change could include: The development of authentic leadership skills on the part of senior and middle managers, to include an emphasis on the performance coaching role, understanding visibility issues and their importance to sustaining change, modelling behaviour, and how to champion change. Middle Manager Role as Change Agents The role of middle management during the change process was highlighted in both cases. Indeed, the approach adopted by middle management in relation to the process, and in particular to the bureaucratic framework which characterises these public sector organisations, appears to play a central role in relation to its success or otherwise. Change was found to be much more successfully implemented where middle managers were willing to set aside bureaucratic restrictions and engage 6 in a meaningful way with senior management, operations level staff and, indeed, the wider community. Such an approach appears to be successful as it can overcome preconceptions and access the informal side of the organisation, thereby overcoming many of the communication and organisational analysis problems identified above. The role of the middle manager as a change agent could be enhanced through: The provision of training in dealing with ambiguity and uncertainty The effective allocation of resources to middle managers during the implementation process (for example, sufficient cover for staff participating in training activities) The development of communication competencies, information analysis skills, assertiveness training (especially when interacting with senior managers), and decision making skills Conclusions In summary, many of the issues impeding effective change were found to originate in poor organisational analysis, and less developed understanding of the softer side of organisational life (organisational culture). The development of more enhanced skills for organisational analysis, which encompass a full understanding of the prevailing culture, would facilitate communications improvements, help secure staff commitment and engagement, and at the same time allow for meaningful change reinforcement. The suggestions outlined above could all be instrumental in this regard. Outputs and Future Directions The results of the two case studies provided data for the preparation and presentation of a development paper at the 2011 BAM Conference (see Appendix 1 - paper entitled ‘Culture Change: Unintended Outcomes or Inevitable Consequences of a Mismanaged Process’). Feedback from this conference is being used in the preparation of further submissions to the 2012 UfHRD and Academy of Management Conferences. The cases will also form the basis for a number of journal submissions. Ultimately it is hoped to build on this initial study and apply for further funding to enable the research team to carry out a more wide ranging survey, amongst a larger sample of employers, on the issues of change management, perhaps including also a private sector sample. 7 References agendaNI (2009) Implementing Change for Better Public Services’ (BMF Conferences), Seminar, 4th November, Danadry Hotel, Antrim, N.Ireland. Carter, E. (2008) Successful Change requires more that Change Management. The Journal for Quality and Participation, Spring: 20-23 Gilley, A., Dixon, P. and Gilley, J. (2008) Characteristics of Leadership Effectiveness: Implementing Change and Driving Innovation in Organizations. Human Resource Development Quarterly, 19 (2): 153-169. McCracken, M. and Bennett, H. (2010) Managing Change in the Further Education Sector: Using Change Management to Enhance Employee Commitment, The Improvement Agenda – International Symposium for Learning and Skills, Learning and Skills Development Agency NI. O’Brien, E. and Robertson, P. (2009) Future Leadership competences: from foresight to current practice. Journal of European Industrial Training, 33 (4): 371-380. Thompson, J.E. & Harrison, J. (2000) “Competent managers? The development and validation of a normative model using the MCI standards.” The Journal of Management Development, 19 (9&10): 836-852 Winterton, J., Parker, M., Dodds, M., McCracken, M. and Henderson, I. (2000) The Future Skill Needs of Managers, Department for Employment and Education, Research Series Report, No. 182, 24 Jan. 8 Appendix 1: Paper Presented at British Academy of Management Conference 2011 Culture Change: Unintended Outcomes or Inevitable Consequences of a Mismanaged Process Dr Martin McCracken Department of Management and Leadership Ulster Business School University of Ulster Jordanstown Campus BT37 0QB T: 028 903 68346 E: m.mccracken@ulster.ac.uk Dr Hadyn Bennett Department of Management and Leadership Ulster Business School University of Ulster Jordanstown Campus BT37 0QB T: 028 903 66454 E: hrv.bennett@ulster.ac.uk Track: Organizational Transformation, Change and Development (Change management, transformation and development in the public sector) (2537 words excluding references) 9 CULTURE CHANGE: UNINTENDED OUTCOMES OR INEVITABLE CONSEQUENCES OF A MISMANAGED PROCESS Summary The aim of this paper is to explore unintended consequences arising from management interventions designed to bring about cultural change. Empirical evidence was gathered from a large public sector organisation which has recently undergone a period of planned change. Findings revealed that whilst the organisation has been successful in delivering the central objective of the change programme, several unintended consequences have also resulted, which have implications for ongoing performance. Although a number of these unintended consequences have already been reported in the literature, this paper contributes by showing that there are additional unreported consequences, which may arise when organisations implement change. In the conclusions section suggestions are made as to how unintended outcomes may be avoided through more effective management of organisational change. Introduction The last two decades have seen a profusion of interest in the area of organisational culture, and (more recently) issues of cultural management (Rehn, 2008). In large part this interest has been driven by a belief (Levin and Gottlieb, 2009), and some evidence (Peters and Waterman, 1982; Wilkins and Ouchi, 1983), in organisational performance outcomes which may be associated with culture. However, the outcomes of such research are somewhat mixed, an inevitable result of both the array of definitions, conceptualisations and usages of the culture construct, and the complexity of its relationship with organisational performance (Deal and Kennedy, 1982; Dennison, 1990; Hitt and Ireland, 1987 and Peters and Waterman, 1982). While there have been a plethora of espoused definitions, Harris and Ogbonna (2002: 32) propose that “culture is… theorized as a pervasive, eclectic, layered and socially constructed phenomenon, which is generated through values, beliefs and assumptions, but expressed through artefacts, structures and behaviours”, and this is the perspective that has been adopted in this study. What is clear is that culture is a multi dimensional, multi-layered and interrelated construct and as such efforts to manage it (in pursuit of performance improvements) will result in a multitude of outcomes. These can be both intentional as the result of direct management intervention, and unintentional arising from the complex set of relationships which constitute culture as a construct. The aim of this paper is to explore unintended consequences arising from management interventions designed to bring about cultural change. In order to understand these phenomena, empirical evidence was gathered from a large public sector revenue collection organisation which has recently undergone a sustained period of planned organisational development. Findings revealed that whilst the organisation has been successful in delivering the main aims of the OD programme, several unintended consequences have also resulted, which have implications for ongoing performance. Although a number of these unintended consequences have already been reported (see for example, Harris and Ogbonna, 2002) this 10 paper contributes to the literature by identifying additional as yet unreported consequences which may arise when organisations implement change. The final section of the paper makes suggestions as to how these unintended outcomes may be avoided through more effective management of organisational change. Literature Review Perhaps the most common approach to culture management adopts the functionalist view of culture (Martin, 1983) as a set of clearly identifiable values, beliefs and attitudes which give rise to established, observable behaviours, rites, rituals and artefacts, and attempts to design interventions aimed at changing these variables. Thus, interventions may seek to change employee values (see for example, Wilkinson, Fogarty and Melville, 1996), or address any, or all, of the levels identified in the multi-layered view of culture (examples include Bowman and Faulkener, 1997 and Schneider, 1994). Given the potentially far-reaching objectives and scale of such interventions, it has been recognised in the literature that such programmes of organisational change can result in unintended consequences. To date there has been limited research specifically designed to investigate unintended consequences when organisations engage in cultural change. Perhaps the best known study in this area is that of Harris and Ogbonna (2002), which reports eight unintended consequences that may arise as a result of management action, observed in a case-study investigation of ten UK organisations. These are: ritualization of culture change (where ongoing intervention results in organisational members simply ‘going through the motions’); the hijacked process (whereby the original aims are diluted as a result of individual managers or management grades, specific departments or individuals attempting to further their own particular agendas); cultural erosion (in which case the initial change is eroded either by subsequent events or a lack of reinforcement); cultural reinvention (where changes are simply interpreted as reinforcement of the prevailing culture); ivory tower culture change (where those responsible for the development of change programmes are perceived as being – or actually are – lacking in awareness of organisational realities); inattention to symbolism (where factors such as style of delivery or choice of media used for communication purposes actually convey meaning in themselves); uncontrolled and uncoordinated efforts (where inconsistencies in the intervention programme serve to undermine its impact); and behavioural compliance (where the impact of the change is limited to observable behaviours without having had any impact on values, attitudes and beliefs). Given the ongoing interest in the management of culture, and the paucity of widespread critical empirical investigation of unintended consequences, an in-depth examination of the nature of such consequences, relationships between them and indeed the identification of additional factors is appropriate. The present study aims to address this perceived gap in the literature through an in-depth study of four public sector organisations in the UK. 11 Methodology A multiple case study approach was adapted to facilitate the stated objective of identifying unintended consequences of organisational change. The UK Public Sector was identified as providing a fertile arena for the study given the nature and extent of ongoing change within the sector. Four public sector bodies, each of which has undergone a major programme of organisational change, were contacted and access agreed. Data collection entailed carrying out a series of semi-structured focus groups within each organisation. Groups were selected on a cross-functional and cross-hierarchical basis. The findings reported in this development paper relate to the initial findings from one of the organisations studied - a major public sector revenue collection organisation. The programme of change was extensive, and sought to transform the way in which ‘cases’ are processed and ultimately the culture of the organisation. In short, this extended to a fundamental change to the organisation’s operating processes and systems, and an attempt to develop a closer focus on the organisation’s espoused primary objective (revenue collection) and on meeting ‘client / customer’ needs. A total of six focus groups were convened, covering operations level (two groups), team leader / front line supervisor, middle management, senior management (director level) and the ‘change programme management’ team (which had been specifically convened to manage the change process). In addition, the Trade Union’s (TU) perspective was sought through an interview with a TU representative. An average of five participants attended each focus group session. As part of the agenda, questions were asked surrounding the extent to which the change programme had been successful in changing the culture of the organisation. The researchers were aided in this regard by having been involved in an earlier study on the culture of the organisation in 2003, which added a longitudinal perspective. The focus group discussions were taped and transcribed verbatim. Each focus group transcript was independently analysed by both researchers / authors using an agreed coding schedule to identify emerging themes. Subsequent to this, the authors met to agree the principal findings from the data. Findings Data analysis identified three major findings: firstly, the occurrence of all eight of the unintended consequences identified by Harris and Ogbonna (2002); secondly, relationships were observed between a number of the unintended outcomes; and finally three additional unintended outcomes were identified. Evidence of Unintended Consequences Ritualization of culture change: the organisation in question has undergone repeated programmes of organisational change. It was clear from the focus groups – especially those within the operating core – that members suffered from ‘change fatigue’, and in consequence displayed low commitment / attention to ongoing change initiatives. Hijacked processes: managers were reported to have interpreted and managed the roll-out of the change process in a way which suited their own interests. For example, staff reported 12 middle management as being reluctant to communicate staff views further up the hierarchy for fear that they (managers) would suffer personal loss of face or appear incompetent. Cultural erosion: the extent of ongoing change and the rate of change, coupled with changes in the organisation’s external environment (for example, political change), were reported to have eroded the impact of the culture change programme. Further erosion was caused by the perceived absence of a reward culture for the adoption of new cultural values and behaviours. Cultural reinvention: at the level of processes and systems, a shift in emphasis from case processing to final outcomes (payments) was widely perceived as reinforcing the emphasis on procedures and routines within the culture, albeit with a different focus for measurement. Ivory tower cultural change: the view was commonly expressed (especially at operations and team leaders level) that senior management lacked meaningful understanding of the day-today aspects of operations. The comments of one of the administrative level staff focus group participants summed up the general mood when he argued: “I think that’s it - understanding, I don’t think they [senior managers] really understand what we do”. Inattention to symbolism: communication media served in many cases to undermine the importance of central aspects of the change programme. Again as one of the staff focus group participants noted: “There is too much reliance on e-mails to tell us what’s going on here …” Uncontrolled and uncoordinated efforts: operations staff reported dissatisfaction with interruptions to the process, and constant changes being made to implementation schedules. Additionally, they reported receiving conflicting and contradictory messages from managers during the change process. Behavioural compliance: evidence emerged to indicate that staff routinely carried out operations in such a way as to convey the impression of compliance with new processes and procedures whilst at the same time completing the tasks which were easiest, most suitable or presented the most reward to themselves. Relationships Between the Unintended Consequences As well as confirming the occurrence of Harris and Ogbonna’s (2002) unintended outcomes, the focus group discussions provided much evidence of relationships between these factors. A full understanding of the nature of these relationships is contended to be central to the development of management interventions aimed at preventing their occurrence. In the first instance, ivory tower cultural change was observed as being a key antecedent to many of the other unintended outcomes. Thus, inadequate planning prior to change introduction was found to be associated with cultural erosion, the ritualization of change, behavioural compliance and cultural reinvention. It also provided many of the opportunities for process hijacking. Close relationships were observed between the ritualization of change, behavioural compliance and cultural reinvention, a not unexpected outcome given the role of ivory tower cultural change as a causal variable associated with these three outcomes. 13 Additional Unintended Consequences Uncovered In this organisation it would appear that an additional three unintended consequences of the culture change could be identified. Goal displacement: as a revenue collecting organisation, the change programme focussed on improving the inward flow of revenue from clients / customers. It should be noted that prior to the programme of change, the organisation had received much public criticism for its inefficiency and ineffectiveness in carrying out this core function. Evidence emerged that senior management had been so successful in promoting this that other important aspects of the organisation’s work appeared to have been pushed to one side, including, customer relations / service, and accuracy. After speaking to staff on the ground it appeared as if the programme had placed so much emphasis upon this objective, that as an unintended outcome, other aspects of its work were now neglected. In short, behavioural compliance with the revenue objective appeared to have been pushed to such an extent that all staff behaviour now seemed to revolve around this goal. The following quote from one of the staff focus groups sums up this finding: “We even have people phoning in, we were told, if they are asking for reassessment, check how many arrears they have first and ask them for a payment, if they don’t pay you anything tell them no sorry we can’t do a reassessment, you know that could be somebody’s, a big difference to someone, you know if they maybe had a genuine change, and they are told no sorry you have arrears. … I’m very cynical about the whole thing because it is just money money, money focused at the moment, rather than … instead of getting it right, it is a case of, we have got all this bad press, we have got all these millions we have never collected, we are going to show them, we are going to get this and this and this in, but it is not correct ....” Organisational conflict: again stemming from the promotion of revenue flow as the most important objective, and with the reinvention of the culture as being quantitatively focussed on this particular outcome, we observed the increasing prevalence of conflict between employees and teams attempting to maximise revenue. As was summed up by one focus group participant, this relentless pursuit of revenue generation had caused considerable overt conflict: “On our floor we have a nice wee whiteboard with each team’s credit card payments for the month, totals, running total for the month, and then it is almost like they are trying to make you compete against another team, … people would cut your throat to get a credit card payment and it is just ridiculous. … I have seen people, department sections raging because another department has taken a payment that they could have got the credit for”. Change now treated as ‘flavour of the month’: in a similar vein to the ritualization of culture change consequence discussed above, we found that staff members had become so used to change that they simply complied with whatever current emphasis was being promoted by 14 management. Hence they had grown to expect priorities and processes to change on almost daily basis. As one of the participants from a staff focus group elaborated: “Just that point there, about taking you off something you are in the middle of doing, whenever the notion hits them…Everybody is going on to new tasks today, and you go in the next day and everybody is going to do, take payments and tomorrow it will be security or something else, you can never know what you are going to be doing.” Implications, future direction and conclusions This particular case study, as well as confirming the occurrence of all eight of Harris and Ogbonna’s (2002) unintended outcomes to programmes of cultural change, has led to the identification of an additional three such outcomes, and established the existence of relationships between the unintended outcomes observed. All of the observed unintended outcomes mitigate against successful culture change, and as such the design of management interventions to avoid their occurrence is central to change management success. In simplistic terms, it may be tempting to manage (or address) each of the outcomes in isolation; however, given that compelling relationships were observed between many of the outcomes, and given that a ‘piece-meal’ approach to cultural change was observed to have a direct relationship with many (such as behavioural compliance, the ritualization of change and change being treated as flavour of the month), such a fragmented approach may not be warranted. Ivory tower cultural change and inadequate planning were found to be a significant causal factor in relation to a number of the unintended outcomes, and from a management perspective this is one area which obviously merits attention. However, a more full understanding of the nature of relationships between all of the outcomes is required to ensure that one set of unintended outcomes is not simply replaced with another. References Bowman, C. and Faulkener, D. (1997), Competitive and Corporate Strategy. Irwin, London. 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