Project vs. Product: The Shift You Need for Digital Transformation

The line between ‘project’ and ‘product’ is becoming increasingly blurred. As businesses navigate the complex journey of digital transformation, understanding this distinction is not just academic—it’s a strategic imperative. Traditionally, businesses have approached development through the lens of project management, emphasizing timelines and specific deliverables. Projects, with their defined timelines and specific goals, are giving way to products that demand continuous development and evolution. This shift is not just about adopting new technologies; it’s about embracing a new mindset that prioritizes adaptability, customer value, and long-term vision. Let’s explore why reorienting your approach from project to product could be the game-changer your company needs to thrive in a digital-first world.

Data Bridge Market Research reports that in 2023, the digital transformation market held a valuation of USD 752.38 billion, and it is anticipated to achieve a value of USD 4,339.82 billion by 2030. This represents a compound annual growth rate (CAGR) of 23.60% throughout the forecast period.

Understanding Projects and Products

A. Definition of a Project

  1. Characteristics of a Project: A project is a temporary endeavor with a defined beginning and end, undertaken to achieve a specific goal or outcome. The following are key characteristics of a project:
    a. Temporary Nature: – Projects have a finite duration, with a clear start and end date. Once the project’s objectives are met, it is considered completed.
    b. Unique Objectives: – Each project is distinct, with specific goals and objectives that set it apart from routine operations.
    c. Cross-Functional: – Projects often involve collaboration among individuals from different departments or disciplines, bringing diverse skills and expertise together.
    d. Resources: – Projects require resources such as time, budget, personnel, and materials to achieve their objectives.
    e. Planning: – Effective planning is crucial for projects. This includes defining scope, setting milestones, and allocating resources appropriately.
    f. Risk and Uncertainty: – Projects inherently involve some level of risk and uncertainty. Managing and mitigating these uncertainties is part of project management.
  1. Examples of Project-Based Approaches in Business: In a business context, various initiatives are undertaken as projects to achieve specific goals. Some examples of project-based approaches include:
    a. Software Development: – Creating a new software application or upgrading an existing one is often approached as a project. It involves defining requirements, development, testing, and implementation phases.
    b. Product Launch: – Introducing a new product to the market involves a series of coordinated activities, from product development and marketing to distribution. This entire process is managed as a project.
    c. Infrastructure Upgrade: – Upgrading an organization’s IT infrastructure, such as migrating to a new server system or implementing cloud services, is a project that requires careful planning and execution.
    d. Event Planning: – Organizing events, conferences, or trade shows is typically managed as a project. It involves coordinating various elements, including venue selection, logistics, and participant engagement.
    e. Mergers and Acquisitions: – Mergers and acquisitions involve complex processes that are managed as projects, from due diligence and negotiations to integration planning and execution.

Understanding these examples illustrates how diverse projects can be in terms of scope, complexity, and objectives within the business environment. Each project requires tailored management approaches to ensure successful completion and achievement of its goals.

B. Definition of a Product

  1. Characteristics of a Product: A product is a tangible or intangible offering that is created or acquired through a process and is intended to satisfy a need or want. Products have distinct characteristics that set them apart:
    a. Lifespan: – Unlike projects, products have a continuous lifecycle. They are not limited by a specific duration and may evolve over time.
    b. Continuous Value: – Products provide ongoing value to customers. They are designed to meet long-term needs and can be adapted or upgraded to stay relevant.
    c. Market Presence: – Products are introduced to the market and aim to establish a presence, potentially gaining market share and customer loyalty.
    d. Iterative Development: – Products can undergo iterative development cycles, with updates, enhancements, and new features introduced based on feedback and changing requirements.
    e. Customer Focus: – Products are often designed with a customer-centric approach, addressing the needs and preferences of the target audience.
    f. Branding: – Products are associated with a brand identity, helping establish a connection with customers and differentiate them from competitors.
  1. Examples of Product-Oriented Strategies in Business: Businesses employ various strategies to manage and promote their products effectively. Some examples of product-oriented strategies include:
    a. Product Development: – Invest in research and development to create new and innovative products. This strategy focuses on expanding the product line and offering novel solutions to meet customer needs.
    b. Product Differentiation: – Emphasize unique features, quality, or brand image to differentiate products from competitors. This strategy aims to create a competitive advantage based on distinct attributes.
    c. Product Lifecycle Management: – Manage products throughout their lifecycle, from introduction to decline. This strategy involves making informed decisions about product updates, modifications, or discontinuation.
    d. Brand Extension: – Introduce new products under an existing brand to leverage brand recognition and customer trust. This strategy is about expanding product offerings within a familiar brand umbrella.
    e. Cross-Selling and Upselling: – Encourage customers to purchase additional or upgraded products. This strategy involves offering complementary products (cross-selling) or persuading customers to choose higher-tier options (upselling).
    f. Product Positioning: – Define the market position of a product based on factors such as price, features, and target audience. This strategy aims to create a distinct identity for the product in the minds of consumers.

By adopting these product-oriented strategies, businesses can effectively manage their product portfolios, meet customer expectations, and stay competitive in the marketplace.

The Traditional Project Approach

A. Overview of Traditional Project Management

Traditional project management involves a structured and linear approach to planning, executing, and closing projects. It typically follows a series of sequential phases, often referred to as the project life cycle. The main stages include initiation, planning, execution, monitoring and controlling, and closure. Key features of traditional project management include:

  1. Sequential Phases: Projects are divided into sequential phases, and each phase has specific deliverables and objectives that must be completed before moving on to the next.
  2. Detailed Planning: Emphasis is placed on detailed planning at the beginning of the project to define scope, schedule, and resources. Changes to the plan may be challenging once execution begins.
  3. Specialized Roles: Roles and responsibilities are typically well-defined, with individuals assigned specific tasks based on their expertise.
  4. Predictive Approach: Traditional project management assumes that the project’s requirements can be clearly defined at the beginning, allowing for predictable project outcomes.

B. Limitations and Challenges of a Project-Centric Approach

While traditional project management has its merits, it comes with limitations and challenges that may hinder its effectiveness in certain situations:

  1. Rigidity: The sequential nature of traditional project management can make it inflexible when facing changes or uncertainties during the project. Adapting to evolving requirements can be challenging.
  2. Limited Stakeholder Engagement: Stakeholder involvement may be limited to specific phases, leading to potential misunderstandings or a lack of alignment between project outcomes and stakeholder expectations.
  3. Focus on Processes Over People: Traditional project management can sometimes prioritize processes and documentation over the individuals involved, potentially affecting team collaboration and creativity.

C. Case Studies Illustrating Pitfalls of Solely Project-Focused Initiatives

  1. Failed Software Implementation Project: A company embarked on a large-scale software implementation project using a traditional project management approach. Due to the rigid planning and limited flexibility, the project faced challenges in adapting to changing user requirements. The end result was a system that did not meet the users’ needs, leading to dissatisfaction and a significant financial loss.
  2. Infrastructure Upgrade Delay: An organization initiated a project to upgrade its entire IT infrastructure. The detailed planning phase took an extensive amount of time, and by the time the execution started, some of the chosen technologies became outdated. This delay resulted in a less efficient and costlier solution than originally intended.
  3. Product Development Setback: A company focused on developing a new product using a traditional project management approach. The rigid structure led to delays in responding to market feedback and incorporating necessary changes. As a result, the product faced tough competition upon launch, and its success was compromised.

These case studies highlight the pitfalls of solely relying on a project-centric approach without considering the need for flexibility, ongoing adaptation, and collaboration with stakeholders throughout the project’s lifecycle. Recognizing these challenges can encourage organizations to explore more agile and adaptive methodologies in the context of digital transformation.

The Product-Centric Paradigm

A. Introduction to Product-Centric Thinking

Product-centric thinking represents a shift in focus from traditional project-centric approaches to a more dynamic and iterative model. In a product-centric paradigm, the emphasis is on creating and evolving products that deliver continuous value to customers and adapt to changing market dynamics. This approach acknowledges the ongoing nature of digital transformation and the need for agility in today’s fast-paced business environment.

B. Key Principles of a Product-Centric Approach

  1. Continuous Development and Iteration: In a product-centric approach, development is an ongoing, iterative process. Instead of discrete project cycles with distinct start and end points, products are continuously refined and improved. This allows organizations to respond quickly to changing market conditions, customer feedback, and emerging opportunities.
  2. Customer-Centric Mindset: Central to the product-centric paradigm is a strong customer-centric mindset. Products are developed and enhanced based on a deep understanding of customer needs, preferences, and feedback. Regular interactions with customers throughout the product lifecycle help ensure that the product remains aligned with evolving customer expectations.
  3. Cross-Functional Teams: Product-centric organizations often organize work into cross-functional teams that include individuals with diverse skills and expertise. These teams are empowered to take ownership of the entire product lifecycle, from ideation and development to delivery and support. Cross-functional collaboration promotes faster decision-making and a holistic perspective on product success.
    • Advantages of Cross-Functional Teams:
      • Rapid Response: Cross-functional teams can quickly adapt to changes and make decisions without relying on hierarchical approval processes.
      • Comprehensive Expertise: Teams bring together a mix of skills, including development, design, marketing, and customer support, ensuring a well-rounded approach to product development.
      • End-to-End Ownership: Teams take ownership of the entire product lifecycle, fostering a sense of responsibility and accountability for the product’s success.

Adopting these key principles enables organizations to embrace a more flexible and adaptive approach to digital transformation. By prioritizing continuous development, customer feedback, and cross-functional collaboration, businesses can navigate the complexities of the digital landscape and deliver products that meet the evolving needs of their target audience.

Digital Transformation and the Need for a Product Mindset

A. Connection between Digital Transformation and Product-Centric Strategies

The connection between digital transformation and product-centric strategies lies in the recognition that traditional project-centric approaches may fall short in addressing the evolving challenges of the digital age. Digital transformation involves leveraging technology to fundamentally change how businesses operate and deliver value. A product-centric mindset aligns well with the dynamic nature of digital transformation by emphasizing continuous improvement, customer focus, and cross-functional collaboration.

  1. Agility and Adaptability: Digital transformation often involves navigating rapidly changing technologies and market landscapes. A product-centric approach allows organizations to be more agile and adaptable, responding quickly to emerging opportunities and challenges.
  2. Customer-Centricity: Digital transformation is not just about adopting new technologies; it’s about meeting customer expectations in the digital era. A product-centric mindset ensures a strong focus on understanding and addressing customer needs throughout the transformation journey.
  3. Continuous Innovation: The digital landscape is characterized by constant innovation. Product-centric strategies encourage organizations to embrace a culture of continuous innovation, iterating on products based on feedback and technological advancements.

B. Real-World Examples of Successful Digital Transformations Through a Product Lens

  1. Amazon: Amazon’s digital transformation is often cited as a prime example of a product-centric approach. The company continuously evolves its products and services, from the core e-commerce platform to innovations like Amazon Web Services (AWS) and Amazon Prime. Amazon’s customer-centric focus and commitment to continuous development have contributed to its success in the digital space.
  2. Netflix: Netflix transformed the entertainment industry by shifting from a traditional video rental model to a subscription-based streaming service. The company constantly enhances its streaming platform, recommends personalized content based on user preferences, and adapts its product offering to changing viewer habits. This product-centric approach has propelled Netflix to a leadership position in the digital streaming industry.

C. Benefits of Adopting a Product-Centric Mindset for Digital Transformation

  1. Flexibility and Adaptation: A product-centric mindset enables organizations to adapt quickly to changing market conditions, technological advancements, and customer expectations. This flexibility is crucial in the dynamic landscape of digital transformation.
  2. Customer Satisfaction and Loyalty: By consistently delivering products that align with customer needs and preferences, organizations can enhance customer satisfaction and build long-term loyalty. Understanding and responding to customer feedback become integral to the product development process.
  3. Innovation and Competitive Edge: Embracing a culture of continuous innovation through a product-centric approach allows organizations to stay ahead of the competition. Regularly updating and improving products can provide a sustainable competitive edge in the digital marketplace.
  4. Cross-Functional Collaboration: The use of cross-functional teams in a product-centric model fosters collaboration among individuals with diverse skills. This collaborative environment promotes creativity, efficiency, and a holistic approach to solving complex problems.
  5. Reduced Time-to-Market: The iterative and continuous development nature of product-centric strategies can lead to reduced time-to-market for new features and enhancements. This speed is vital in the digital realm where rapid innovation is often a competitive advantage.

Adopting a product-centric mindset in the context of digital transformation enhances an organization’s ability to navigate the complexities of the digital landscape, respond to market dynamics, and deliver value that resonates with customers.

Navigating the Shift: Practical Steps

A. Assessing Current Project-Based Processes

Before transitioning to a product-centric approach, organizations should conduct a thorough assessment of their current project-based processes. This involves:

  1. Reviewing Project Portfolios: Analyze existing projects to identify their characteristics, success factors, and challenges. Determine which projects align with a product-centric mindset and which may need adjustments.
  2. Stakeholder Feedback: Gather feedback from stakeholders, including team members, project managers, and leadership. Understand their perspectives on the effectiveness of current processes and their readiness for a shift to a product-centric approach.
  3. Identifying Pain Points: Identify pain points and limitations in the current project-based processes. This may include rigidity in adapting to changes, challenges in meeting evolving customer needs, or delays in product delivery.
  4. Assessing Project Outcomes: Evaluate the outcomes of completed projects, considering factors such as customer satisfaction, time-to-market, and the ability to adapt to changing requirements. Identify areas for improvement.

B. Introducing Product Thinking into the Organizational Culture

To introduce product thinking into the organizational culture, organizations can take the following steps:

  1. Leadership Alignment: Ensure leadership alignment with the shift to a product-centric mindset. Leadership support is critical for driving cultural change and fostering a collaborative environment.
  2. Communication and Education: Communicate the benefits of product-centric thinking to employees at all levels. Provide educational resources, workshops, and training sessions to help teams understand the principles and practices of a product-centric approach.
  3. Create a Shared Vision: Establish a shared vision that emphasizes the importance of delivering continuous value to customers. Align the organization around this vision to create a collective understanding of the purpose behind the shift.
  4. Encourage Cross-Functional Collaboration: Break down silos and encourage cross-functional collaboration. Foster an environment where individuals from different departments work together seamlessly to contribute to the success of products.
  5. Reward and Recognition: Introduce reward and recognition mechanisms that celebrate achievements aligned with a product-centric mindset. Acknowledge teams and individuals who demonstrate adaptability, innovation, and customer focus.

C. Training and Upskilling Teams for a Product-Centric Approach

To ensure teams are equipped for a product-centric approach, organizations can invest in training and upskilling initiatives:

  1. Product Management Training: Provide training programs on product management principles and practices. Equip teams with the skills needed to define product roadmaps, prioritize features, and manage product lifecycles.
  2. Agile Methodologies: Train teams in agile methodologies, such as Scrum or Kanban, which are often foundational to a product-centric approach. Emphasize the importance of iterative development, flexibility, and responding to customer feedback.
  3. Customer-Centric Workshops: Conduct workshops focused on developing a customer-centric mindset. Train teams to gather and analyze customer feedback, understand user needs, and prioritize features based on customer value.
  4. Cross-Functional Collaboration Skills: Provide training to enhance cross-functional collaboration skills. Encourage open communication, teamwork, and the ability to work across different functions to achieve common goals.
  5. Change Management Training: Offer change management training to help teams navigate the cultural shift. Equip them with tools and strategies to manage resistance to change and foster a positive and adaptive mindset.

By systematically assessing current processes, instilling a product-centric culture, and investing in training and upskilling initiatives, organizations can effectively navigate the shift towards a product-centric approach in their digital transformation journey. These practical steps contribute to building a foundation for continuous improvement, customer focus, and cross-functional collaboration.

Case Studies

A. Showcase of Companies that Successfully Transitioned from Project to Product

  1. Microsoft: Microsoft underwent a transformation from a project-centric to a product-centric organization under the leadership of CEO Satya Nadella. The shift involved a focus on platforms such as Azure, Office 365, and Windows as continuously evolving products. This transition enabled Microsoft to provide regular updates, embrace cloud computing, and stay competitive in a rapidly changing tech landscape.
  2. Spotify: Spotify transitioned from a project-oriented approach to a product-centric model by organizing teams around autonomous squads. Each squad has end-to-end responsibility for a specific aspect of the product, fostering a culture of continuous development and customer-centricity. This shift allowed Spotify to innovate rapidly and adapt its music streaming service to evolving user preferences.
  3. ING Bank: ING Bank embraced a product-centric mindset by organizing its teams around customer journeys rather than traditional projects. This approach allowed ING to deliver seamless and personalized banking experiences to its customers. By focusing on products like mobile banking apps and online platforms, ING transformed its digital offerings to meet customer expectations.

B. Lessons Learned and Best Practices from These Case Studies

  1. Customer-Centricity is Key: Successful transitions emphasized the importance of understanding and prioritizing customer needs. By adopting a customer-centric mindset, organizations can align their products with user expectations, ensuring sustained value delivery.
  2. Cross-Functional Collaboration Drives Innovation: Case studies highlighted the effectiveness of cross-functional teams in fostering innovation. By breaking down silos and promoting collaboration among diverse skill sets, organizations can respond more effectively to challenges and opportunities.
  3. Continuous Development and Iteration: Companies that successfully shifted to a product-centric approach embraced continuous development and iteration. Regular updates, enhancements, and adaptations to products based on customer feedback and market changes were critical to their success.
  4. Leadership Support and Alignment: Leadership support and alignment with the product-centric mindset were crucial in driving successful transitions. Leaders played a key role in communicating the vision, encouraging cultural change, and fostering an environment conducive to product thinking.
  5. Agile Methodologies Enhance Adaptability: Agile methodologies, such as Scrum or Kanban, played a significant role in facilitating adaptability and flexibility. These methodologies provided frameworks for iterative development, allowing organizations to respond rapidly to changes and deliver value incrementally.
  6. Empowerment of Cross-Functional Teams: Empowering cross-functional teams with end-to-end ownership of products was a common theme. This empowerment encouraged teams to take responsibility for the entire product lifecycle, leading to faster decision-making and better outcomes.
  7. Focus on Continuous Learning and Upskilling: Organizations prioritized continuous learning and upskilling initiatives to equip teams with the skills needed for a product-centric approach. Training in product management, agile methodologies, and customer-centric practices contributed to successful transitions.

By examining these case studies, organizations can draw valuable insights and best practices to guide their own journey from a project-centric to a product-centric approach. The lessons learned underscore the importance of customer focus, collaboration, adaptability, and leadership support in achieving successful digital transformations.

Challenges and Solutions

A. Anticipated Challenges in Shifting to a Product-Centric Approach

  1. Resistance to Change: Employees and stakeholders may resist the shift from a project-centric to a product-centric approach due to familiarity with existing processes and fear of the unknown.
  2. Cultural Shift: Transforming the organizational culture to embrace continuous development, customer-centricity, and cross-functional collaboration can be a significant challenge.
  3. Legacy Systems and Processes: Existing legacy systems and processes may not align with the agile and iterative nature of a product-centric approach, posing integration challenges.
  4. Lack of Skillsets: Teams may lack the necessary skills for product management, agile methodologies, and customer-centric practices, hindering successful implementation.

B. Strategies and Solutions to Overcome These Challenges

  1. Change Management and Communication: Resistance to change can be addressed through effective change management strategies. Communicate the benefits of the shift, provide regular updates, and involve employees in the decision-making process.
  2. Cultural Transformation: Transforming organizational culture requires time and concerted effort. Establish a shared vision, lead by example, and celebrate early successes to reinforce the desired cultural shift.
  3. Gradual Transition and Integration: Legacy systems and processes can be integrated gradually. Implement a phased approach to transition, allowing for the evolution of both products and the supporting infrastructure.
  4. Training and Upskilling Programs: Address the lack of skillsets by investing in training and upskilling programs. Provide resources and workshops on product management, agile methodologies, and customer-centric practices to equip teams for success.
  5. Cross-Functional Collaboration Initiatives: Encourage cross-functional collaboration through team-building activities, workshops, and clear communication of the benefits. Foster an environment where collaboration is valued, and roles and responsibilities are well-defined.
  6. Pilot Projects: Overcome resistance by initiating pilot projects that demonstrate the benefits of a product-centric approach. Use these projects to showcase positive outcomes and gather feedback for further improvements.
  7. Leadership Support and Involvement: Gain leadership support by emphasizing the long-term benefits of the product-centric approach. Leaders should actively participate in the transition, reinforcing the importance of the shift at all levels.
  8. Feedback Loops and Continuous Improvement: Address challenges through continuous improvement mechanisms. Establish feedback loops to gather insights from teams and stakeholders, allowing for adjustments and refinements to the product-centric approach.
  9. External Expertise and Consultation: Seek external expertise and consultation to guide the transition. External consultants with experience in product-centric transformations can provide valuable insights and best practices.
  10. Incentives and Recognition: Challenge: Motivate and incentivize teams by introducing recognition programs that acknowledge and reward contributions aligned with the product-centric mindset. Highlight success stories to inspire others.

By strategically addressing these challenges through a combination of change management, cultural transformation, training programs, and gradual integration, organizations can successfully navigate the shift to a product-centric approach in their digital transformation journey.

Future Trends in Digital Transformation

A. Emerging Trends in Product-Centric Digital Transformations

  1. AI and Machine Learning Integration: The integration of artificial intelligence (AI) and machine learning (ML) into product-centric digital transformations is on the rise. These technologies enable more personalized and predictive product features, enhancing user experiences and providing valuable insights for continuous improvement.
  2. Blockchain for Transparency and Security: Blockchain technology is gaining prominence in product-centric transformations, particularly in industries where transparency and security are critical. It can be used to create secure and transparent product lifecycle records, ensuring trust among stakeholders.
  3. Data-driven Decision Making: Data-driven decision-making is becoming a core element of product-centric strategies. Organizations are leveraging advanced analytics and big data to gather insights into user behavior, preferences, and market trends, informing product development and strategic decisions.
  4. Remote Collaboration Tools: As remote work becomes more prevalent, the integration of advanced collaboration tools is a growing trend. Product-centric organizations are adopting tools that facilitate seamless communication, collaboration, and coordination among cross-functional teams, regardless of physical location.
  5. Digital Twins and Simulation: The concept of digital twins, creating a virtual representation of physical products or processes, is gaining traction. This enables organizations to simulate and optimize product development, performance, and maintenance, leading to more efficient and innovative solutions.

B. Technologies Shaping the Future of Product Management in Digital Initiatives

  1. Internet of Things (IoT): IoT technologies are transforming product management by enabling connected devices and real-time monitoring. Product-centric strategies can leverage IoT data to enhance features, predict maintenance needs, and deliver more value to users.
  2. Augmented Reality (AR) and Virtual Reality (VR): AR and VR technologies are shaping the future of product management by providing immersive experiences. In digital initiatives, these technologies can be used for virtual product prototyping, user training, and enhancing customer engagement.
  3. 5G Technology: The rollout of 5G technology is set to revolutionize product-centric digital transformations. Faster and more reliable connectivity will support real-time data exchange, enabling enhanced features, improved user experiences, and new possibilities in product development.
  4. Edge Computing: Edge computing is emerging as a key technology for product-centric strategies. By processing data closer to the source (edge devices), organizations can reduce latency, enhance security, and enable faster decision-making, particularly in IoT-driven products.
  5. Robotic Process Automation (RPA): RPA is increasingly being used in product management to automate repetitive tasks, streamline processes, and improve operational efficiency. This allows teams to focus on more strategic aspects of product development and customer engagement.
  6. Voice and Natural Language Processing: Voice and natural language processing technologies are influencing how users interact with products. Product-centric digital transformations are exploring voice-activated interfaces and natural language understanding to create more intuitive and user-friendly experiences.
  7. Cybersecurity Innovations: With the increasing importance of data security, cybersecurity innovations are integral to product-centric digital transformations. Technologies such as advanced encryption, zero-trust architectures, and continuous security monitoring are crucial for safeguarding digital products.

These emerging trends and technologies will play a significant role in shaping the landscape of product-centric strategies. Organizations embracing these innovations can stay ahead in delivering value to customers and adapting to the dynamic digital environment.

The Shift You Need

Art Hu, the global CIO of Lenovo, is one of the pioneers in the shift from project-to-product. Art recognized that traditional project-based approaches were no longer suitable in the face of increasing uncertainty and the need for agility. The company shifted to a product-based IT model, where teams took ownership of products throughout their lifecycle, rather than working on discrete projects with defined endpoints. This change led to increased agility, happier customers, and more successful transformations, as every feature on the product roadmap was aligned with measurable business outcomes and rapidly tested for usability and feasibility.

By taking such actions, organizations can position themselves for success in the evolving digital landscape. The transition from a project-centric to a product-centric approach is not just a methodology shift; it’s a strategic move toward building resilient, customer-focused, and innovative organizations that thrive in the digital age.

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