UK Innovation Index:  Measuring Innovation that matters<br />Brian MacAulay – Director Innovation Index, NESTA<br />Innoba...
What should an Innovation Index set out to do?<br />Goals<br />Underlying questions<br />1<br />Measure the level of inves...
Innovation and Economic Growth – NESTA’s approach<br />Rationale<br /><ul><li>Innovation is the most important driver of e...
Minority of high-growth, innovative businesses vital to the economy
Demand from government to help foster economic growth</li></ul>There are four factors that we can focus on to promote inno...
BIS’sAnnual Innovation Report<br />
The Innovation Index has been officially recognised in BIS’s Annual Innovation Report<br />
The measurement of innovation expenditures- Investment in Intangible Asset Survey<br />Key Findings<br />What was done<br ...
50% of UK firms invest in non-R&D assets compared to 8% for R&D
Level of investment in 2009 was £39bn* with largest component is software (£11.3bn)
Services invest significantly more software, training and branding than manufacturing firms
Data for Training, Software, R&D and Branding are comparable with Pilot findings
Issues remain for Design and Organisational development possibly due to sampling, and recessionary effects or CHS assumpti...
55% of spending in-house compared to 45% purchased externally
Only in Branding are external purchases significantly higher than in-house (70%)</li></ul>3<br /><ul><li>Respondents asked...
R&D has longest average benefit of 4.6 years
Average of others is 3.2 years
Estimated depreciation rates of 23% for R&D and 40% for other intangibles
Pilot uses CHS depreciation rates which are based on a small literature
IAS finds Branding and Training relatively short lived (same as CHS)</li></ul>Enables estimate of depreciation rates for i...
5<br />The UK invested £137bn in innovation in 2008<br />Investment in innovation, ₤bn, 2008<br />The Index also provides ...
A wider view of innovation investments casts new light on the so-called “Innovation Gap” <br />Business R&D as a share of ...
A wider view of innovation investments casts new light on the so-called “Innovation Gap” <br />Investment in innovation as...
The measurement of innovation should be linked to the measurement of economic growth<br />Productivity (GDP per hour worke...
Innovation contributes around two-thirds of productivity growth<br />Contribution to productivity growth, <br />%, 2000 - ...
Index provides breakdown of sector Labour Productivity growth<br />Business Services<br />Financial Services<br />Retail, ...
Index provides breakdown of sector Labour Productivity growth – importance of ICT<br />Business Services<br />Financial Se...
Index provides breakdown of sector Labour Productivity growth – importance of ICT<br />ICT is important to financial servi...
Index provides breakdown of sector Labour Productivity growth – Intangible capital<br />Business Services<br />Financial S...
Index provides breakdown of sector Labour Productivity growth – Intangible capital<br />The Index reinforces the view that...
Index provides breakdown of sector Labour Productivity growth – Intangible capital<br />Business Services<br />The dampene...
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Brian MacAulay "Evaluando el impacto de la Innovación"

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Presentación utilizada por Brian MacAulay en los Martes de Innobasque. 22/03/2011

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Brian MacAulay "Evaluando el impacto de la Innovación"

  1. 1. UK Innovation Index:  Measuring Innovation that matters<br />Brian MacAulay – Director Innovation Index, NESTA<br />Innobasque - Evaluating the Impact of InnovationBilbao, 22nd March 2011<br />
  2. 2. What should an Innovation Index set out to do?<br />Goals<br />Underlying questions<br />1<br />Measure the level of investment in innovation<br />Is investment in innovation in the UK rising or falling?<br />Is the UK investing as much in innovation as other developed countries?<br />2<br />Link the impact of innovation to GDP<br />How does this translate into economic growth and what does it do for the productivity gap?<br />3<br />Measure innovation in UK businesses<br />How innovative are businesses, and how does this compare across sectors? <br />4<br />Assess wider conditions for innovation in the UK<br />How good a place is the UK to innovate compared to other developed economies?<br />
  3. 3. Innovation and Economic Growth – NESTA’s approach<br />Rationale<br /><ul><li>Innovation is the most important driver of economic growth
  4. 4. Minority of high-growth, innovative businesses vital to the economy
  5. 5. Demand from government to help foster economic growth</li></ul>There are four factors that we can focus on to promote innovation across the economy<br />Capital<br />Markets <br />
  6. 6. BIS’sAnnual Innovation Report<br />
  7. 7. The Innovation Index has been officially recognised in BIS’s Annual Innovation Report<br />
  8. 8. The measurement of innovation expenditures- Investment in Intangible Asset Survey<br />Key Findings<br />What was done<br />Comparison to Pilot data<br />What is new in survey<br /><ul><li>Questions asked for detailed data on the 6 categories of intangible assets: R&D, Design, Training, Software, Branding and Organisational development
  9. 9. 50% of UK firms invest in non-R&D assets compared to 8% for R&D
  10. 10. Level of investment in 2009 was £39bn* with largest component is software (£11.3bn)
  11. 11. Services invest significantly more software, training and branding than manufacturing firms
  12. 12. Data for Training, Software, R&D and Branding are comparable with Pilot findings
  13. 13. Issues remain for Design and Organisational development possibly due to sampling, and recessionary effects or CHS assumptions in pilot</li></ul>1<br />Measure wider spending on knowledge assets beyond R&D<br />2<br />Measure level of in-house and external expenditures<br /><ul><li>Respondents asked to report the level of expenditure conducted by own staff (including associated costs such as office facilities etc)
  14. 14. 55% of spending in-house compared to 45% purchased externally
  15. 15. Only in Branding are external purchases significantly higher than in-house (70%)</li></ul>3<br /><ul><li>Respondents asked to report average life-span of benefits from each asset type
  16. 16. R&D has longest average benefit of 4.6 years
  17. 17. Average of others is 3.2 years
  18. 18. Estimated depreciation rates of 23% for R&D and 40% for other intangibles
  19. 19. Pilot uses CHS depreciation rates which are based on a small literature
  20. 20. IAS finds Branding and Training relatively short lived (same as CHS)</li></ul>Enables estimate of depreciation rates for intangible assets<br />* £39bn is total weighted expenditure from IAS<br />
  21. 21. 5<br />The UK invested £137bn in innovation in 2008<br />Investment in innovation, ₤bn, 2008<br />The Index also provides historical innovation investment data going back to 1990<br />16.0<br />R&D<br />% of business output<br />23.3<br />Design<br />R&D<br />Design<br />Organisational innovation<br />30.7<br />Org. Development<br />Training & skills development<br />27.1<br />Training<br />Software<br />Software development<br />21.6<br />Go to Market<br />Software<br />“Go-to-market”<br />15.0<br />Other (copyright, etc)<br />3.8<br />13.8% of private sector output<br />Total<br />137.4<br />Source: Innovation Index<br />
  22. 22. A wider view of innovation investments casts new light on the so-called “Innovation Gap” <br />Business R&D as a share of GDP, 2008<br />2.8%<br />Finland<br />2.7%<br />Japan<br />US<br />2.0%<br />Germany<br />1.9%<br />France<br />1.3%<br />1.1%<br />UK (2009)<br />1.3%<br />Canada<br />1.0%<br />Italy<br />Sources: R&D: OECD, except UK: ONS/Imperial, <br />
  23. 23. A wider view of innovation investments casts new light on the so-called “Innovation Gap” <br />Investment in innovation as a share of Market Sector Gross Value Added 2006*<br />Business R&D as a share of GDP, 2008<br />UK (2008)<br />Market Sector<br />13.8%<br />2.8%<br />Finland<br />2.7%<br />Non Farm Business Sector<br />12.0%<br />Japan<br />US<br />US<br />2.0%<br />Whole Economy<br />11.1%<br />Japan (2005)<br />1.9%<br />Germany<br />Whole Economy<br />Canada (2005)<br />9.8%<br />France<br />1.3%<br />Non Financial Business Sector<br />9.0%<br />Finland<br />1.1%<br />UK (2009)<br />Market Sector<br />7.9%<br />France<br />1.3%<br />Canada<br />Market Sector<br />7.1%<br />1.0%<br />Germany<br />Italy<br />Italy<br />Market Sector<br />5.0%<br />Sources: R&D: OECD, except UK: ONS/Imperial, <br />Software development<br />Includes Training & skills development; Organisational Improvement, Market research & advertising <br />Hidden innovation<br />Includes R&D, Design, Mineral exploration & copyright development<br />Traditional innovation<br />
  24. 24. The measurement of innovation should be linked to the measurement of economic growth<br />Productivity (GDP per hour worked, current PPP), UK=100<br />140<br />Closing the UK’s productivity gap with other developed countries is an important goal of economic policy<br />130<br />US<br />Germany<br />120<br />France<br />110<br />The productivity gap remains significant<br />100<br />UK<br />90<br />1991<br />08<br />92<br />93<br />94<br />95<br />96<br />97<br />98<br />99<br />2000<br />01<br />02<br />03<br />04<br />05<br />06<br />07<br />09<br />Source: ONS<br />
  25. 25. Innovation contributes around two-thirds of productivity growth<br />Contribution to productivity growth, <br />%, 2000 - 2008<br />Total<br />2.24<br />Labour quality<br />Capitalinvestment<br />Total factor productivity (wider benefits of innovations)<br />7%<br />0.90<br />30%<br />0.51<br />Investment in innovation<br />40%<br />23%<br />0.67<br />Capital investment<br />Innovation investment<br />TFP<br />0.16<br />Labour quality<br />Source: Innovation Index<br />
  26. 26. Index provides breakdown of sector Labour Productivity growth<br />Business Services<br />Financial Services<br />Retail, Hotels & Transport<br />Construction<br />Utilities<br />Manufacturing<br />Agriculture, Fishing & Mining<br />
  27. 27. Index provides breakdown of sector Labour Productivity growth – importance of ICT<br />Business Services<br />Financial Services<br />Retail, Hotels & Transport<br />Construction<br />Utilities<br />Manufacturing<br />Agriculture, Fishing & Mining<br />
  28. 28. Index provides breakdown of sector Labour Productivity growth – importance of ICT<br />ICT is important to financial services<br />Business Services<br />Financial Services<br />Retail, Hotels & Transport<br />Construction<br />Utilities<br />But not so important for manufacturing<br />Manufacturing<br />Agriculture, Fishing & Mining<br />
  29. 29. Index provides breakdown of sector Labour Productivity growth – Intangible capital<br />Business Services<br />Financial Services<br />Retail, Hotels & Transport<br />Construction<br />Utilities<br />Manufacturing<br />Agriculture, Fishing & Mining<br />
  30. 30. Index provides breakdown of sector Labour Productivity growth – Intangible capital<br />The Index reinforces the view that intangibles are important for service sector productivity<br />Business Services<br />Financial Services<br />Retail, Hotels & Transport<br />Construction<br />But, they are also important in driving productivity in manufacturing – servitisation?<br />Utilities<br />Manufacturing<br />Agriculture, Fishing & Mining<br />
  31. 31. Index provides breakdown of sector Labour Productivity growth – Intangible capital<br />Business Services<br />The dampened effect in financial services as labour hours rise greatly<br />Financial Services<br />Retail, Hotels & Transport<br />Construction<br />Utilities<br />Manufacturing<br />Agriculture, Fishing & Mining<br />
  32. 32. Innovation is important in the key sectors – Business services, finance and manufacturing <br />Business Services<br />Financial Services<br />Retail, Hotels & Transport<br />Construction<br />Utilities<br />Manufacturing<br />Agriculture, Fishing & Mining<br />
  33. 33. Innovation is important in the key sectors – Business services, finance and manufacturing <br />In financial services, although productivity is lower, innovation through TFP plays the large part in driving productivity growth – 90%. <br />Business Services<br />Financial Services<br />Retail, Hotels & Transport<br />Construction<br />Manufacturing driven by within industry intangible investments<br />Utilities<br />Manufacturing<br />Agriculture, Fishing & Mining<br />
  34. 34. Measuring Innovation in the Public Sector<br />
  35. 35. We developed a survey tool aligned with this framework, and also based on a development of NESTA’s existing private sector index tool:<br /><ul><li>Our first priority was to accurately reflect how innovation happens in the public sector.
  36. 36. Our second priority was to enable future comparability of innovation across the private and public sectors, in the UK and internationally.
  37. 37. In order to achieve this, we sought to maximise the use of the existing private sector survey tool, and align additional questions with existing relevant international innovation survey instruments where possible.
  38. 38. We conducted user (cognitive) testing with 7 interviewees (4 Local Govt, 3 NHS) and refined the survey
  39. 39. We analysed the survey findings based on the framework of public sector innovation.</li></li></ul><li>Background to the pilot survey<br />Part of NESTA’s ‘Innovation Index’ Programme of work, to develop a new national innovation index.<br />The ambition of the Public Sector Innovation Index is that it will form a part of the national commentary on economic growth.<br />The index includes commentary and indices relating to the impact of innovation on UK economic growth, the conditions for innovation, private sector innovation and public sector innovation. Our work forms an important part of the latter.<br />Our project is a pilot approach to measuring innovation across the public sector using a survey approach.<br /><ul><li>Based on a survey of two parts of the public sector: the health sector and local authorities
  40. 40. Objective 1: to help accurately understand the drivers of innovation, the levels of innovation, and the impact of innovation
  41. 41. Objective 2: to enable comparability across sectors. The survey tool aligns with NESTA’s Private Sector Index</li></li></ul><li>Participation levels<br />
  42. 42. The outputs of the survey provide results that can inform different levels of the public sector<br />The survey tool can be used by policy-makers and delivery organisations in the following ways:<br />As a dashboard – a lead indicator of performance improvement<br />To provide a body of research evidence to help improve innovation in the public sector<br />To identify where innovation is happening well (without the lag associated with performance monitoring) – to support identification and diffusion of innovation<br />As an organisational awareness and development tool<br />Our view is that a survey tool has value (in the achievement of the above) and there is demand for its use. Its future potential can best be realised by integrating the lessons from this pilot study and developing it in to a highly engaging online tool, available for use across the public sector<br />
  43. 43. Approach<br />We have based the survey on the framework of public sector innovation shown below - developed from NESTA’s Innovation Index research to-date<br />The framework acknowledges two key differences between the public and the private sectors:<br />Differences in how value is defined. Innovation in the public sector is assessed through impact on a range of social value as well as economic value indicators.<br />Differences in the systems in which organisations operate. The framework reflects that public sector organisations operate in a range of different systems and assesses the impact of the system conditions on innovation in organisations.<br />Innovation Activity<br />Innovation Capability<br />Innovation Activity – describes the pipelines of ideas flowing through an organisation and the effectiveness of the associated key innovation activities:<br /><ul><li>Accessing new ideas
  44. 44. Selecting and developing ideas
  45. 45. Implementing ideas
  46. 46. Diffusing what works</li></ul>Innovation Capability – describes the key underpinning organisational capabilities that can sustainably influence innovation activity:<br /><ul><li>Management of innovation
  47. 47. Leadership and culture
  48. 48. Organisational enablers of innovation</li></ul>Framework of Innovation inPublic Sector Organisations<br />Innovation Activity<br />Impact on Performance<br />Impact on Performance<br />Wider Sector Conditions for Innovation<br />Impact - describes the impact of innovation activity on an organisation’s performance in terms of impact on outcomes, service and efficiency measures, as well as the context for change:<br /><ul><li>Improvement in output KPIs
  49. 49. Improvement in service evaluation
  50. 50. Improvement in efficiency
  51. 51. Improvement context</li></ul>Wider Sector Conditions for Innovation - describes how well the system in which an organisation operates helps or hinders innovation. There are 4 key innovation ‘levers’ that we investigate:<br /><ul><li>Incentives
  52. 52. Autonomy
  53. 53. Leadership and culture
  54. 54. Enablers</li></ul>Innovation Capability<br />Wider Sector Conditions for Innovation<br />
  55. 55. Your organisation’s Innovation Activity is represented by the chart on the top left hand side of your scorecard. Innovation Activity has been categorised into four main process indicators described below. <br />For each of these four process indicators, a red X shows the corresponding index scores for your organisation, based on our analysis of your survey responses - relative to participating peer organisations. Comparisons can be made between your organisation and the average index scores, as well as the minimum, maximum and spread of responses from similar organisations.<br />Innovation Activity<br />This part of the framework provides a view of the current innovation activities of your organisation.<br />This provides a view of the activities most likely to impact future performance in the short - medium term (1-3 yrs).<br />Innovation activity can be considered as pipelines of new ideas flowing through your organisation as they are accessed and identified, selected and developed, implemented and diffused.<br />To gain a clear picture of the overall pipeline, an assessment of this activity should be based on quantitative indicators where possible, but will need to be augmented by qualitative assessment.<br />Description<br />The process of selecting the best new ideas for development; allocating resources and working collaboratively during development<br /><ul><li>Selecting the best ideas
  56. 56. Allocating resources(skills and investment)
  57. 57. Developing the ideas as a multi-disciplinary team
  58. 58. Piloting/testing activity</li></ul>Description<br />The process of converting developed and tested ideas to fully implemented solutions; allocating appropriate resources<br /><ul><li>Embedding and scaling
  59. 59. Training and investing
  60. 60. Measuring benefits
  61. 61. Securing benefits (including intangibles)</li></ul>Description<br />The process of accessing and identifying a sufficient number of different types of new ideas from a range of sources<br /><ul><li>Volume and types of ideas
  62. 62. Novelty of ideas
  63. 63. Sourcing: front line staff , consumers, senior management, research, competitors, sector scanning, delivery partners/collaborators, suppliers, intermediaries</li></ul>Innovation Activity<br />Description<br />The process of sharing and disseminating successful ideas within and outside the organisation<br /><ul><li>Disseminating
  64. 64. Sharing</li></ul>Implementing ideas<br />Selecting and developing ideas<br />Accessing new <br />ideas<br />Diffusing what <br />works<br />
  65. 65. The impact innovation is having on your organisation’s performance, based on our analysis of your survey responses, is represented by the chart on the top right hand side of your scorecard. Impact on Performance has been broken down into four main impact indicators, as described below. <br />For each of the four impact indicators, a red X shows the corresponding index scores for your organisation, based on our analysis of your survey responses - relative to participating peer organisations. Comparisons can be made between your organisation and the average index scores, as well as the minimum, maximum and spread of responses from similar organisations.<br />Impact on Performance<br />This part of the framework provides a view of the impact innovation is having on your organisation’s current performance.<br />These indicators are the ones that research suggests that senior management and staff pay most attention to when managing innovation.<br />Depending on how your organisation views innovation, your innovation activities might fit alongside other improvement initiatives to improve performance. It is important to understand how your organisation views these collective contributions.<br />It is useful to augment survey findings with organisational performance improvement data.<br />Impact on Performance<br />Description<br /><ul><li>Improvements in output KPIs over the last 1-3 years
  66. 66. Impact of these on outcomes</li></ul>Improvement in output KPIs<br />Improvement in serviceevaluation<br />Improvement in efficiency<br />Improvementcontext<br />Description<br /><ul><li>Improvements in service evaluation/feedback from consumers over the last 1-3 years</li></ul>Description<br /><ul><li>Improvements in key efficiency/productivity indicators over the last year</li></ul>Description<br /><ul><li>Understanding of the context for improvement in impact (degree of challenge)</li></li></ul><li>Your organisation’s Innovation Capability is represented by the chart on the bottom left hand side of your scorecard. Innovation Capability has been divided into three main capability indicators, as described below. <br />For each of these three capability indicators, a red line shows the corresponding index scores for your organisation, based on our analysis of your survey responses - relative to participating peer organisations. Comparisons can be made between your organisation and the average index scores, as well as the minimum, maximum and spread of responses from similar organisations.<br />Innovation Capability<br />This part of the framework provides a view of the Innovation Capability of your organisation.<br />It contains the key underpinning capabilities that can sustainably influence innovation activity and performance in the medium-longer term (3 years+).<br />The ability to develop these capabilities is within the control of your organisation.<br />The assessment of these capabilities is mostly qualitative in nature and can be supported by other data such as staff surveys.<br />Description<br />The critical enablers of innovation activity within the control of the organisation<br /><ul><li>Management information
  67. 67. Connectedness
  68. 68. Incentives and rewards
  69. 69. Profile/forums/events
  70. 70. ICT Infrastructure
  71. 71. Access to supportand skills (including quality of staff)</li></ul>Description<br />The behaviours and conditions required for innovation to flourish<br /><ul><li>Vision and spirit of senior managers
  72. 72. Prioritisation of innovation
  73. 73. Attitudes to risk taking and learning
  74. 74. Attentiveness to views of users, front-line staff and middle-managers
  75. 75. Space and capacity for creative thinking
  76. 76. Term of office for leadership</li></ul>Description<br />The quality of organisation and planning for innovation activities<br /><ul><li>Innovation objectives linked to performance priorities
  77. 77. Investment intensity
  78. 78. Innovation governance
  79. 79. Professional engagement
  80. 80. Risk management</li></ul>Leadership & Culture<br />Organisational Enablers of Innovation<br />Management of Innovation<br />Innovation Capability<br />
  81. 81. Your organisation’s view regarding how well the Wider Sector Conditions help or hinder your ability to innovate - are represented by the chart on the bottom right hand side of your scorecard. These conditions have been divided into four main category indicators, as described below.<br />For each of these four category indicators, a red line shows the corresponding index scores for the views of your organisation, based on our analysis of your survey responses - relative to participating peer organisations. Comparisons can be made between your organisation and the average index scores, as well as the minimum, maximum and spread of responses from similar organisations.<br />Wider Sector Conditions for Innovation<br />This part of the framework provides a view of how well the system in which your organisation operates helps it to innovate.<br />The system contains policy levers that can help or hinder innovation.<br />These policy levers are outside the control of your organisation but within the control of policy-makers or other influencing bodies.<br />The framework allows your organisation to provide a view on the effectiveness of the use of these levers to policy-makers.<br />Description<br />The responsibility and freedom to innovate<br /><ul><li>Responsibility for innovation
  82. 82. Flexibility to shape local strategy
  83. 83. Budget flexibility
  84. 84. Freedom to use rules and guidance
  85. 85. Legislative basis</li></ul>Description<br />Effectiveness and alignment of a system of incentives<br /><ul><li>Demand
  86. 86. Competition
  87. 87. Performance targets
  88. 88. Performance transparency
  89. 89. Accountability to consumers
  90. 90. Recognition & reward
  91. 91. Regulation</li></ul>Incentives<br />Autonomy<br />Description<br />Access to critical enablers of innovation<br /><ul><li>Access to transparent comparable performance data
  92. 92. Access to best practice information across public and private sectors
  93. 93. Access to innovation funds and support
  94. 94. Award schemes
  95. 95. Learning from inspections/audits
  96. 96. Adequate IT systems
  97. 97. Access to shared structures and tools
  98. 98. Peer review processes
  99. 99. Measurement of innovation</li></ul>Description<br />The behaviours and conditions required for innovation to flourish<br /><ul><li>Vision and spirit of innovation
  100. 100. Innovation linked to strategy
  101. 101. Attitudes to risk taking and learning
  102. 102. Attentiveness to views of users, front-line staff and middle-managers
  103. 103. Attitudes to collaboration/working across organisational boundaries
  104. 104. Focus on short/medium/long term goals
  105. 105. Quality of new initiatives</li></ul>Leadership& culture<br />Enablers<br />Wider Sector Conditions for Innovation<br />
  106. 106. We are testing findings<br /><ul><li>With key policy representatives from DH, CLG, Cabinet Office and BIS
  107. 107. With survey participants – who will receive a scorecard (shown)
  108. 108. We will ask survey participants for feedback</li></li></ul><li>Should the survey tool be developed further and made available for use across the public sector?<br />A survey-based innovation index, if developed well, can be useful enabler of innovation in the public sector – in 4 ways<br />As a dashboard – a lead indicator of performance improvement<br />To provide a body of research evidence to help improve innovation in the public sector<br />To identify where innovation is happening well (without the lag associated with performance monitoring) – to support identification and diffusion of innovation<br />As an organisational awareness and development tool<br />Our pilot study has provided useful lessons to improve the tool - through development in to an online version<br /><ul><li>Limitations of a telephone-based survey. These include particular limitations of the ability to assess performance impact through a telephone interview approach
  109. 109. The need for flexibility regarding number of participants, per organisation
  110. 110. How to galvanise participation
  111. 111. The use of the tool in promoting innovation and raising organisational capability</li></ul>We are consulting on future use of such a tool. In particular:<br />Potential for application across different levels: nationally coordinated surveys; sector-led approaches; a tool for organisations’ use<br />Functional requirements of the tool: benchmarking results, research and organisational development<br />Whether you agree that a web-based tool should be developed to meet the above requirements<br />

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