Cross-functional collaboration: what it is and how to improve it
Workplaces today are hard to imagine without cross-functional teams. They seem to be the backbone of most successful companies. But, what exactly are cross-functional teams? Why are they important and for whom? What does effective cross-functional collaboration look like? What are the biggest challenges cross-functional teams face? How to overcome them? And, how can we improve the ways these teams collaborate?
This guide will present you with detailed answers to these questions, followed by examples to help you have a greater understanding of the role of cross-functional team collaboration and what changes to make to improve it. Also, we’ll provide additional tips on how to approach hiring people suitable for this type of collaboration.
What is a cross-functional team?
A cross-functional team is a group of people from different functional parts of an organization, who work together to achieve a common objective. These are groups consisting of a small number of people with complementary skills, who are mutually accountable and responsible for:
- Developing new products;
- Improving customer relationships;
- Re-imagining organizational processes;
- Improving organizational performance.
That said, here are some examples of cross-functional teams:
🔶 Four friends work together to launch a start-up. Lisa is responsible for design, Gina is the marketing expert, Nick is a back-end developer, and Ryan is a front-end developer. Together, they collaborate in an effort to set in motion all necessary processes to make their company a success.
🔶 Mary is a content editor in charge of leading and tracking the progress of several content writers. They, along with an SEO specialist, a PR specialist, and a social media manager make up a cross-functional team charged with increasing the online presence of their company.
🔶 Michael is a pediatrician, Rita is a Registered Nurse, and Danielle is a speech therapist. These three run a private practice for helping children with mild to moderate speech and language development issues.
🔶 An e-commerce company that sells hand-made furniture. This team is made up of people belonging to different functional units. These units include production, warehouse, logistics, software engineering, marketing, HR, and customer support.
🎓 If you feel like learning more about various types of teams, you can take a look at our in-depth guide to Different types of teams and how they collaborate.
Who can benefit the most from cross-functional teams?
Not all organizations see benefits from employing cross-functional teams. In fact, studies suggest that, in some cases, functional diversity may negatively impact performance.
Continuing on, the results a team accomplishes vary according to company size, its internal infrastructure, and the industry they belong to. In addition, implementing effective company structures, practices, and procedures requires a lot of effort. All of these challenges are amplified when employing cross-functional teams. This happens because they already face their own internal challenges, and, in principle, require plenty of work to turn coherent and efficient.
How do we determine who needs cross-functional teams?
Here, we encounter the matter of what kind of company can see the most benefit from implementing cross-functional teams. One way we can establish this is by first categorizing companies according to the innovation strategy they use.
In brief, there are three different kinds of innovation strategies. All of them vary according to two dimensions: the level of innovation and the speed of development. They are the prospecting, the analyzing, and the defending innovation strategy.
⛏️ Prospecting innovation strategy
The Prospectors are the companies who put the most emphasis on the innovativeness of their product or service. They are searching for the metaphorical “gold”– an idea, a product, or service that would fare well in the competitive market. Most notably, start-ups fall into this category.
Most of the Prospectors find that the speed of development is secondary to their objectives. They take as much time as necessary to come up with what they believe would be a perfect solution.
🔍 Analyzing innovation strategy
The Analyzers have a different approach: they emphasize speed of response to market demands as a way of preserving competitive advantage.
The amount of innovation is not as critical in this case, as they can always model their products and services according to those already successful on the market.
🛡 Defending innovation strategy
The Defenders seek to find a secure niche and establish their presence in it. So, they are looking to launch a product or service in a relatively stable area.
The Defenders are rarely innovative and do not prioritize speed of development.
How does innovation strategy pertain to cross-functional teams?
Well, an above-mentioned study found that firms with prospector or analyzer innovative strategies met their product development goals more successfully with cross-functional teams. On the other hand, the Defenders found that the amount of investment it takes to form an efficient cross-functional team did not pay off when combined with their business strategy.
So, in essence, cross-functional teams are best used in situations where speed and innovation are prioritized, leaving different types of teams to deal with more stable environments.
Before we delve into specific challenges of cross-functional team collaboration and how to deal with them, let us first take a look at the characteristics of successful cross-functional teams.
What are the characteristics of an effective cross-functional team?
For Prospectors and Analyzers, cross-functional collaboration plays a crucial role in establishing effective teams. It is the driving force behind high-performing and sustainable teams.
Cross-functional teams are unavoidable when it comes to projects that require people with different skill sets and from different functional parts of the company. In these situations, they have various benefits, such as:
- Increasing the speed of development;
- Driving continuous improvement within the company;
- Reducing cost;
- Enabling agility and adaptability;
- Enabling creative problem-solving and innovativeness.
Effective cross-functional collaboration empowers teams to deliver all of these benefits, and be as productive as possible.
In this segment, we will take a closer look at the features of high-performing cross-functional teams. The more characteristics from the following list a team has, the more likely it is to be successful.
As a general rule, permanent and long-term cross-functional teams have a better chance of success. Simply put, if a team is temporary, the organization may not see the value in improving the team members’ work setting. When a company knows that a team will be disbanded as soon as it finishes a project, it makes the company much less likely to assign significant resources to it.
So, when a cross-functional team becomes permanent, management cannot ignore their requests for better work conditions. In the long run, the investments an organization makes to enhance work conditions for a cross-functional team pay off through improved performance.
Clear, compelling, and challenging goals
Time and time again, studies show that cross-functional teams perform better when they have clear and somewhat challenging goals. When all of the team members have a definite understanding of project objectives and merits, they are more likely to be, so to say, pulling in the same direction. In other words, with the presence of clear goals, people know what to strive for without getting bogged down in miscommunication troubles.
Another important element of team success is that the project objectives present a moderate performance challenge. Not enough stimulation and people get bored. In contrast, when the challenge is too difficult, people disengage and distance themselves from it. Balance is key.
It is difficult to work effectively in a climate of pressure, fear, or boredom. Successful teams do not. High-performing cross-functional teams prioritize a positive work climate, placing value on the individual well-being of team members.
Most people average about eight hours of work a day. This makes up a significant portion of our lives, so it is important what kind of general mood our work surroundings project.
For example, management may decide that creating a sense of urgency emphasizes the importance of a project. However, it also creates tension, which leads to more conflict among team members. In contrast, a different team leader may be too lax about rules. Then, the employees do not take the project seriously, making it hard to get anything done. In conclusion, a relaxed yet professional approach seems to work the best for efficient cross-functional teams.
Cross-functional teams with empowered members can be a huge asset to the companies that employ them. Empowered members are given a certain sense of autonomy when it comes to making decisions about a project. Research shows that more autonomy makes employees more committed to the project and achieving their goals, as well as improving their levels of satisfaction.
Additionally, the speed of development increases with the level of freedom and responsibility team members have. Allowing decisions to be made at the level of project teams reduces the time it takes to make decisions, solve problems, and take action. Collaboration grows when teams are allowed to make their own rules and procedures.
Typically, leaders of productive cross-functional teams do not take direct action to help finish the project. Instead, leaders serve as enablers of the development process. Effective team leaders outline the task boundaries for the team. Then, they allow team members to function within those boundaries, leaving out exact detail on how the tasks should be performed. In other words, good team leaders provide boundaries, but also freedom and autonomy when it comes to decision-making.
Another way leaders enable collaboration is by implementing a participatory style of leadership, where team members are expected to share some of the leadership roles.
This gives employees the freedom to explore, discuss, and challenge ideas about what technologies to pursue or which problems to solve. In this scenario, the team leader becomes an enabler by giving over some of his responsibility to the employees.
Additionally, leaders should be good communicators. Their duty is to keep everyone informed about the project and changes that arise during the development process. So, they benefit from having a positive attitude and commitment to the project. Also, open and apolitical leaders share knowledge more readily, becoming an example for the other team members. Team leaders are also the link between cross-functional teams and senior management.
Support from senior management
Support from senior management can be critical to the success of a team. Harvard Business Review research shows that projects with strong support from senior management had a 76% rate of success. We can compare this with projects with moderate support that had only a 19% success rate. The difference is drastic enough to justify a strategic effort for senior managers to show more support for cross-functional teams.
Some of the ways senior management can show support to the project team is by demonstrating commitment, helping the team to surmount obstacles, and providing encouragement.
The project team relies on senior management to “make things happen”, meaning to create circumstances in which the team can function without a glitch.
Team champions are the people who take great interest and commit themselves to a higher degree to the achievement of product or service development goals. As such, champions are a source of inspiration and motivation for other team members.
Champions can be both leaders and regular team members. These are the people who go the extra mile, and who find personal satisfaction in the success of their team.
Here we have the, arguably, most important characteristic of successful cross-functional teams — excellent communication. We see many benefits from team members communicating with high levels of trust, honesty, and respect for each other. Some of these benefits are:
- Improved mutual understanding;
- Leads to better collaboration;
- Increased productivity;
- Increased creativity;
- Helps team members accept changes easier;
- Helps with problem-solving;
- Improved employee morale;
- Helps when dealing with conflict;
- Builds trust;
- Encourages future input.
After reading this list, it becomes clear why good communication should be a priority within cross-functional teams. Even if all other technical requirements are fulfilled, the lack of proper communication can still bring the entire endeavor down.
What are the main challenges of cross-functional collaboration?
Ineffective practices lead to 75% of cross-functional teams being dysfunctional. Why is this the case? First of all, people from different backgrounds are required to work together in close proximity. They have to find ways to make their ideas and needs clear to each other.
Another factor is the lack of trust, due to teams often being put together hurriedly and disbanded as soon as they accomplish their objectives. This leaves no time for people to actually get to know each other, and to be willing to share knowledge among themselves.
So, as we already established, cross-functional teams come with many challenges. Some of the most obvious ways we can see a cross-functional team has failed is when they:
- Produce subpar goods and services;
- Fail customer expectations;
- Go way over the planned budget;
- Have difficulty staying on schedule;
- Stray from the company’s mission.
Here, we will list some of the challenges that cross-functional teams face in their day-to-day activities, ranging from clashing personalities to deeply flawed organizational systems.
Difficulty scheduling meetings
Our first entry on the list may sound simple at first glance — scheduling meetings. But when we account for remote and international teams, things get a little bit more complex. Scheduling meetings with team members in different time zones can lead to misunderstanding, confusion, and frustrated people sitting alone in a video conference scheduled to start in an hour or two.
In addition, meeting times are usually adjusted to the needs of team leaders, due to their place in the workplace hierarchy. Even in co-located teams, issues of personality differences may spring up and create conflict.
Different priorities and goals
Next, we have situations where people have different functional priorities and objectives. The first issue can be attributed mostly to a lack of communication between different teams, as a result of not having a centralized communication system.
Likewise, lack of communication combined with ambiguous goals makes for misinterpreted objectives. Due to the limited duration of the project team, employees rarely have the time to resolve their different ways of thinking, so their efforts often become incoherent.
Lack of trust
The lack of trust in cross/functional teams comes from putting people with no previous acquaintances in a high-pressure environment. This results in great discomfort for the team members, who do not feel secure enough to freely communicate with each other. As a result, teams try to escape the discomfort by lowering standards in order to finish the project early, effectively escaping the situation.
Other manifestations of trust deficiency include an unwillingness to share information and the creation of silos.
According to recent Microsoft research, with the shift some companies made to remote work came significant changes in the number of monthly collaboration hours. The collaboration hours, including time spent on maintaining cross-group ties, decreased dramatically with the switch to remote work. The switch did not necessarily affect the number of collaborators employees had, they certainly seem to have lost connection with other distinct functional parts of the organization.
Due to their nature — being made up of people from different functional units — cross-functional teams run an increased risk of developing intra-team silos. For example, engineers might find it hard to work with designers, as they have distinctly different approaches to work. So, in a cross-functional team, they may resort to keeping to themselves, creating the infamous silos. This was true even before the COVID-19 pandemic, but is especially pertinent now with many companies taking the remote-first approach, which limits opportunities for collaboration.
🎓 To find out more about strategies you can use to deal with silos, check out our article on How to break down team silos and improve collaboration.
Lack of recognition
When employees feel like they lack adequate rewards and recognition for their efforts, they have no incentive to perform to the best of their ability. Therefore, when team collaboration is encouraged but not appropriately rewarded, employees may feel like it is too much effort with little in return. It may feel like something that was “pushed down” on them, another duty, instead of a solution for improved team coherence.
Complexity of the leader’s role
An inexperienced leader in charge of a cross-functional team may find themself in a tough spot. Due to the complexity of the team leader’s role, it is probably best to employ someone with proven skills in leading multidisciplinary teams.
A leader with little previous experience may find it difficult to juggle the needs of employees from different functional areas. Also, they may have a hard time outlining tasks and combining the efforts of all team members into a productive system.
In turn, employees may feel a lack of management support and clarity of direction.
There are numerous barriers to effective communication, stemming from reasons such as physical limitations, emotional and cultural barriers, differences in personality, etc. In cross-functional teams, these lead to misunderstandings, frustration, and tension in the workplace. But, most importantly, poor communication hinders accomplishing the goals the team was created to achieve in the first place. This means that the quality of communication between team members can make or break the entire project.
🎓 If you want to get a deeper insight into the topic of team communication, you can find a whole wealth of resources on our Team Communication Hub.
10 best practices to help improve cross-functional team collaboration, with examples
Here, we will list ten ways you can improve cross-functional collaboration, followed by concrete examples.
Select the right team members
Selecting the right team members is the critical first step to establishing successful cross-functional collaboration. When approaching this task, make sure to hire open-minded and highly motivated team members.
We asked Michele Olivier, Principal Consultant and founder of O&H Consulting, for some advice on how to select these kinds of employees and where you can go wrong. She said:
“First off, what many employers do right now is to have representatives from all the different areas meet with the candidate and assess how they would work with them. This results in a lot of interviews, and not very much unique information. What’s needed is a candidate who can seamlessly work cross-functionally and engage with stakeholders — internal and external. Having every department weigh in doesn’t really establish that.”
She continues to break down the term “cross-functional collaboration” into several more easily measured components:
1. “An ability to communicate complex ideas simply and in language understood by all;
2. Questioning skills with a willingness to ask enough questions to really understand the needs and process of an unfamiliar area;
3. Being able to motivate/coach people not within your line of report;
4. A willingness to admit their mistakes and change course.”
The other precondition for successful collaboration you should take care of is that all necessary functional areas of the company are represented in correct proportions. This means that you should find a balance between too many people doing the same thing and stepping on each other’s toes, and on the other hand people burning out trying to achieve unrealistic goals.
🔶 Example of selecting the right team members:
Kayla, a hiring manager, has the choice between hiring two designers with equally impressive resumes. Where she makes the decision is when comparing interview questions aimed at assessing how open-minded they are. One candidate expressed a defiant attitude when it comes to admitting mistakes, so Kayla chooses the other, more agreeable candidate.
Provide appropriate training
All teams can benefit from providing appropriate training for their members. You should try to provide all necessary resources needed to demonstrate methods and tools team members can use during their work. By this, we mean both the technical side of things, and the instructions on how to handle interpersonal conflict and communication. This way, you prepare employees for the challenges they can expect to face.
🔶 Example of appropriate training:
Angela is newly hired in customer support at a SaaS company. In her first week, she undergoes thorough training on how to use the technologies her company uses internally. This includes instructions on how to use project management software, online workspaces, and time tracking software. Next, she is introduced to the product the company hosts. And finally, Angela goes through meetups with HR, to get familiar with how to handle conflict, and who to come to if she needs help. She is now fit to independently deal with her responsibilities.
Assign an experienced leader
A person with experience in multidisciplinary teams will be more effective for cross-functional collaboration. These people will find it easier to be proactive in ever-changing situations. They are ready to take an objective look at all the advantages and disadvantages of the development process, and to take steps to improve it. In short, experienced leaders have a more farsighted view of the production process, and are able to find solutions that fulfill company expectations.
🔶 Example of assigning an experienced leader:
Austin was the initial team leader of a team in charge of product design. Unfortunately, he had issues with coordinating team members, leading to not finishing an important project in time and losing a long-term client. With this in mind, the company assigns Jason as the new team leader. Jason has plenty of proven experience in leading teams responsible for new product development. He also switched careers at some point, which gives him the ability to view issues from different perspectives and be much more organized and productive.
Set clear organizational objectives
Establishing clear organizational goals provides a common frame of reference for the team. Having set objectives helps structure tasks, and creates boundaries to their accomplishment. This helps reduce confusion about which direction to take and in what way. Otherwise, it gets easy to get lost trying to always redefine objectives.
When it comes to boundaries, we specifically mean defined deadlines for project completion, and a set appraisal and meeting schedule.
One approach that enables setting clear objectives is to let organizational forms and structures evolve naturally. You can do this by shifting priority from tactics to strategy, and from output to outcome. This lets the employees feel more involved and creates a better environment for collaboration.
🔶 Example of setting organizational objectives:
A new start-up has only one objective: “Develop a competitive product in our niche with as few resources as possible.” All other internal processes and structures are organized around this principle. So, the employees always know to emphasize affordable solutions and to eliminate all unnecessary expenses. In addition, they are guided to focus on products and services with proven market value, so innovativeness is somewhat limited. This practice extends to the hiring process, as they look for fewer, but more experienced employees.
Create key performance indicators.
An effective way of tracking performance is creating key performance indicators (KPIs). KPIs are strategic goals expressed in measurable values. They are an objective means of measuring collaboration.
Some of the KPIs focus on measuring financial performance, for example, Net Profit or the Revenue Growth Rate.
Others pay attention to client feedback, by measuring the Customer Satisfaction Score or tracking the Net Promoter Score.
Still, others might measure employee engagement and satisfaction, manager quality, usage of collaborative tools, and other relevant metrics.
🔶 Example of using KPIs to measure cross-functional collaboration:
Susan is a team leader for a cross-functional team put together to improve customer satisfaction. To measure the success the team has in reaching their goal, Susan decides to use the following KPIs: Customer Satisfaction Score, Client Retention Rate, and Net Promoter Score. As for the effectiveness of the team, she decides to implement the Employee Engagement Index, Employee Satisfaction Score, as well as Revenue Growth rate to see how things progress on the financial side of things.
🎓 To get a more detailed insight into measuring collaboration with KPIs, visit our guide on Collaboration metrics: how to measure collaboration in a team.
Use boundary objects
To combat the difference between team members’ deep knowledge, you can use so-called boundary objects or tangible definitions. These objects are pragmatic representations used to inform multiple communities.
Boundary objects can be:
- Concrete boundary objects. These are stable and recognizable objects, used as containers of meaning to facilitate collaboration. These are artefacts
- Epistemic boundary objects. Epistemic objects are fluid, incomplete, and constantly evolving to meet the needs of explaining difference between knowledge among team members.
🔶 Example of using a boundary object:
Jake is a team leader in charge of getting a factory line up and running. He decides to use a boundary object to clearly delineate to all team members what the expectations are. To do this, Jake believes the most efficient boundary object is a machine prototype that demonstrates the mechanisms at work. This prototype serves to bridge the gap between engineers and machine operators, establishing more successful collaboration.
Be transparent about rewards and repercussions
Both rewards and repercussions are efficient ways of motivating employees. Only they work in different ways. Simply, with a reward in mind, people will push themselves to perform better. Likewise, when “punishments” are overtly discussed, it gives employees incentive to stay on the right path. This rule is simple but commonly overlooked.
🔶 Example of reward and repercussion transparency:
Kaytlin is an accountant, and she knows that if she misses another deadline to turn in her assignment, she will lose her opportunity for promotion until the next appraisal period. So, she works extra hard and tries to organize her time as efficiently as possible.
Recognize the value of diversity at work.
Here we have two different kinds of diversity in mind. One is the diversity of people and the other is functional diversity.
When it comes to the diversity of people, it is important to take a stance about discriminating against people according to their race, gender, and sexuality. You should make sure that the workplace is welcoming to all kinds of people. This makes people feel appreciated and creates an overall positive collaborative climate. As a bonus, one BCG study even found that diverse workplaces produce 19% more revenue. So, creating diverse teams is not only the more ethical but also the more financially wise decision.
The other kind of diversity is the functional diversity of cross-functional teams. When many functional units are represented in a team, there is an increase in the variety of available information. Therefore, team members are provided with the chance to view the project from multiple perspectives. Additionally, functional diversity also makes it easier to notice and prevent downstream problems such as manufacturing problems and market mismatch.
🔶 Example of hiring a diverse team:
Craig is a Talent Acquisition manager who decided to try an experimental approach to hiring a diverse team. To prevent bias, he publishes a job opening but requests that candidates exclude any information (including name and pictures) that can reveal their age, gender, race, or sexuality. He then asks the candidates who fit his needs to complete a task. Once he selects the people with the skills to successfully finish the assignment, the pool of candidates is significantly smaller. Only then does Craig invite the candidates to in-person meetings and video conferences. As a result, he is sure his own personal bias had minimal effect on the person he selects for the job.
Build a common identity
Fostering a common identity — the “we” in a team — has many benefits. First of all, the sense of unity gives people motivation to put in extra effort to accomplish team goals.
To best accomplish this, implement a special team structure that delegates decision-making authority to the team. Collective rewards also increase the sense of community. Team buildings are also an activity that increases the sense of common identity.
However, keep in mind that testing showed that “negative association between centralization and superordinate identity lost significance in companies with annual revenues larger than a billion dollars”. In other words, larger companies expect more traditional, hierarchical decision-making.
🔶 Example of building a common identity:
Carrie is a member of HR in a software development company. She decides that a good activity to build a common identity is participating in a tree-planting activity. For her, this is the ideal solution, as it is both good for the environment and gives the employees the opportunity to spend a day in nature, getting to know each other better.
Ensure your technology stack enables collaboration
Teams collaborate better when they have a clear idea of what everyone is actually doing. The easiest way to make this happen is by using quality team collaboration technology. Also, the technology you use is better when centralized, allowing both messaging and file-sharing capabilities.
🔶 Example of using technology to enable collaboration:
In the following example, we have Steve, Fiona, and Harry scheduling a visit to stores, in search of inspiration for a new cooking line. This team chat app allows them all to voice their opinions, as well as reactions to what they read. If they feel the need to contact other team members, they can always check their online status, and add them to the group conversation.
Additional tips: how to assess the level off cross-functional collaboration skills during hiring interviews
Now, how can we make sure a candidate possesses collaborative skills?
We already saw what Michele Olivier, the recruitment expert, had to say about the skills necessary for cross-functional collaboration. Here, we will include the questions she recommends for assessing the levels of these skills in a candidate.
As a reminder, the skills she listed are:
- An ability to communicate complex ideas in simple;
- Questioning skills;
- Being able to motivate and coach people not within line of report;
- The willingness to admit mistakes and change course.
Here’s how she recommends approaching each of these:
Assessing the ability to communicate complex ideas in simple language
The first step in assessing collaboration skills is to make sure the candidate can explain complex ideas in a language understood by all. To accomplish this, Michele advises:
“Have a non-technical team member (HR, CS, recruiter, etc) ask a technical question relevant to the role. Explain to the candidate that they are not technical, and that they will need a simplified version. Then have that person rate the candidate on:
1. clarity of explanation;
2. checking for understanding throughout;
3. lack of use of jargon;
4. ability to answer follow-up questions;”
Assessing questioning skills
This next step assesses the level of willingness a candidate has to ask enough questions to really understand the needs and process of an unfamiliar area. Michele believes that this skill can easily be assessed with some more typical interview questions.
“These include giving the candidates a scenario to engage with, and asking how they would approach it. When doing this, you should intentionally limit the amount of information given and let them know they can ask anything that they need. Then, look out for questions about the basic premise, such as what are we trying to achieve or who is the stakeholder.”
Assessing the ability to motivate and coach people outside their line of report
Here, you can ask the candidates questions to evaluate the competence for motivating and coaching people not within their line of report. According to Olivier, some of these questions to assess these competencies might include:
1. “Tell me about a time you had to motivate someone, not within your direct line of report, to achieve a professional goal.“
2. “How do you bring people onsite who are resistant?“
3. “Give me an example of a time you had to provide difficult feedback to someone.“
Assessing the willingness to admit mistakes and change course
When it comes to assessing the willingness to admit mistakes and change course, we are again in a familiar territory within interview questions to consider. According to Olivier, some of these may be:
1. “Tell me about the last time you were wrong at work.“
2. “When was the last time you changed a process or approach?”
3. “What inspired the change?”
4. “How did you know if the change was successful?“
The hiring process is the perfect time to evaluate the collaboration potential of a candidate. If you do this properly, you run a much lower risk of the candidate being ill-fitted for the existing team. As a result, establishing effective collaboration is simpler and more straightforward.
Cross-functional teams are complicated in nature. Consequently, collaboration among such team members also comes with many challenges. But, with a concerted effort, you can make leaps when it comes to the level of productive collaboration. This allows you to enjoy all the benefits of coherent and high-performing cross-functional teams, such as innovativeness and lightning-speed product development.
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