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Sunday, July 31, 2016

3 Activities To Encourage Dynamic Strategic Thinking

3 Activities To Encourage Dynamic Strategic Thinking

Added on June 13, 2016 by Kavi Guppta.
The future of strategy and innovation will be incredibly dynamic. Leadership and companies will have to prepare for a world where businesses will constantly have to reinvent themselves. How can you prepare for this transformation? In this post, we share three activities that leaders and teams can regularly perform to become dynamic strategic thinkers.
Last year Alex Osterwalder and Yves Pigneur were recognized by Thinkers50 for their impact on strategy and innovation. Alex and Yves earned the #15 spot in what Financial Times considers the “Oscars of management thinking”.
In his thank you note to our audience, Alex mentioned sitting alongside other influential strategic thinkers like Rita McGrath, Steve Blank, and Eric Ries. Together, this group represents a new wave of dynamic strategic thinking that will encourage organizations to be agile and constantly reinvent themselves. 

So how can companies prepare for a world where business models and value propositions will change regularly and dramatically? What can leadership do to tangibly discuss and capture where the company is now, and where the company needs to be?
Columbia School of Business professor Rita McGrath spoke to us about the future of strategy and innovation. And in our chat, Rita shared her “portfolio model” which consists of three activities leadership can regularly conduct to evaluate strategic progress.
1. Start with looking at what you have got.
You will want to assess what the company is working on that’s part of today’s business. What projects or areas of the organization can be a candidate that could fuel the next generation of growth? And what are you currently working on that are potential options for the future? Are there existing resources or assets that have been overlooked, but could be repositioned to create new value for customers or the company?
2. Discuss where you want to be.
When you look out five or ten years, what are some of the things the organization wants to achieve? Where are you hoping to aim the company? From there you can work backwards and assess how it will apply to what the company is doing.
3. Then break it all down into day-to-day activities.
This is where all areas of the organization will get involved, and it’s how your strategy can be implemented. You will have to translate your longer term strategy into day-to-day activities that will consist of experiments, learning, and iterations. These tasks will all move you toward validating or invalidating the future value your company hopes to create. You will be continually gathering evidence for the organization’s vision, and regularly need to assess how these new ideas or opportunities can get the company where it wants to be

Tuesday, July 26, 2016

13 Traps That Can Render Your Market Research Irrelevant

13 Traps That Can Render Your Market Research Irrelevant

Market research helps you verify the viability of your business idea through a series of quick and cheap experiments in the real world. But poorly designed experiments can not only render your market research irrelevant, it can also capture the wrong picture of your customers and environment. In this post, I’ll share 13 mistakes to avoid when trying validate or invalidate your assumptions. Watch out for these traps.
Experiments helps product managers, entrepreneurs or intrapreneurs catch a glimpse of what their market looks like. These snapshots enables them to make data-backed decisions when building a new venture.  But poorly designed experiments inevitably generate an inaccurate picture of how customers actually behave. 
Salim Virani, author of Decision Hacks, and Paul Mackinaw, Principal at Leancog, both helped me construct the list of 13 testing mistakes that can distort your 'market snapshots' and make your research irrelevant. Are you stuck in these traps? Check out the list and feel free to add your own traps in the comments below:

1. You test the solution before verifying your customers’ jobs, pains, and gains
If your test indicates that your solution doesn’t solve a problem, you won’t know if the solution is wrong or if the jobs, pains, and gains you’re trying to address doesn’t exist. You have to understand what jobs, pains, and gains influences customer behaviors before trying to verify if a solution address their priorities. Our Value Proposition Canvas was designed to avoid this very trap. The tool encourages innovators and entrepreneurs to test the circle before the square.

2. Your testing environment differs from real life situations
Your test is a lens to understand the real world and verify if your idea can work within it. If you test your assumptions under conditions that don’t match the real world, your results will be incorrect. For example: you’re testing customer interest for a diet right after Thanksgiving. The high interest you receive validates that losing weight is a crucial job for your customer, but only based on the data you got at that point in time. This job might not be as important for your customer during the rest of the year when customers’ are outside of special holiday seasons.

3. You value opinions over evidence
There is a difference between surveys (indicate what the customer wants to tell you) and calls-to-actions (indicate how people actually behave). Interviews and surveying are great ways to get rich insights when you get started, but can be extremely unreliable because customers often don’t act like they say they do. To validate critical assumptions, you need to test if people behave the way they say they would with a call-to-action (CTA). You can learn and discover unexpected opportunities or potential risks by getting customers to interact with a minimum viable product (MVP) like a landing page or online ad rather than hearing them comment on your idea.

4. Your Call-To-Action (CTA) is weak and fails to reveal a real interest or preference
Time, money, and reputation are three things that people aren’t willing to sacrifice easily. Your call-to-action truly shows a strong interest or preference only if customers are willing to spend their money and time, or risk their reputation by participating in your CTA.

5. You chose the wrong testing technique
There is a disconnect between what you need to learn and the test you chose to uncover those insights. For example, Dropbox (file synchronization company) initially tried to test interest in its app through Google ads to see if people would search for their type of solution. But because they were in a new market without a lot of users and existing competitors, people weren't in a mind frame to search for Dropbox online. The business environment clearly showed that customers had jobs, pains, and gains in this area, but the testing technique that Dropbox used failed to verify the existence of those pains. 

6. You chose the wrong ‘success metrics’ to validate what is needed for your business model to work
When you verify your assumption via an experiment, you set up your test with a set of 'success metrics' to determine if a test is validated or invalidated. How do you know how much is enough to consider a test as validated? Is there a disconnect between what you need to learn and what you consider as ‘validation’? What do you consider as successful market share? What revenues do you need to sustain your business? You can research benchmarks to get a rough idea, but it’s also important to go back to your business model and define success metrics based on what is needed for your business to work.

7. You didn’t test business killers first and instead focused on hypotheses with the least impact
You will take more time to learn if your idea is promising if you start by testing the hypotheses that have less impact on the viability of your business. You're much better off by first verifying the crucial hypotheses that need to be true for your idea to work, especially assumptions that could undermine your business if you’re wrong.

8. You forgot to invalidate your hypothesis and remove your own bias
You choose a hypothesis that can’t be falsified or proven wrong. It’s tempting to conclude that a test is validated when data is ‘promising.' But you might also be hallucinating. Seek the invalidation of your idea by verifying the opposite of your hypothesis to avoid biased conclusions.

9. You test too many things at once, making it hard to understand the outcomes
If you test too many variables at once, you risk misinterpreting data or having to run additional tests to make a decision. For example: your flyer displays an image of your product, as well as its price and a phone number to call if people are interested in buying it. But people don’t call. How do you know if they are not interested, or if they are shying away from an expensive product? The data isn’t actionable, and you’re not learning from this test.

10. You don’t adapt the sample size to your testing context
The larger the sample, the more accurate the data. But the larger the sample, the longer the learning cycle. At the early stages, get insights as quickly as possible by testing with a smaller sample. Find patterns and resonance, and then test your idea with an MVP on a larger sample. When testing with a smaller sample, always keep in mind that the data could be flawed.

11. You give too much or too little time to your test

You don’t give enough time to your test to produce results - or you wait for too long. Is the additional time spent on this test worth the amount of learning?

12. Your commitment to the original idea prevents you from discovering superior alternatives
You disregard data that could indicate there’s a better opportunity than the idea you’re testing because you’re in love with your original idea. Stay as detached and as adaptable as you can because a superior alternative might exist.

13. You’ve poorly executed your tests and the data is flawed
Your data could be flawed if the test is poorly executed. An ad of poor quality will not get clicked on even if customers are interested in that kind product.
Innovators and entrepreneurs that design their tests with these “traps” in mind are likely to see a clear and accurate picture of their environment. Based on this data, they are able to figure out whether their business could potentially succeed. But using tests to answer questions will only take you so far. Instead, the most successful entrepreneurs use data to ask the right questions and continue to explore where the best opportunities lie.

Saturday, July 23, 2016

The Vocabulary Of Strategy, Innovation, & Entrepreneurship

The Vocabulary Of Strategy, Innovation, & Entrepreneurship

Added on November 5, 2015 by Kavi Guppta.
Whether you’re new to the world of Value Proposition Design and Business Model Generation, or simply need a refresh, here are key phrases that will help you to better articulate your approach to business strategy and innovation within your company.
I’ve also included some quick links to important blog posts, tools, videos, and examples that will help strengthen your skills with these key phrases or concepts.
(Business) Hypothesis
Something that needs to be true for your idea to work partially or fully but that hasn't been validated yet.
Business Model                  
Rationale of how an organization creates, delivers and captures value.
Business Model Canvas                  
Strategic management tool to design, test, build, and manage (profitable and scalable) business models.
Business Tools
Conceptual frameworks that are specifically designed to help business practitioners solve a concrete (and limited) business problem in a real-world context. The best tools are conceptually sound, simple, practical, visual, with a great user interface (UI) and a great user experience (UX). These characteristics makes them fit for the real world and increases adoption by business practitioners.
Call to Action (CTA)
Prompts a subject to perform an action; used in an experiment in order to test one or more hypotheses.
Chief Entrepreneur
someone who can lead the future of the company while the CEO takes cares of running the existing business. This is a huge divergence from the traditional norm for chief roles, but the CE is a necessary position of power to ensure that a company innovates.
Chief Internal Ambassador
The Chief Internal Ambassador knows everything that’s going on in both sides of the company. The CIA knows all of the resources, activities, and patents that exist on the execution arm of the organization, and also has the trust of the powerful people that manage them. The CIA makes sure the Chief Entrepreneur and the team benefits from the strengths of the existing company by negotiating access to elements like clients, a salesforce, the brand, and its skills. This role is the link between the existing company and its innovative partner. Communication on each other’s progress will be integral to finding the right relationship between both sides.
Customer Development                  
Four-step process invented by Steve Blank to reduce the risk and uncertainty in entrepreneurship by continuously testing the hypotheses underlying a business model with customers and stakeholders.
Customer Insight                  
Minor or major breakthrough in your customer understanding helping you design better value propositions and business models.
Customer Profile                  
Business tool that constitutes the right-hand side of the Value Proposition Canvas. Visualizes the jobs, pains, and gains of a customer segment (or stakeholder) you intend to create value for.
Environment Map                  
Strategic foresight tool to map the context in which you design and manage value propositions and business models.
(Business) Experiment/Test                  
A procedure to validate or invalidate a value proposition or business model hypothesis that produces evidence.
When your products and services create customer value because they address relevant jobs, pains, and gains that matter to your customers. There are three types of fit: problem-solution fit; product-market fit; and business model fit.
Jobs to be done                  
What customers need, want, or desire to get done in their work and in their lives.
Lean Startup                  
Approach by Eric Ries based on the Customer Development process to eliminate waste and uncertainty from product development by continuously building, testing, and learning in an iterative fashion.
Learning Card                  
Strategic learning tool to capture insights from research and experiments.
Minimum Viable Product (MVP)
A model of a value proposition designed specifically to validate or invalidate one or more hypotheses.
Progress Board                  
Strategic management tool to manage and monitor the business model and value proposition design process and track progress towards a successful value proposition and business model.
Prototyping (low/high fidelity)
The practice of building quick, inexpensive, and rough study models to learn about the desirability, feasibility and viability of alternative value propositions and business models.
Search & Implement
A constant back and forth between where you design and test business models and value propositions. You continually iterate between what you design and what you test (implementation) until you find a value proposition that customers want, that can also be embedded into a scalable and profitable business model.
Test Card
Strategic testing tool to design and structure your research and experiments.
Validate/Invalidate (Tests)
A series of hypotheses you will test that will either prove your assumptions to be correct or incorrect. The outcomes from these tests will help you understand the viability of your business idea.
Value Map  
Business tool that constitutes the left-hand side of the Value Proposition Canvas. Makes explicit how your products and services create value by alleviating pains and creating gains.
Value Proposition                    
Describes the benefits customers can expect from your products and services.
Value Proposition Canvas                    
Strategic management tool to design, test, build, and manage products and services. Fully integrates with the Business Model Canvas.
Value Proposition Design              
The process of designing, testing, building, and managing value propositions over their entire lifecycle.

Thursday, July 21, 2016

8 Reminders To Motivate Your Search For Value Propositions & Business Models

8 Reminders To Motivate Your Search For Value Propositions & Business Models

Added on January 18, 2016 by Kavi Guppta.
The discovery of new value propositions and business models can be a long and tough journey. Here are 8 reminders to keep your team focused and motivated. Print them out and tape them up in your workspace to fuel the energy needed for uncovering tomorrow’s success.
Your company’s future depends on the search and validation of value propositions that connect with customers, and business models that create value for your organization. It’s a difficult task to prepare your company for the future while taking care of today’s business model. 

Here are a few reminders to keep your teams motivated through the journey, with links to expert advice and content. Feel free to share your own reminders in the comments.
1. Do nothing and your company will become disposable.
2. Good business model innovation starts with your culture.
3. Manage today’s business model while searching for tomorrow’s success.
4. Reinvent constantly. Don’t wait for a crisis to surprise the organization.
5. Innovation isn’t magic, it’s a process.
6. Get leadership and teams to speak the same language.
7. Your company’s existing assets might be the ticket to its next success.
8. Always, always, always champion evidence.

Tuesday, July 19, 2016

4 Important Facts About Business Model Innovation For 2016 & Beyond

4 Important Facts About Business Model Innovation For 2016 & Beyond

Added on March 14, 2016 by Kavi Guppta.
Renee Hopkins, Director of Engagement at Business Innovation Factory (BIF), wrote an impactful post on the myths and facts of business model innovation. In this post, we highlight the 4 facts from Renee’s post to remind leaders and teams about the importance of business model innovation.
2016 will be a big year for business model innovation as leaders and organizations recognize the importance of systematic and intentional reinvention of a company as a whole. It’s a sentiment Strategyzer co-founder Alex Osterwalder shared in our final StratChat of 2015.

Let’s take a look at the four major facts Renee outlines in her post, and why they’re important for companies. We’ve also added links to our perspective on each fact for further reading.
Renee Hopkins and Strategyzer agree: business model innovation is a persistent and iterative exploration of entirely new ways to create, capture, and deliver value. And as Hopkins points out in her post, companies mistake business model innovation for a change management initiative; when in reality, it’s a way to rethink strategy.
As BIF founder Saul Kaplan has said repeatedly in his work and in our StratChat, “companies have to peddle the bicycle of today’s business model while simultaneously exploring a portfolio of new [business] models for tomorrow.” It’s especially important for companies to explore new growth engines while they are successful. Reinvention shouldn’t take place only when a business crisis hits your organization.
Companies love to solve tech problems before understanding if the market even wants the technology in the first place. It’s something we’ve been talking about a lot on the blog lately. But as we’ve pointed out before (and so does Renee): business model innovation doesn’t have to be tied directly to a new product or service. Companies can look at strengths in an existing business model to uncover new ways to create value for customers.
Business model innovation is a constant back and forth of cheap experiments, quick failure, and continued learning. As Renee points out (and we agree): it starts by adopting the customer’s point of view to understand what matters to them. It’s not enough to gather market research and develop your idea. Your team has to listen and analyze customer behaviors; iterate rough prototypes for testing; and continue to gather evidence to iterate the idea based on how your customers react

Monday, July 18, 2016

5 Characteristics Of A Great Strategy Workshop Facilitator

5 Characteristics Of A Great Strategy Workshop Facilitator

Added on July 18, 2016 by Kavi Guppta.
A great facilitator is key to guiding productive strategy workshops. These 5 tips will help you brush up on your approach, and ensure that attendees can be guided toward productive results from the workshop session.
A workshop is a great way to quickly and effectively get key people in a room to discuss strategy and innovation ideas, progress or next steps. We often encourage teams in large companies to regularly participate in workshop sessions that can foster collaboration, dynamic ways of thinking, and team alignment for a specific goal.
Workshop facilitators--the people who are responsible for leading a strategy workshop--have the most important job to do in the room. Facilitators have to make sure that participants are focused and productive for any given length of time.
Whether you’re hosting a workshop for the first time, or want to brush up on your skills, here are 5 tips to keep you sharp:
1. Remember: it’s not about you.
Your main role as a facilitator is to make sure that everyone in the room is getting involved; that everyone is collaborating; and that the planned exercises are being acted out in the way they were intended. You have to make sure the session is going well, and avoid getting in the way of the activities that are taking place. It’s not about you, it’s about the people in the room.
2. Ask a lot of questions.
As a facilitator you will be responsible for bringing out what people are thinking. This means you’ll have to ask a lot of questions to get participants going. The best way to ask good questions is to be curious: be really interested in what your attendees have to say in order to get their creative juices flowing.
3. Be a brilliant listener.
A great facilitator will be very patient and a brilliant listener. There will be a lot of ideas, comments, and opinions coming out from participants throughout the workshop. You will have to rephrase a lot of that activity to make sure it’s all understood and captured correctly onto the tools or devices that are being used during the session.
4. Help to bring ideas together.
This tip ties on to being a brilliant listener. As all of these ideas are coming out, you will be there to help participants see connections, spot relationships or themes with the ideas they might not notice or have considered before.
5. Be external to the process. 

We end this list in the same vein: remove yourself from the interactions taking place in the room. Be available to give a good overview of exercises and results; keep things going throughout the day; keep people engaged; and make sure that each part of the session is connected to each other to ensure proper flow and structure

Saturday, July 16, 2016

Don’t Let Your Company Culture Just Happen

Don’t Let Your Company Culture Just Happen

Added on July 11, 2016 by Alex Osterwalder, Yves Pigneur & Kavi Guppta.
A happy and engaged workforce is the result of an intentionally designed company culture. It's not something that you just let happen. In this post we explain how to intentionally design culture that engages individuals, teams and leadership to contribute their best work, and we give you a tool and approach to help you do it. 
This post originally appeared in Harvard Business Review
Right now 7 out of 10 people in your organization are not actively engaged at work. Disengaged workforces are a global problem; and the costs are high. In the U.S. alone, companies are haemorrhaging $450 billion to $550 billion in lost productivity each year.
Companies try to motivate their people with incentives and unique perks like ping-pong rooms and free meals, but none of those approaches address the deeper issue of why employees are so disengaged.
We believe the answer is culture—the formal and informal values, behaviors, and beliefs practiced in an organization. Very few companies intentionally work on their culture—in fact, many companies just let culture happen.
XPLANE founder Dave Gray says that a company’s culture is like a garden. You can design culture but nature will still be a force. You can’t control everything about your culture but you can intentionally take it into your own hands. Culture will emerge through constant care and nurturing.
To become more systematic about culture design, we use a tool that our company, Strategyzer, and Yves Pigneur co-developed with Gray. It’s called the Culture Map. The Culture Map allows you to have a conversation about the three key elements of organizational culture:
  • Outcomes. These are the things you want (and don’t want) your culture to achieve.
  • Behaviors. These are the very visible parts of your culture—the positive or negative actions people perform everyday that result in the desired or undesired outcomes for your company.
  • Enablers and blockers. These are the formal or informal policies, rituals, actions, and rules that enable or block your culture—the elements that are truly intentional to achieving a desired culture.
Let’s look at how you can use the Culture Map to intentionally design the culture you want to increase happiness and engagement.
There is no right or wrong way to design culture. Every organization is unique and you will design what fits your needs. The Culture Map is simply a tool to help you facilitate a conversation with you and your team.

Outcomes: What are you trying to achieve?

You start by describing the outcomes you don’t want—what you’d see if your people weren’t engaged. What are the outcomes you don’t want to see? You could pick a theme, instance, or incident that has taken place internally to get the conversation started. In this example, the main theme or incident is unhappy and unengaged workers. This helps you understand what you’re trying to actively avoid.
The outcomes you’re trying to avoid may include:
  • People perform poorly
  • People hate coming to work
  • People have checked out
To illustrate how this process works (and keep it simple), we’ve selected three broad outcomes. When you start to discuss implementation inside the company, your conversation will yield a greater number of more detailed outcomes.
Next you’ll identify the outcomes of your desired culture that will counter the negative outcomes.
In this context you might identify that you want the following:
  • People are happy at work
  • People are engaged
  • People do their best work
Your desired outcomes may often be the opposite of your undesired outcomes but it might be helpful to think about what your company has and what your company may desire. For example, “an internal pro-environmental stance” to become a carbon neutral workplace may engage individuals, but the outcome may not directly answer a negative element in your existing culture.

Behaviors: What do you want to see in people inside your organization?

Then you look at behaviors—the very visible part of your culture. These are the actions people perform every day that result in the outcomes you’ve just listed. That is, what do you want people in the organization doing and not doing? We recommend that you look at three categories of behavior: individual, team, and leadership. Again, here you look at undesired and desired behaviors.
In this example, you might list the following undesired behaviors:
  • Individual behavior. Show little interest in their work, procrastinate (surf the web), avoid responsibility
  • Team behavior. Participate in in-fighting and blaming, look out for oneself, have a personal agenda, sabotage projects
  • Leadership behavior. Care about personal power and prestige, only focus on quarterly numbers
Then think about what are the good behaviors that could counter bad behaviors. You might list the following:
  • Individual behavior. People show passion for their work, are transparent about their work and progress, people take ownership; and most importantly, people look forward to coming into work
  • Team behavior. Collaborate and help each other, are open and honest, have fun
  • Leadership behavior. Listen to teams, help people grow

Enablers & Blockers: How do you intentionally shape the culture?

This is where you have the ability to influence the outcomes and behaviors you’ve identified. The enablers and blockers are the formal and informal levers that leaders, teams, and individuals can intentionally pull to drive a company’s culture.
Think carefully about each of these four elements:
  • Incentives are a basic element of doing good work. People should be paid fairly and competitively for their roles, and increases in compensation should be a predictable process. In addition to pay, the culture should work to reward results generated versus hours worked. Employees shouldn’t feel anxious about how visible they are in the office or on projects, and strict timekeeping can create a sense of mistrust between teams and management. Lastly, and this is something we care about a lot, good failure should not result in career suicide.
  • Context and rules will determine what rituals and processes allow people to do great work. If initiative is punished instead of rewarded, people will feel less compelled to push new ideas internally. The ability to make quick judgment calls and move decisions forward will outpace any lengthy or cumbersome internal approvals process. The same goes for autonomy and flexibility—do you trust your teams to lead while you get out of the way? Are teams allowed to participate in flexible work options that encourage their productivity? Your teams need the right tools and resources to do their job—are they spending more time fighting for what they need? If access to those resources is limited, individuals will be less inclined to take part in initiatives with so many blockers in front of them.
  • People are the core of a great organization and the processes and systems you use to hire, promote, and reward them can be both enablers and blockers. Bob Sutton’s famous “no asshole rule” is an important factor when hiring people for your company, especially if they’re “star performers”. Sutton believes that star performers who are demeaning can wreak havoc on organizations. You just can’t compromise your business on people like that.
  • Leadership has to play a role in the culture if the whole organization is to transform. And leading by example is a pivotal component of management enablers (and blockers: leadership can lead by poor example as well, of course). If leadership exhibits the behaviors expected of teams and individuals, then people in the organization will follow suit.
Once you’ve captured the conversation, you’ll want to break down the enablers into day-to-day activities and experiments. This will allow you to gather evidence as to whether you have the appropriate enablers in place to encourage positive behaviors and outcomes. As leaders, you will not only oversee many of these experiments but you’ll participate in them, too. For example, you might run an experiment where you enable teams with the autonomy and flexibility to make certain decisions on a project without leadership involvement. By getting out of the way and enabling teams to make decisions, you may create behaviors that foster trust, honesty, and collaboration. You’ll be able to see if the experiment results in the outcome of happier and engaged employees.

Your completed Culture Maps

This is what the two versions of your Culture Map will look like. They will serve as an important reference tool as you assess if you’ve made progress toward your desired culture, and help you steer clear of the undesired culture.
Company culture can feel like a beast, which is why many leaders avoid having these tough conversations. But there are small ways to get started. Here are three things you can do together in order to begin the conversation in:
  • 10+ minutes. Do a quick assessment to map your current culture. Have everyone think hard about enablers and blockers. Quickly capturing your current culture will allow you to carry over any existing enablers and positive behaviors that can also work in your desired culture.
  • 60+ minutes. In a slightly longer session you can facilitate a shared understanding of your current culture with people contributing their perspectives. Collaboration is key. How has your Culture Map changed with others sharing their input?
  • 180+ minutes. In this long session, you can move to defining your desired culture and kick off a conversation about how the company can move from the current culture to its desired culture. Individuals, teams, and leadership can collaborate to discuss and capture the desired enablers and behaviors that everyone can begin to experiment with and implement internally.
Companies should be as intentional about culture as they are about strategy and business model innovation. We believe that a tool is incredibly important for discussing and capturing organizational culture. Each one will be unique to the challenge the organization has to face, whether that’s tackling growth, crisis, or disruption. You can’t create a culture that will do any of that without the right tools

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