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Unlocking Digital Transformation Success in the Middle East: A Human-Centric Approach

Human-centered transformations are crucial globally, but in the Middle East they take on a distinctly different imperative, shifting from technology to empowering people.  

Digital transformation has come a long way from being a buzzword to becoming a fundamental for business success. But, digital transformation goes beyond technology; it’s an ongoing process where human issues and change management are just as central to a successful transformation process as the tech. And today, organizations are starting to understand that change comes from using technology to achieve human goals. They recognize that such change helps them to be more targeted in servicing customers, creating experiences and becoming more efficient, profitable and sustainable.  

While human-centered transformations are essential all over the world, they take on a distinctly different imperative in the Middle East. The relationship-based culture requires a very human approach – business here is all about the way people connect. 

The region has one of the world’s youngest populations, with about 60% under 25, which means most employees are digital natives. They run their lives using mobile technology and expect the companies they work for to do the same. They are more at ease with artificial intelligence and want all the entities in their lives, from government and employers to shopping and entertainment, to be convenient, automated and personalized. 

There’s no ignoring the need to be digital. It is simply expected in every aspect of life. Yet technology is only one part of the solution. It frees up and increases the demand for organizations to provide a human experience. This is becoming more important every day: Yes, there are plenty of tasks tech can do better than people, from booking airline tickets to delivering groceries. But when it’s time for people to interact with each other, whether with colleagues or customers, those interactions take on outsized importance.  

In the Middle East, this transition to a more human-centered business should foster the growth of the region’s relationship-driven culture by directing employees’ attention more toward the human elements of business. Organizations should allow their employees to use technology to help their customers and stakeholders achieve their goals.  

And this is the crucial distinction: recognizing that humans drive the change in business – not technology. 

Starting a Human-Centered Transformation 

For the last five years, Prophet’s global research has explored how companies can leap from outdated ideas of digital transformation to human-centered change. We’ve found that sustainable change, the kind that leads to uncommon growth, works best by comparing every organization to the makeup of a human being. Every enterprise has DNA, a mind, body and soul. We call it the Human Centered Transformation Model.

These transformation efforts are powered by purpose, values, brand and strategy, which we consider an organization’s ‘DNA’. All enterprises need a clear and compelling ‘why’. That ‘why’ is the North Star, illuminating every effort, so every part of the organization pulls in the same direction. This purpose must be meaningful, a shared ambition that can unite and inspire people to embrace change for a better future.  

Each organization also has a ‘mind’, including the talent, skills and capabilities to take it forward. The ‘body’ includes the organization’s shape, such as governance, processes and systems. And finally, each enterprise has a ‘soul’, the behaviors, beliefs and stories that motivate its people. These soul-based elements are especially important in the Middle East. They include symbols, rituals and a mindset that help ignite change and are deeply meaningful to younger workers.  

Leveraging the Middle East’s Unique Advantages and Addressing its Challenges 

Our research has identified the critical levers – fundamentals and accelerators – that can drive change. These are global findings. Yet there are some specific conditions in the Middle East that support rapid digital transformation and help bring people on the journey of change. 

First, there is speed, urgency and ambition. The race to achieve the national 2030 vision, even as it expands toward 2040, is an amazing driver for change. People who run enterprises feel this vital purpose and are eager to achieve it. Employees are even more impatient.  

Next, there’s a regional thirst for excellence, prestige and creativity, inspired by ambitious projects, whether it’s Dubai’s “20-minute city” goals, Saudi Arabia’s $500 billion bet on NEOM, or Egypt’s audacious plans for a new capital. These ambitious endeavors are not only shaping the future but also instilling a sense of collective national pride, fuelling the appetite for achievement and making people eager to join the journey towards a digital future.

The region also faces barriers. Similar to companies globally, some entities react reflexively in ways that are inconsistent or misaligned with their declared strategy, making it more challenging to coordinate and drive change. 

Organizations are maturing and evolving all the time. Yet, even in flux, it’s essential to connect the dots strategically. Every change should arise from the enterprise’s DNA, relating continuous improvement to a broader agenda. This clear purpose is the North Star, helping companies see how that purpose translates into every employee and customer experience. 

The region also faces workforce challenges due to the transient nature of talent, where professionals frequently change roles and locations. This dynamic environment contributes to fluctuations in productivity, as teams experience continuous turnover, impacting stability. This is why strategies that focus on talent retention, skill development and creating a workplace culture that aligns with the diverse expectations of the workforce are imperative.  

These unique advantages and challenges make taking a human-centered approach even more important, ensuring it is tailored to your organization’s characteristics and strengths.

Studying transformation success stories and digital leaders in the West can be tempting. But that’s a mistake. Only Google can be Google. While it’s fine to be inspired by what others have done, organizations in the Middle East (and everywhere else) must remain authentic to their core identity. They should be driven by and centered around the unique group of individuals within their organization and guided by the strategic purpose they aim to achieve.  

Cookie-cutter methods won’t create the far-reaching, long-lasting transformation required in modern marketplaces. But there are specific steps companies can take to begin this human-centered change in ways that build on what they do best, helping them create more robust, more agile organizations that better serve all stakeholders. 

The Power of Leadership Excellence 

Start by defining what good leadership looks like. Leadership values need to stem from the organization’s unique DNA. And while an enlightened CEO is required to initiate the transformation journey, the passion for the mission needs to be nurtured in leaders at all levels. Organizations in the Middle East need leaders who can work with many cultures and nationalities. They require the ability to co-create a dialogue about what the enterprise wants to achieve with this transformation, deciding how best to prepare employees for the changes ahead. 

Again, there are inherent regional advantages. Organizations can create close-knit, enterprise-focused leadership teams using the power of the relationship-based culture. We see this inherently in start-ups, steering away from traditional hierarchies and driven by innovation, the emphasis is on collaborative cultures that nurture a sense of belonging and shared purpose among team members. Similarly, government entities in the region have increasingly recognized the value of cultivating strong leadership teams to enhance organizational effectiveness and establish relationship-based cultures that resonate with the diverse populations they serve. 

While transformation efforts are still in the planning stage, leaders should remind themselves how much power they have over the outcome of any transformation effort. If leadership isn’t seen as fully on board with changes, efforts will never gain traction. Companies can increase the chance of transformational success by: 

  • Framing the transformation as a positive, modern journey. Make it clear that it helps build pride and furthers national goals, using context that is meaningful and relevant to all employees. 
  • Encouraging creative thinking. As Artificial Intelligence (AI) takes over more operational and administrative tasks, organizations should emphasize the human effort shaping these technological changes. AI can only predict. It can’t think or invent. Constantly seek out new ways to encourage human insight and innovation. 
  • Embracing diversity. Effective transformation in the Middle East requires working with locals, whose motivation and sense of purpose are linked to faith and cultural heritage. But it also requires international workers and customers. Organizations need to serve many segments, tailoring and personalizing every experience.  

Build the Right Employee Value Proposition 

As leadership teams coalesce around this pivotal transformation initiative, it’s crucial to sharpen every element of talent acquisition. That starts with updating the Employee Value Proposition (EVP) – the deal you offer those who join your organization. While encompassing salary and benefits, an EVP transcends these essentials, delving into the fundamental reasons why people come to work each day. A robust EVP that vividly articulates the organization’s purpose unveils the unique, compelling and meaningful aspects of the employee experience. Beyond merely enhancing talent acquisition, this refined EVP serves as a linchpin for retention. Engaged employees, drawn to a purposeful workplace, contribute to the transformational journey, propelling the organization toward unparalleled growth.  

Given macroeconomic challenges, it’s a critical time for regional organizations to make sure these EVPs play across borders, attracting international talent. This can be time-consuming for companies not well-known in other parts of the world. And it often calls for new ways of thinking. For example, flexible schedules and work-life balance are now an expectation of many people in the West and must be addressed in recruiting efforts. 

You can’t skimp on developing an EVP. Successful transformation relies on building new capabilities. And while some of those needs will be addressed by upskilling current employees, attracting talent with new skills and background is essential. The rapid expansion of AI tools has dramatically accelerated the demand for new skills. 

Companies can’t afford to overlook local talent, either. The competition is intensifying as the Middle East region prospers and grows, especially relative to Western economies.


FINAL THOUGHTS

To meet the needs of the Middle East today and tomorrow, organizations can no longer rely on outdated ideas of digital transformation. Instead, they need to find new and better ways to use human-centered transformation, putting the right technology into the hands of the many people they serve. When enterprises put people before technology, all stakeholders benefit – employees, customers, community members and investors.  

If you’d like to discuss your digital transformation effort, our expert team can help you in placing a human-centered focus at the heart of your approach.  

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Unleashing the Power of Digital Transformation in Manufacturing and Distribution

60% YOY growth in e-commerce sales. $1 billion in new revenue. 8x productivity gains.   

These are the types of results that B2B manufacturing and distribution businesses can realize if the right digital strategies are developed, and when leaders take on the necessary transformation work to bring these strategies to life. Unfortunately, many companies in the manufacturing sector are still trying to get by with outdated systems and patchwork solutions – leading to operational inefficiencies and limiting their strategic options for growth. There is hope: Those who embrace digital transformation can create new possibilities. 

In our work with a range of B2B manufacturing and distribution leaders, we’ve seen successful digital transformation enable companies to expand into new markets, unlock new avenues for growth, engage new customers and gain a tangible competitive advantage. In this article, we explore why digital growth strategies matter and how to develop the right e-commerce approach for your business. 

“We believe our industry will begin seeing more disruption from large online players and big digital marketplace players, and want to support our customers from seeing attrition as a result. We saw it as absolutely critical to digitally transform to meet rising consumer expectations and to ultimately help our customers grow their businesses.” 

Rob Saper, General Manager, Dexter Distribution Group

The Significance of a Digital Growth Strategy 

Digital growth strategies can support a range of business objectives, from increased sales and stronger customer loyalty to higher efficiency and lower costs. But the simplest reason that B2B companies need digital and e-commerce strategies is that customers expect them to have one. All customers are looking for convenience, flexibility and personalized experiences. Every company must have a digital platform that supports effortless ordering, rapid delivery and responsive service.  

When Dawn Food Products Inc. made it easier for customers to discover new products on its online self-service platform, the company saw a surge in online orders for products that customers had not previously purchased offline. The well-designed digital solution prompted customers to buy more and expand their relationships with Dawn.  

Digital platforms add value beyond purchasing by providing an outlet for content and services that cater to diverse customer needs associated with the core product set. Anheuser-Busch InBev’s BEES B2B sales platform, for example, empowers retailers and partners with customer insights, personalized product recommendations and sales trends. AB InBev now generates 63% of its revenue through B2B digital platforms, with BEES experiencing a remarkable 60% growth from 2021 to 2022. 

Digital strategies also empower companies to scale efficiently, accommodating a growing customer base without the limitations of traditional brick-and-mortar operations. Casey’s Distributing achieved an eightfold increase in productivity by transitioning from manual order processes to a SaaS-based e-commerce platform integrated with inventory management software. 

Platforms that automate manual processes and connect diverse systems reduce both error rates and costs. They make it possible to harness the power of data and analytics to generate invaluable insights that can be used to optimize pricing, marketing programs, inventory, and supply management. These platforms help companies understand where they should invest in growth and how to scale the business.  

E-commerce strategies are critical for B2B companies to extend into new market segments and compete with established players, new market entrants and potential disrupters. To engage smaller businesses with simpler needs than its larger customers, Grainger operates Zoro.com alongside its flagship website. The expanded product assortment has been a hit, generating $1 billion in annual revenue.  

Over time, as digital strategies evolve and capabilities mature, companies may consider refining their business models or launching entirely new value streams. The right platform allows companies to test and learn about new products and services. For instance, Schneider Electric’s  Exchange created a new marketplace of data services that foster collaboration and networking within the energy sector

A common theme for successful e-commerce strategies is data monetization. Marketplace and platform models featuring different vendors offering their products produce data and insights that customers value. They also create a market for selling advertising space. B2B businesses, especially distribution companies and others that serve as middlemen, can follow the lead of Walmart, Target, Kroger and others that have built large businesses by selling ads and customer data directly to advertisers.

Asking the Right Questions 

The journey to breakthrough results starts with asking the right questions to inform digital and e-commerce strategies: 

  • What information or tools would enrich and accelerate the customer journey? 
  • Which interactions and touchpoints can we personalize to encourage upselling? 
  • What data would be valuable for customers? What’s the best way to make it accessible and actionable?  
  • Which existing processes would benefit from automation and integration? 
  • How can e-commerce enable us to fully capture and leverage customer data?  
  • How can we expand the value exchange with the customer base? What’s the best place to start?  
  • Where can we find new revenue streams in a revamped digital ecosystem?

Seven Steps for Developing a Successful Digital Growth Strategy 

To build successful e-commerce and digital strategies, companies should consider the following key steps: 

1. Define the Vision and Goals

Envision your business aspirations and how they relate to what customers want. Determine where your e-commerce and digital strategy can deliver maximum value in meeting customer needs. Clearly identify, document and gain organizational consensus on the top areas of opportunity across the customer journey.  

2. Assess Customer Readiness for Change

Proactively engage customers to determine their preferences for digital engagement versus traditional business approaches. Communicate clearly what’s changing and how they will benefit from a more digital experience. Take advantage of the inherent stickiness of manufacturing and distribution to gradually evolve customer mindsets toward digital ecosystems and, ultimately, strengthen existing relationships. 

3. Prepare the Organization

Assess organizational structures, processes and resources to determine whether they need to be enhanced or adjusted to execute against the new digital ambitions. Engage business units and organizational capabilities that will be affected by the new strategy to ensure they understand the goals and their role in it.  

4. Prioritize Change Management Needs

Craft a change management approach that addresses fears of job security and change fatigue, especially among essential customer-facing staff. Consider refining incentives and shifting cultural attitudes to foster innovative thinking and behaviors. Invest in training and upskilling and equip the workforce with the right tools so they can thrive as their everyday work and your business operations get more digital. 

5. Create a Roadmap and Business Case

Develop a detailed plan outlining how your digital strategy will unlock value over time, with key milestones and quantifiable targets. Engage stakeholders to gain buy-in based on formal business cases and roadmaps, which is especially important for low-margin businesses unaccustomed to transformational change.  

6. Choose the Right Platforms and Technologies

Evaluate and select e-commerce and digital platforms that best align with your business objectives. Integrate the back-office systems and data repositories necessary to build the foundation for high-impact customer-facing solutions.  

7. Continuously Monitor and Adjust

With the roadmap and business case as the baseline, devise and track meaningful customer, financial and operational metrics to monitor the success of your digital strategy. Adapt your strategy accordingly while keeping the long-term vision in mind. Plan to iterate continuously as digital transformation is more an ongoing journey than a single destination. 


FINAL THOUGHTS

The prospect of digital transformation can seem daunting, to even the most forward-looking leaders. But robust e-commerce and digital strategies have become essential in B2B manufacturing and distribution businesses. And the lessons learned from those firms that have successfully transformed confirm the compelling returns – in the form of broader reach, increased efficiency, high-value customer insights, stronger relationships, and stronger competitive capabilities. 

Prophet has been recognized by Forrester as a notable Digital Transformation in The Digital Transformation Services Landscape, Q3 2023. Check out the report here and learn how Prophet can help drive performance gains through effective digital strategies.

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Human-Centricity Accelerates Successful Business Transformation

New research reveals the power of a human-centric approach to drive transformation.

Our new global research commissioned from Forrester Consulting has found that human-centric companies are more likely to see results from their business transformation efforts. In fact, human-centric organizations are 10 times more likely to achieve revenue growth rates of 20% or more.   

Forrester surveyed over 300 organizational growth and transformation decision-makers across geographies and industries to uncover how firms are using human-centricity to design and assess the effectiveness of their transformation initiatives. Our maturity model provides a comparative analysis that illustrates how human-centric firms are outperforming their peers when it comes to delivering transformative growth.  

In comparison to less human-centric organizations, respondents from human-centric organizations are more likely to achieve or expect these benefits:

Barriers to meeting transformation goals for initiatives that are less human-centric:

This study offers resources for decision-makers looking to transform their organizations to be more resilient, improve their culture and satisfy all stakeholders while setting themselves up for future business success.

Source: A commissioned study conducted by Forrester Consulting on behalf of Prophet, July 2023.

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Human-Centricity Accelerates Successful Business Transformation

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WHAT NEXT

Our report reveals that successful transformations often require partnerships to help drive organizational change. As leaders navigate the complex landscape of business transformation, relying on the expertise of external partners becomes a vital catalyst for achieving success. 

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The 2023 State of Digital Transformation

Benchmarks for what digital maturity looks like in 2023 for businesses to chart a path forward in the next wave of digital transformation. 

In this year’s State of Digital Transformation report, we set out to identify the key differences between the businesses that are succeeding at digital transformation, and those that are still struggling. We surveyed over 600 executives from North America, Europe and Asia across a range of industries to highlight not only their current digital capabilities but the key investments and choices they made that got them to where they are today. By separating the responses of high performers and average performers, we identified key characteristics of companies that successfully met their transformation goals. 

This report serves as a benchmark for what digital maturity looks like in 2023 and charts a path forward for businesses that are looking to drive growth and thrive in the next wave of digital transformation initiatives. 

Key Takeaways:

  • The majority of companies (45%) chose business growth as their top goal for digital transformation, followed by innovation (45%) and efficiency (42%). 
  • Top-performing companies tracked metrics like innovation (36%) and digital literacy (32%) to measure digital transformation success, while average performers tracked business performance (42%) and efficiency (40%). 
  • Limited budgets (34%) and a resistant culture (27%) were the top obstacles to digital transformation success. 
  • Despite challenging economic times, 42% of digitally mature companies were accelerating their digital transformation efforts this year. 
  • Top-performing companies were more likely to have their digital transformation led by the CEO (33%), compared to average performers where the CIO or CTO (36%) were more likely to be in charge. 
  • The top transformation priorities for companies were upgrading technology (50%), achieving operational efficiency (34%) and getting more value from data (32%) 

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REPORT

Building Business Resilience Through Innovation

How the most successful organizations are using innovation to build resilience and drive long-term growth in an uncertain economic climate. 

Faced with a world of growing volatility, uncertainty, complexity and ambiguity (VUCA), business resilience is being tested like never before. And, continuing with business as usual becomes the biggest risk.  

Innovations’ power to boost resilience is more important than ever. Yet organizations are barely scratching the surface when it comes to innovation and missing opportunities for meaningful and sustainable revenue growth.  

So, how can business leaders chart a path for their organization to join the high-performing ranks of the truly innovative and resilient? Especially when innovation and resilience are treated like conflicting priorities, with innovation seen as a cost center and resilience as cost-cutting.

We talked to 300 senior global business leaders across 30+ industries to learn how successful organizations use innovation to drive business resilience. And we learned these types of organizations are more likely to practice a wide range of innovation techniques, have C-suite buy-in and strive for sustainable change.  

Organizations that are both innovative and resilient are two times as likely to exceed their financial targets and three times as likely to create shareholder value than their competitors.  

Download our global research report to learn:  

  • How the most financially successful organizations use innovation to build business resilience 
  • The common barriers that slow innovation in organizations 
  • The top techniques used to expand commitment to innovation through the enterprise 
  • How to use Prophet’s Human-Centered Transformation Model to become more innovative and resilient 

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Frequently Asked Questions

Business resilience is the ability to thrive in the face of new environmental challenges, often by coming up with new and innovative solutions. Survey participants agreed with our definition, but a few explicitly connected resilience to trying something new. 

Almost universally, the senior business and innovation leaders that we surveyed for our global research report, Building Business Resilience Through Innovation, said innovation means bringing a new idea, process, product business or operating model into the world.

Almost half of the innovation leaders we surveyed for our report, Building Business Resilience Through Innovation, believe innovation and resilience are correlated. Among high-performing companies, awareness rises to 60%. This connection suggests an organizational understanding that innovation isn’t just about successfully launching new products. Instead, it’s a valuable mindset that strengthens and benefits the entire organization. In the most successful companies’ innovation builds business resilience.

While this list is by no means exhaustive, Prophet’s innovation experts have identified the following 15 best practice innovation techniques, many of which have been widely used in business for decades:  

  • Focus on Customer Needs  
  • Leadership Coaching and Alignment   
  • Agile Product Development/Methodologies  
  • Tracking KPIs  
  • Dedicated Customer Research Team  
  • Dedicated Innovation Team  
  • Special Incentive Structures for New Business  
  • Scenario Planning  
  • Focus on Competitor Activity  
  • Design Thinking Methods  
  • Explicitly Balance Investment  
  • Introduction of AI/ML to Your Operations  
  • Innovation Incubation Program  
  • Rapid Prototyping and iteration  
  • Pod-Like Structures/ Decentralized Teams

At Prophet, we view all organizations as a macrocosm of the individual. Each one has a collective DNA, Body, Mind and Soul. To become a more innovative and resilient organization, leaders need to think about every aspect of this ecosystem. Our Human-Centered Transformation Model provides an accessible lens for unpacking complexities and highlighting and understanding specific components more easily.

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Middle East Business Outlook for 2023 

These five practices will continue to drive uncommon growth in the region in the year ahead.

The Middle East is set for success and growth in 2023, even as businesses in other parts of the world face more challenges. Its importance as a hub for global trade is growing and companies are attracting more significant investments and talent. Overall, the bar is rising as the region takes a more prominent place on the global stage. 

That combination is breeding optimism and ambition throughout the GCC region. We’ve identified five opportunity areas companies should consider so that they can take part in that growth. 

1. Rebalancing Transformation Strategies, Making Them More Human and Less Digital 

Human centricity should be at the heart of any transformation efforts. Organizations should be putting people–customers, employees, investors and communities–at the heart of their strategies and evolving from the inside out.  

Digital is still essential, of course. But the goal isn’t to become more digital–it’s to become better organizations. The most progressive companies recognize the difference. The first question is no longer, “What technology should we invest in?”, it’s “What do our people need to be more productive, and how can we best support that?” And with this human-centric approach, companies are redefining what it means to be a modern enterprise. 

2. Defining Purpose Through the Sustainable Development Goals (SDG) Lens 

Environmental, social and governance policies are growing in importance, shaping businesses worldwide. But here, the emphasis is somewhat different. Organizations in the Middle East are more focused on sustainable development goals. These 17 global SDGs, set by the United Nations to achieve by 2030, matter more than the ESG goals devised by individual companies. 

Governments are setting the vision, sometimes with breathtaking ambition. The UAE, for example, has excelled, working SDGs into its national agenda. And it’s paying especially close attention to the guidelines for developing growth and innovation. This approach reflects its national ideals and challenges many people’s perceptions of the priorities of a Middle Eastern nation. Both these focus areas are now enshrined in the SDGs as it moves toward turning commitments into action. 

For companies, it’s inherently more confusing than simply delineating a strategy that best suits them. So, companies are plunging in with trial-and-error gusto as each tries to find a path forward. They want to comply, of course, and successfully navigate among many shifting government mandates. But they also want to do so in ways that build on their individual purpose, controlling what is theirs to control. They face intense pressure as they make these decisions–from employees, customers, investors, NGOs and regional communities. As they realize they don’t have to align with every SDG, the most forward-thinking companies choose the goals they can best contribute to and embed those into their purpose and strategies.  

For example, we’ll see continued growth in sustainable travel and tourism, with companies carefully examining how people’s hotels, itineraries and experiences impact the entire value chain. And since the region is heavily dependent on foreign investors, there will be greater efforts to demonstrate that companies act responsibly. 

3. Investing in the Start-Up Ecosystem 

The region is on track to produce a substantial number of unicorns in the next ten years. Uber, for example, recently scooped up Careem, based in the UAE, for $3.1 billion. And companies like Kitopi, a cloud-kitchen company; Fawry, an Egyptian fin-tech company; and Swvl, a mass transit system, are all in the $1 billion valuation club. 

This start-up ecosystem’s emergence encourages larger companies to chase business innovations. They’re making strategic bets on new business models. We see companies striving for greater agility. They’re using pod-based innovation, for example, as they look for new ways to collaborate. They’re more deliberate in efforts to break down silos and optimize spending. And they’re more likely to pursue joint ventures.  

4. Creating Data-driven Experiences That are Customized for Audiences  

Digital thinking continues to be the lifeblood of business. But–as is true in C-suites around the world–leaders in the Middle East recognize that data is only valuable when used strategically.  

People in the Middle East, especially in the UAE and Saudi Arabia, are among the most connected and digitally savvy in the world. Consumers want things now. They expect a seamless brand experience. They want holistic omnichannel experiences with personalized communication at every stage of the purchasing funnel. Now that brands have access to more customer data, it’s imperative to use this to unlock the opportunities it presents–delivering very tailored, specific products and personalized messages and communications. 

That means moving beyond broader mass-marketing tactics that simply target groups like millennials and Gen Z. Yes, the youth market is intensely significant in the Middle East. But younger consumers only spend on things they care deeply about. They prize authenticity in the companies, brands and influencers they deal with.  

Prophet’s recent Gen Z research finds that younger people are increasingly determined to curate their own digital experience. They want to connect with others that share their values and are eager to balance digital interactions with those that are human. 

5. Designing an Employee Experience that Delivers Well-Being 

More traditional leaders may still roll their eyes at the expansive responsibility of providing for employee well-being. But unless they understand how holistic well-being is fast becoming a requirement for job seekers, they won’t be able to gain a hiring advantage.  

Health is now the ultimate headline. People have had the chance to re-evaluate what’s important and possible in their lives. They’re fed up with outdated norms like the 9-5 schedule. They’re more open about burnout, chronic stress and fatigue. Employees are less willing to sacrifice their physical, mental and social health for their job.  

In the UAE, the government has set the way forward with a shorter working week–at 4.5 days–to help employees achieve a healthier work/life balance. Such steps allow organizations to re-energize employees, so they can become more productive and innovative. And it also helps retain talent long term. Enterprises are beginning to understand that it is their people that make companies what they are–and it’s essential to take better care of those workers. 

Employee experience design is a rapidly growing discipline. It’s how organizations can maximize their advantage in the war for talent and take advantage of seismic shifts in working patterns. When employee experience becomes a central pillar in a company’s people strategy, aligning with brands, business strategy and customer experience is easier.  


FINAL THOUGHTS

The Middle East has distinct competitive advantages, positioning it for growth in the foreseeable future. Relatively insulated from current global challenges and replete with an influx of talent, businesses here can–and should–be optimistic. They’re looking for new ways to increase revenues and find uncommon growth, outperforming other regions. 

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Financial Services Trends We’ll Be Watching in 2023 

There are many reasons why 2023 can – and very much should – be the year of relentless relevance in financial services.

It’s that time of year again, when we stick our necks out to envision what’s coming for financial services in 2023. You don’t have to be clairvoyant to know that there will be more disruption and plenty of innovation. The tightening economic landscape means that banks, insurers and wealth and asset managers will need to prioritize investments that deliver results in the near term, even as they look to establish strong foundations for long-term transformation and ongoing innovation.  

1. Resilience Through Relevance Becomes the Priority  

Yes, customers are likely to be more careful with their spending in 2023. But, no, customer experience will not become less important. Financial services firms should “buy the dip” by continuing to fund innovation programs.  

Market experience and research from Harvard Business Review tell us that firms that retain their focus on and continue to invest in innovation (especially in those areas of relatively low opportunity cost) during times of economic uncertainty significantly outperform their peers in sales and profit growth. And many well-known brands and market leaders have fully reinvented themselves during downturns, by focusing relentlessly on resilience and retaining their relevance.  

For large financial services firms, they must overcome the common tendency to solve their own internal business problems rather than solving authentic customer problems, as broad and evolving as those can be. Showing empathy and aligning with customer values can help brands stay relevant and differentiate during tough times. That means defining the corporate purpose in terms that are meaningful to customers, a topic we cover in more detail here. Such clarity is especially important in embedded finance and other areas of disruption, where established brands must define their role.  

2. Mega-Growth Comes from Sub-Categories  

When it comes to reaching new segments, many financial services companies are finding success with tailored offers that can create separation from the primary brand and the competition. As Prophet Vice Chairman David Aaker has written in his book, “Instead of promoting the superiority of a brand, create a subcategory with new or markedly superior customer experiences or brand relationships to create barriers to competitors.”  

Sub-categories are promising because they allow incumbent brands to go into new places. And there are many potential opportunities:  

  • Banks offering credit and other services tailored to small business categories
  • Insurers launching digital policies for millennials and Gen Z 
  • Wealth managers focusing on simpler income protection products and decumulation strategies  

There has been considerable market action along these lines in recent years: Some sub-category explorations and extensions have been successful in gaining traction, while others have delivered sub-optimal results, while also producing ample learnings that can be applied to future endeavors.  

We’ll give David Aaker the last word here: “Subcategory-driven growth has exploded in the digital era because of technological advances and the fast, inexpensive market access made possible by e-commerce and digital communication.” That trend will surely continue in 2023 and beyond.  

3. Brands Will Define Their Roles in the Embedded Finance Value Chain  

Critical mass may still be a few years off, but the days of nearly all finance being delivered as-a-service are getting close. Embedded finance is on the same trajectory that made “digital marketing” just “marketing” and “mobile phones” just “phones”. 

According to recent research, the U.S. embedded finance industry is expected to grow at a CAGR of 23.5% from 2022 through 2029, reaching $212 billion by 2029. Plaid expects a 10x jump in embedded finance revenue from 2020 to 2025. We expect the growth of embedded finance to be nearly recession-proof.  

At the center of this growth is the shift from standalone products to solutions delivered at the point of need. After all, customers don’t want a credit card or an insurance policy, but rather an integrated payments experience that streamlines purchasing and provides protections for important purchases. We believe that a primary way to differentiate in the embedded finance space is to start with the customer and design products and experiences around their needs and relevant to their financial journey. 

The next 12 months will see plenty of milestones. Investment advice is everywhere and easily hopping over industry boundaries. Consider how DriveWealth is offering advice for health savings accounts (HSAs).  

The tipping point for mass adoption of embedded finance is clearly getting closer and we very well may reach it in 2023. Financial services organizations that start with deep insights into the needs of customers’ financial journeys and that engage successfully in ecosystems will be best positioned to win the innovation game in the embedded era.  

4. Holistic Wellness Matters as Much to Your Employees as Your Customers   

For many financial services institutions, customers are your employees. A weakening macroeconomic environment will only intensify the need for greater wellness – including physical, mental and financial wellness. There’s a risk that employers may cut programs because of cost pressures in a recessionary environment; that would be a mistake in our view. While wellness may seem a consumer hot topic du jour, financial firms should recognize that wellness equates to confidence and security, which is what consumers are looking for when they buy financial services products.      

We expect to see more financial services firms expand their content, education and advisory offerings (via both in-person and Robo channels) for the simple reason that more people need such services. That’s true at every level of the market; from high-net-worth families that want multi-generational wealth distribution strategies to younger consumers just starting their careers and seeking higher degrees of financial literacy and basic tools for budgeting, savings and investing. To realize the benefits, banks, insurers and others will need to master their activation strategies.  

Financial services firms keying on wellness would do well to understand the complex linkages between mental health and financial wellness. For instance, financial stress is the number-one driver of poor mental health among employees, according to research from MetLife. Because dynamic relationships between different types of wellness play out for both customers and employees, the group insurance and employee benefits space is seeing more innovation, much of it focused on driving well-being. For example, the Morgan Stanley at Work program offers holistic features for both financial security and empowerment.  

5. Human Capital and Strong Cultures Deliver Even More Competitive Advantage    

Post-COVID, more companies have rediscovered the power of their people (okay, maybe not Twitter). It’s more than companies having to compete for scarce talent. Rather, those firms that embrace cultures of learning, creativity and flexibility typically realize better results in terms of customer-centric innovation. And it’s not a matter of choosing to invest in tech or people, but rather getting the right people in place to boost returns on your tech investments.  For all of these reasons, 2023 will not be the time to cut back on learning, development and upskilling/reskilling programs. These initiatives help strengthen cultures and create a more resilient workforce, just what financial services firms will need to thrive in the near term.  

Whether and to what extent inflation or a recession impact the job market remains to be seen. But it’s possible that wage increases may rise faster than price increases. And financial services firms have an opportunity to hire more tech-savvy talent after widespread Silicon Valley layoffs; this is another opportunity to “buy the dip.”  

But even if there is more talent available, banks and others must ensure their cultures are attractive to the right type of talent. Typically, that means emphasizing collaboration and taking a human-centric approach. Our research into the Collaborative Advantage shows that higher levels of teamwork enrich individuals, building new skills that increase engagement and job satisfaction – what financial services firms need to complete in a dynamic market landscape today. 

6. Balancing ESG Expectations With Reality  

While the bright spotlight on environmental, social and governance (ESG) matters will not dim significantly in the coming year, attention will shift toward closer brand scrutiny, both in terms of greenwashing and the authenticity of their ESG claims. More companies – including the “big 6” banks that have aligned to the Paris Agreement – will be evaluated in terms of how well they are “walking the walk” relative to their commitments. That scrutiny will come not just from regulators but the full range of stakeholders, including employees, investors, and clients and customers, who will not react well to big gaps between brand perceptions and actual ESG performance.  

Tensions and contradictions will be called out. For instance, many of the firms marketing green products and aiming for inclusion in ESG funds and indexes also continue to underwrite fossil fuel infrastructure. No wonder some banks are considering leaving industry alliances.  

Financial services firms should be thoughtful in understanding their ESG efforts from a broader range of perspectives. Certainly, there will be more focus on the “S” or social dimension “People well-being” is one potential lens for evaluating commitments and monitoring progress. For instance, the employee experience can be viewed in terms of its social impacts, as can loan portfolios’ inclusion of minority-owned businesses.  

Financial services firms should not shy away from articulating their value relative to ESG, but they must be careful about mere virtue signaling. They should also look to get beyond compliance focus, though of course, lawyers are going to restrict what can be said about green offerings. Further, firms will need to become experts in ESG data and reporting, not least because more detailed disclosures are coming soon.   


FINAL THOUGHTS

Anchoring on what matters most to your stakeholders, especially your customers, will provide a tangible edge in a tough market in 2023. From sub-category extensions and embedded finance to employee wellness and ESG, there are many reasons why 2023 can be – and very much should be – the year of relentless relevance in financial services.   

Contact our financial services team today. We’d love to talk about what transformation can look like at your organization in 2023. 

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Five Healthcare Trends To Watch in 2023

Healthcare leaders can drive change in 2023 by thinking boldly and targeting investments in the following trending healthcare spaces.

Looking ahead to 2023 in healthcare, the big macroeconomic clouds on the horizon make for a less than cheery outlook. The combination of an economic downturn and higher costs will be a dominant theme for the entire healthcare industry and a huge challenge for organizations across hospitals, health systems and device makers, pharmaceuticals, and life sciences companies, as well as players in technology. 

Still, taking the glass-half-full view, we see many opportunities for leaders across the business to drive operational discipline and innovation by focusing on investments that matter most in driving better outcomes for all stakeholders. As we point out in our transformation playbook, changemakers that push beyond the many common barriers to innovation can achieve a great deal. Yes, the economic pressures will be greater. But 2023 will see plenty more disruption – and thus plenty of growth opportunities – as our annual list of healthcare trends below makes clear.  

1. Holistic Wellness Solutions Continue to Influence the Market  

Successful one-off wellness apps and small niche solutions are adopted by large employers and payers to enhance benefits programs and give people more options to live healthier lives. As consumers adopt wearable data trackers in support of that goal, they will increasingly choose to work with healthcare organizations that are committed to holistic wellness.  

 It’s not about the gadgetry, but rather driving good outcomes, particularly relative to social determinants of health (SDoH) and patients’ lived experiences. The start-ups and tech firms with the most attractive and powerful solutions will achieve rapid scale by going the B2B2C route. We think the biggest winners will emerge in in-home diagnostics, preventative health opportunities (e.g., perimenopausal women and metabolism and nutrition) and mental health, which will be of interest to large employers, as well as individuals. Apps and widgets that empower individuals with their own data, plus timely prompts and attractive incentives, will crack the code on growth.  

2. Venture Capital Focuses on the Best and Brightest  

While we expect to see a few big winners among tech players, most firms will face a tighter funding landscape and more intense due diligence. Venture capital, which has been flowing freely and voluminously for years, will become less available as investors scrutinize business models more closely and back only the best and brightest.  

 We suspect the firms that attract funding will be those that focus on narrowly defined patient cohorts already engaged in self-monitoring behaviors and where innovation can move the needle on cost control or value delivery. Those that can collect real-world data from outside the four corners of traditional clinical environments, and integrate seamlessly into core systems, will be specially well positioned to attract funding and potential partners. Chronic disease management, patient engagement and population health solutions will also be priorities because there is clear clinical and financial upside in all these areas.  

3. The Workforce Shortage Worsens as a Full-Blown Crisis  

With continuing burnout among healthcare workers, large provider organizations face issues with care quality and deteriorating patient experiences. The supply-demand fundamentals are inescapable: There are simply not enough doctors, nurses and paraprofessionals – not to mention data scientists, business analysts and experience designers – to fill all the vacancies. 

However, there are multiple potential solutions to resolving talent shortfalls. Workforce optimization and workflow efficiency are necessary, so too automation and more advanced technology in everything from reading x-rays to identifying payment fraud. More support for patient self-monitoring, continued expansion of telehealth and in-home care will also help alleviate chronic talent shortages. There’s also a large cohort of tech-savvy talent looking for jobs with a higher mission after layoffs from Silicon Valley giants.  

4. Value-Based Care Models Become Innovation Labs  

The inevitable momentum toward value-based continues. More than 40% of U.S. healthcare reimbursement now has some value-based component, a proportion that will only rise in 2023 and beyond. Though pockets of resistance remain, more provider organizations will advance and mature their Value-Based Care capabilities. And they’ll do so on several fronts. More sustained preventative outreach efforts to underserved, high-risk and high-cost populations for routine screenings will continue producing strong results. Shared-incentive contracting will be more attractive for capital-intensive equipment, such as MRI machines and CT scanners.  

Sophisticated technology usage will be a hallmark of VBC winners. Consider how the burden on the workforce could be reduced with digital apps and AI-enabled patient engagements leveraging HIPAA-compliant natural language processing on existing voice platforms (e.g., Alexa). Such applications also free clinicians to operate at the top of their licenses. The next year will see many pilots of creative concepts in the space.  

The tightening economic backdrop, alongside rising consumer expectations, more powerful technology and the prevalence of chronic conditions, will fuel further adoption of VBC models. Large employers wanting to know what they are getting from higher rates will be yet another prompt for innovation.  

5. Consolidation Increases as Non-Traditional Players Press on  

Challenging macroeconomic conditions will drive more consolidation and spark aggressive plays from tech platforms and large retailers. In this sense, 2023 will look a lot like recent years. Retailers and other non-traditional players are cracking the code on healthcare, faster than healthcare players are cracking the code on consumerism.  Amazon, Walmart and other large players will continue experimenting on their own, buying up promising ventures and looking for partners that can further their huge ambitions.  

And their ambitions won’t shrink just because the economy does. If you already thought these companies were relentless competitors when the economy was good, then you can expect them to press their advantages even more forcefully in pursuit of ever greater market share as cost and capital pressures rise for others.  


FINAL THOUGHTS

The healthcare industry has seen plenty of change during the last few years. The next year will continue that trend. And as challenging as the economic conditions will be, healthcare leaders can drive change for the better by thinking boldly and targeting investments in the most promising areas of opportunity.  

Contact our healthcare team today. We’d love to talk about the transformation opportunities at your organization. 

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5 Common Mistakes in Managing Healthcare Data Products

How healthcare organizations can avoid and navigate data pitfalls while building data products.

As we embark on another chapter of technology adoption, moving from the Internet of Things (IoT) to web3 and the metaverse, and as a greater degree of interoperability takes hold, data in all things healthcare is no longer a differentiator but a table stake.  As we cover in our research, “Transforming Healthcare: The Changemaker Playbook,” the ongoing healthcare data revolution opens the opportunity to deliver better clinical decisions, faster and more appropriate care delivery and ultimately more equity and context to patient treatment. Everyone by now knows that by using data and managing it the right way, organizations will see costs go down and both clinical and business processes get smarter and more efficient. However, where does data specific to your needs come from?  Who’s generating it, curating it and selling it?   

There is a massive gap emerging in organizations as it relates to managing and extracting value from their data, namely the productization of it. Yes, there are seasoned players in the healthcare data space such as Optum, Merative and IQVIA that have a high degree of maturity as it relates to data-as-a-product.  But there are also new entrants, such as growing physician groups, amassing unique and compelling data sets, as well as device and equipment manufacturers, whose smart products are also accumulating data.   

We are finding that these fringe players in healthcare data are extremely eclectic as it relates to their product management capabilities with data. These organizations are oftentimes shining examples in product development with their core products (e.g. specialty practices, vital signs monitors, claims clearing houses, etc.), but when it comes to data-as-a-product, they are often overlooking a variety of fundamentals. These mistakes are having a dramatic impact on their ability to create value with data. Generally, we are seeing three categories of data products that exist in healthcare:  

3 Categories of Healthcare Data Products

  1. DaaS: Data as a Service – When you take raw or transformed data that can be sold or licensed to additional parties
  2. Data Resulting From a Feature – By utilizing features of an existing product or service to generate data that may be productized
  3. Algorithmic and Logic Based – Where you take data, apply logic and algorithms to it to give outputs or aid in decision making 

The following highlights a set of frequent mistakes to avoid when entering the healthcare data space.  
   

1. Prioritizing “More” Data Instead of Necessary Data 

Date range or depth are often things companies will tote as a major selling point. As you peel this back, we found that customers look for the quality and completeness of the essential data that they need to solve problems they’re working on.  

Focusing on who wants or needs this data, and why, is a critical question to answer when defining the data product. Adding lots of nice-to-have data sets to your product may not create customer value. Sophisticated customers who take the time to examine your data will often try to poke holes or find gaps that will impact their decision to purchase and adopt your product.   

2. Lack of Data Accessibility  

Whether your product is a database, web platform, App or API, thinking through the end-to-end customer journey is often a gap. Data is usually part of a broader workflow that combines multiple systems, tech stacks, integrations and processes.  

As you build your product, it’s crucial to envision the data’s entire journey. Make sure your customers can pull and access the data! Rarely does a customer only use a single data source, so being able to integrate and distribute with their other solutions is essential. Often data may need to be mapped to your customers’ existing data models. A helpful tip is understanding your customer’s personas, and their level of understanding and skills, as they will be the day-to-day people interacting with the data.   

3. Loose Data Governance Practices 

As your product’s data is generated or compiled, it is critical to creating a formal taxonomy (hierarchical grouping which gives structure and standardizes terminology). This allows you to keep track of the attribution (source, rights, ownership) of where the data comes from.  some of the things included in data taxonomy are clear definitions of what data means, whether those terms are generally accepted in your industry and knowledge of how to explain the data. Another critical element to data governance is understanding your meta-data. For example, it is essential to document things like time stamping, user, source, security, segmentation and IP rights. Data in healthcare can be sensitive with regulations and policies affiliated with it so understanding what is classified as HIPAA when data can remain identified or needs to be de-identified needs to be considered.  

There will be a number of team members working around your data (engineers, data scientists, database managers, statisticians, researchers, product managers, etc.), so creating a taxonomy and decision for access rights ensures the integrity of your data is preserved. Continuously auditing change logs and benchmarking data is essential and good hygiene. Furthermore, you need to ensure that this data is protected and that your business model for monetization is secure with accessibility. Whether it be in your technology or contract terms, protect your data’s IP. From the business and legal side of governance, your MSA, EULA and contract language (whatever is applicable to your product) need to clearly spell out ownership, give the right to anonymize, create derivate or redistribute data. Knowing where you are or what you can’t do must be relayed back to the product and technology development process.   

4. Data Analytics and Tools as an Afterthought 

Along with #2, we have found that customers want to generate more insights out of their data. This is often why clients ask for periodic data dumps or direct lines of access to the data. It is an important product decision to determine if and how much you want to invest in analytics and tools that enable your customers to generate more insights on their data.  

The more you understand their needs and what they are doing with the data outside of your product, the more you should consider what would make your product stickier if you built those capabilities in. These can be simple things like filtering, searching, scheduled reports or extracts or dashboards. We often see customers still taking data and using excel or tableau to generate basic insights that can be offered inside your product.   

5. Overly Technical Products Can Deter Adoption 

Knowing your user, their technical abilities and their thresholds should be accounted for in your product development process. User retention will suffer if it takes too long to develop skills and understanding to use your product. This will manifest itself with low user activity, as well as unsatisfied business stakeholders who made an investment in selecting and implementing your product. If you are building products that are technical in nature, be sure to engage that user type/ persona early-on and understand how big that sellable market is. Don’t expect a large population of non-technical people to easily embrace your product. You will get early and stronger usage with intuitive products, short-term implementation cycles and onboarding processes, FAQ/help documents and quality customer support offerings.   


FINAL THOUGHTS

As data, product and strategy experts, we have built and worked with numerous healthcare organizations that are challenged with building products that thrive in this rapidly evolving environment. Many companies that are in the early stages of building data product(s) are working through the prioritization of a backlog through current experiences – face a set of common obstacles.  

As a growth and transformation firm, we focus on partnering with our clients to enable the building of the highest quality products possible. Our specialization in healthcare, data and product management practices is a great resource to support you on your data product journey. We cover this subject more in our new report, but please reach out if you’d like to learn more. 

REPORT

Transforming Healthcare: The Changemaker Playbook

Tackling the top four areas ripe for innovation and transformation in healthcare, this report inspires action and impact with big-picture strategic ideas and tactical tips for driving change.

Change is hard, especially in healthcare. But in the sometimes lagging, but always vital industry, transformative change enables real people with real needs to live better lives. Not to mention, change strengthens bottom lines, improves investor returns and supports a more productive and sustainable society. That’s a powerful and synergistic business case to inspire all people that work in healthcare to take on the challenge of driving innovation.  

At face value, becoming a “changemaker,” can be daunting. It requires bravery and a clear sense of direction. This new report, from Prophet’s Healthcare team, was written to empower and guide healthcare’s future changemakers so they can ignite change in the industry and realize their transformation goals.  

Based on interviews with 29 senior leaders in healthcare, extensive market research and decades of experience helping healthcare organizations transform, “Transforming Healthcare: The Changemaker’s Playbook,” provides insights and recommendations to drive necessary change in healthcare.  

Download the report for: 

  • Deep dives into four areas ripe for innovation and transformation in healthcare:
    • The rise of connected and empowered consumers
    • The expansion of care outside the hospital
    • The ascendancy of Value-Based Care
    • The decentralization and democratization of data
  • Highly relevant commentary and insights from industry leaders across the ecosystem 
  • Digestible and achievable “next steps” for leaders seeking to become changemakers

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Transforming Healthcare: The Changemaker Playbook

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REPORT

Winning the Innovation Game in Banking

How incumbent banks can build resiliency by transforming their innovation engines to drive growth. 

Banks that go on offense and remain committed to innovation will have the competitive edge as the economy returns to growth cycles.

Based on ongoing market research and interviews with industry experts and executives, “Winning the Innovation Game in Banking,” provides insights for senior banking leaders seeking to re-energize their organization’s innovation engines. Specifically, this report:

  • Provides pragmatic actions for avoiding costly mistakes and translating innovation investments into market impact and improvements on the top line
  • Defines leading practices and proven frameworks that accelerate efforts to operationalize and scale innovation programs
  • Identifies the most promising market territories for innovation aligned to the growth agendas of incumbent banks

Download the report today. 

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Winning the Innovation Game in Banking

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Thank you for your interest in Prophet’s research!

VIDEO

Prophet Healthcare: Champions for Change

Find out how we help partners across the healthcare ecosystem transform care experiences, create new enterprises and build empathy-driven sustainable ways of working.

4 min

Summary

At Prophet, we believe the organizations that thrive in healthcare are those that dare to change the game – striving to improve human health, create better experiences, and make the best of care an enduring and sustainable reality for all.

Find out how we help partners across the healthcare ecosystem transform care experiences, create new enterprises and build empathy-driven sustainable ways of working. See our healthcare services.


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