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Lean Six Sigma The World We Live In Today

• Six Sigma framework


• High technology
• Lean Six Sigma applications
• Service vs Manufacturing • Fast and open communication
• Service Lean Six Sigma studies • Distributed business operations and markets
• Troubleshooting vs Improvement • Widespread literacy (hence higher
• Project Implementation
realization of consumer rights; higher
• Success Factors
demand for customization; more
• Change Management
assertiveness…)
• Statistical Paradigm
• Beyond Lean Six Sigma
• More concerned stakeholders in businesses

What Do Customers Demand Today?


• Leading edge technology products and services
Lean Six Sigma:
– Technology improvement rate… 100% per year
– Time to market…9 month product life cycles
• Lowest possible price Methodologies NOT
– Price erodes at 1% per week
• Extraordinary quality -- of the academia
– High reliability absolutely critical -- by the academia
• Delivery on demand: products and services -- for the academia
• Outstanding service after delivery
– No-questions-asked responsiveness
Books in English: The first fifteen years

Lean Six Sigma is about

EXCELLENCE IN QUALITY

AND

BUSINESS COMPETITIVENESS

THREE ROOT CAUSES OF


BUSINESS COMPETITIVENESS
QUALITY RELIABILITY AND
PRODUCTIVITY PROBLEMS:
Recall: Meaning of “Sigma Level”
in Six Sigma
• Define a measure that will reflect, from the
customer’s point of view, what is Critical to

LEAN SIX SIGMA


Quality (CTQ)
In comes
• Define the range of acceptable values of CTQ
from the process

• Usually there will be a target CTQ value and


specification limit(s) for actual CTQ values

Let’s consider the quality problem: Let’s consider the quality problem:

SL
Target
SU
x
SL
. . ... .
Target
SU
x
(m, s)
Lower Upper Lower Upper
specification limit specification limit specification limit specification limit
Let’s consider the quality problem: Common Statistical Meaning of Six Sigma

_ x
SL SU

Sigma: σ Sigma: σ
• Symbol for standard deviation
• Sigma: amount of variation
• Measure of dispersion, variation, or spread
• “Aim to increase the Sigma level of a
process…”
• 6 σ is the spread about the mean m that
includes 99.73% of a normal population
• Six Sigma: ???
CTQ y with Target μ; Upper Spec Limit SU
“Sigma Level” in Six Sigma

• Define a measure that will reflect, from the


customer’s point of view, what is Critical to
Quality (CTQ)

• Define the range of values of CTQ that the


process should generate

• Usually there will be a target CTQ value and


specification limit(s) for actual CTQ values

3 Sigma Process
Generalization
3 Sigma Process 6 Sigma Process
66 807 ppm 0.002 ppm

6 Sigma Process
After 1.5 Sigma Shift: 3.4 ppm “dpmo”

“defects per million opportunities”

as a measure of level of quality


Calibrating Quality with Sigma Levels Calibrating Quality with Sigma Levels
(Distribution Shifted 1.5 s ) (Distribution Shifted ± 1.5 s)

Percent % s ppm Process Capability s ppm


Sigma level
“Good”
dpmo 2 308,537
related to 93.3193 3 66,807 3 66,807
Sigma level 4 6,210
5 233
related to 99.99966 6 3.4 6 3.4
dpmo Percent Sigma
Level
Defects per Million
Opportunities
Process
Capability
Defects per Million
Opportunities
“Good”

Conversion of dpmo ~ Sigma Level “Sigma level” as a Performance Calibrator


WHERE DOES YOUR
PPM PROCESS FALL ON
Prescription Writing THIS CURVE?
IRS - Tax Advice Restaurant Bills
1,000,000
Payroll Processing
100,000
Baggage Handling
10,000

1,000
100
10
Airline
1 Safety Rate

* 1 2 3 4 5 6 7

Sigma Level
What is Six Sigma?
• … a disciplined method of using extremely
rigorous data gathering and statistical
Six Sigma from the analysis to pinpoint sources of errors and
ways of eliminating them.
Management Perspective
-- M. Harry & R. Schroeder (2000)Six Sigma: The
Breakthrough Management Strategy Revolutionizing the
World’s Top Corporations, New York, Doubleday

What is Six Sigma? Six Sigma – Defined by GE


What is Six Sigma?
• Six Sigma is an information-driven
Six Sigma is a highly disciplined process that helps us focus on
methodology for reducing waste, developing and delivering near-perfect products and services.

increasing customer satisfaction and Why "Sigma"? The word is a statistical term that measures how far a
given process deviates from perfection.
improving processes, with a focus on
The central idea behind Six Sigma is that if you can measure how
financially measurable results. many "defects" you have in a process, you can systematically figure out
how to eliminate them and get as close to "zero defects" as possible.

Six Sigma has changed the DNA of GE — it is now the way we work
--- MINITAB — in everything we do and in every product we design.

From: http://www.ge.com/sixsigma/makingcustomers.html
Six Sigma – Defined by GE Pillars of Six Sigma
What is Six Sigma?
Components --
Six Sigma is a highly disciplined process that helps us focus on
developing and delivering near-perfect products and services. • Statistical measurement of quality level
Why "Sigma"? The word is a statistical term that measures how far a • Management strategy
given process deviates from perfection.

The central idea behind Six Sigma is that if you can measure how
• Quality culture: CTQ
many "defects" you have in a process, you can systematically figure out
how to eliminate them and get as close to "zero defects" as possible. Goal --
Six Sigma has changed the DNA of GE — it is now the way we work • Customer satisfaction
— in everything we do and in every product we design.
• Company profit

“There is nothing new here”

!ACEENSWY Cpk
Cpk

YES WE CAN!
Steepestascent
Steepest ascent ???
SS aligns analytical tools for
• Six Sigma: How is it related to Cpk ?

troubleshooting and • What if Cpk is not satisfactory?

• How do you know Cpk is at its best?


process improvement
• What if process is out of control?

Statistical Process Control


“Thermometer watching”

• Describes existing
process behavior
• Monitors process
behavior
• Aims to maintain status
quo
• No process intervention
• Cannot judge if process
is performing at its best
• No process Improvement
objectives
Quality tools organized into a
INPUT OUTPUT Six Sigma framework:
x1
• Define
P
x2 y
• Measure
• Analyze
Output can be improved • Identify
through a change of input
• Control

MAIC MAIC
• MEASURE the frequency of defects • IMPROVE the process
1. Select critical-to-quality characteristics 7. Screen potential causes
2. Define performance standards 8. Discover variable relationship
3. Validate measurement systems 9. Establish operating tolerances

• ANALYZE when and where defects occur • CONTROL the process at improved level
4. Establish product capability 10. Validate measurement system
5. Define performance objectives 11. Determine process capability
6. Identify variation sources 12. Implement process controls
Six Sigma Problem-Solving Approach Six Sigma Problem-Solving Approach

Practical Problem Statistical Problem


Statistical tools lead to data-based solutions i.e. backed by

factual information or “voice of the process”,

with a view to satisfying the “voice of the customer”


Practical Solution Statistical Solution

How important is information? What Makes Six Sigma Work?


• Active top-down leadership – not “bottom up” or
originated by the “Quality Department”
• Structured approach (DMAIC) – not ad hoc efforts or
• How you gather, manage, and slogans of “Do it right the first time”
• Formal manpower training (MBB,BB,GB) – not
use information will determine incessant exhortation about “everybody’s business”
• Focus on customers and processes – not obsession
whether with quality certification or award criteria
• Rigorous application of statistical tools – not fancy
you win or lose. management theory or high profile campaigns
• Executed via defined projects – not nebulous concept of
“continuous improvement”
Bill Gates, Business @ The Speed of Thought,
• Progress marked by financial results – not passing
1999, p.3 audits, paperwork, book-keeping
What Lean Six Sigma is NOT
(Compared to Other Quality Initiatives)
What about Lean Six Sigma?
1. Framework D MAIC Not disjointed FMEA, SPC,…

2. Approach Top down Not QA, HR, QCC,…


….Implementing a powerful combination to
3. Application Manuf/trans Not just physical systems

reduce or eliminate 4. Focus Customer Not inward looking ISO/QS…

5. Execution Proj by proj Not “continuous”, CW,…


wastes (material and time) and variation
6. Result Bottomline Not ZD, DIRTFF, QisF,…

Lean Six Sigma Q. How is Lean Six Sigma different from


Work Improvement Teams (WITs)?
Is NOT quality and Six Sigma WITs
Top-down approach Bottom-up approach
competitiveness by Members are appointed by the Involvement is usually voluntary
champion or Steering Committee
Decree Certification
Addresses are assigned problems Team members choose work
Exhortation or opportunities for improvements process problems
Registration
Problem can involve various work Problem is usually specific to work
Willpower units unit
Audit
Due to its intensive data-driven Projects are generally less
Conformance approach, Six Sigma is better complex in nature and relate to the
Accreditation
applied to projects that are day-to-day running of the
strategic to the organisation organisation
Documentation Awards
Lean Six Sigma Orientations
Lean Six Sigma Projects
• Six Sigma: Effectiveness

• (cf. taxi-driver and priest - output)

• Lean: Efficiency

• (cf. two friends and tiger - competition)

Transition of Lean Six Sigma Why Service?

applications from the International Labor Organization (as early as 2007):

manufacturing sector to the for the first time in history, employment in

services (40%) exceeds that in agriculture

service sector (39.4%), and that in manufacturing (20.7%)


Why Service? The Word has indeed changed; for example

Examples–
• Before: Not enough information … DOE
• Now: Too much information … Data Mining
Republic of Korea (2008):

Two-thirds of gross domestic products are from the service sector


• Before: Should know what to store
• Now: Should know what to delete
Republic of India:(2007)

55% of gross domestic products are from the service sector • Before: Customers take the service we provide
• Now: We provide the service that customers
want

Is service relevant when


Examples
“The World is Flat”?
• Government
• Globalization…
• Education
• Outsourcing… • Healthcare
• Distributed operations… • Finance

- Only too a certain extent! • Information


• Entertainment
- Can hairdressing be outsourced?
• Hospitality
- Can courtesy be outsourced?
• Transportation
- Service can be an important differentiator
• (by Exclusion: non-agriculture/manufacturing)
Applications to Manufacturing and Service Sectors Applications to Manufacturing and Service Sectors

MANUFACTURING SERVICE MANUFACTURING SERVICE


• Product is tangible • No physical product
• CTQ – “Critical to Quality” • CTQ could be difficult to
as a measure of system define; also the provider and • Functionality constitutes • Perception could overwhelm
performance can be pre- the customer may have prime consideration functionality considerations
defined by the provider differences in what • Measure of characteristics • Measure of performance
(manufacturer) without constitutes the CTQ – or performance often well usually undefined or
much difficulty depending on perceptions defined arbitrarily defined
• Hard savings and soft • Savings to the customer • Quality can be technically • Quality often reflected by gap
savings from a completed could be highly variable;
defined and quantified in between subjective
project can be reasonably non-financial benefits could
measurable terms perception and expectation
objectively estimated outweigh financial ones

Applications to Manufacturing and Service Sectors Applications to Manufacturing and Service Sectors

MANUFACTURING SERVICE MANUFACTURING SERVICE


• Non-conformities (“defects”) • Output is often real-timed and/or
• Often in serial (mass) • Less likely in identical
may be rectified, with time lag transient and cannot be modified
production realization • Convergence of functionality • Convergence of activities more
mostly technology driven determined by customer needs
• Standardization is the norm • Standardization may not be
• Output can be accumulated, • Output may not be accumulated
and useful meaningful destroyed, distributed, further (“inventorized”), destroyed,
processed, or recalled transported, distributed, or recalled
• Highly physical raw- • Material transformation not
• Semi-finished products or • Usually outcome cannot be
material dependent necessarily present “parts” are common realized piece-meal
• Provider and consumer are • Provider and consumer are usually
• Little room for social or • Social and cultural bias a
usually independent and often present simultaneously with
cultural bias frequent feature unknown interactions
• After-sales service prevalent • Transaction typically is one-off
LSS in Service: Possibilities LSS in Service: Possibilities
• Leverage on technology (reduces error and • Win-win CTQ formulation
variation)
-- e.g. not always profit vs service or zero-sum
-- e.g. RFID; cash devices (cards); maximize IT in
record keeping and retrieval e.g. statements; paradigm; cut mindless model adulation (cf.
international credit system; common cell phone Toyota vs fragrance, Wal-Mart vs tailor)
charger
• Discard the unnecessary or unworthwhile
• Encourage co-production (for both the above;
turn inadvertent variation into non-CTQ) -- e.g. the “Persian Cat Syndrome” – protocols
-- e.g. self-service in banking transactions, in long- e.g. police checks for passport or PR
distance delivery tracking; in travel booking: self- applications; 0.01% vs 99.99%; forms for
service soft drinks; IKEA model; airline routing/ particulars (event registration; information on
flights/seats; airline check-in; non web activity
charges; e govt
immigration forms; surveys…)

LSS in Service: Possibilities


Major Types of Applications
• Think convergence (improve
speed and eliminate waste) Trouble-shooting
– e.g. tram~post; post office
transactions; also product function (Often customer driven)
convergence: cell “phone”
• Think outside the box; think
fundamental Improvement
– e.g. BKK SQ / Lufthansa business
lounge; the “Persian Cat Syndrome” (Often provider driven)
Characteristics of LSS Projects
Lean Six Sigma Projects in Service
Improvement • Project-by-project implementation (cf. control charts in SPC)
Low Profile High Profile
e.g. re-design; e.g. press statements
DFSS on plans or implementation • Preferably by teams, not by individuals
(press releases)
• A project should not be just of interest to, e.g. the Customer Service
Troubleshooting

Department, or the Marketing Department, or Corporate


High Profile Low Profile Communications Department
e.g. warranties, e.g. ex-gratia compensation;
recalls, statements out-of-court settlements • Each project should have the understanding and commitment of top
(fire-fighting…)
management before its launch

Manufacturing Service • Each project should be examined for chances of success by the

following criteria

Project Considerations The Initial Framework


Project selection and purpose • Organizations select Champions and Master
Methods used to choose the project
How project supports or aligns with organizational goals, performance
measures, and/or strategies
Black Belts
Identify potential stakeholder and ways how they may be impacted
• Champions and Master Black Belts are
Current situation analysis
Methods used to identify potential root causes of problems or opportunities trained in Lean Six Sigma methodologies; a
for improvement
Methods to collect and analyze information for the above deployment plan is developed and presented
Solution development by each business unit
Methods for reaching possible solutions and’or recommendations
Implementation and results • Champions and Master Black Belts identify
Methods of buy-in for implementation
Results to be expected the first “wave” of projects, and select Black
Team management Belts and cross-functional teams
Methods of selecting, involving and managing team members
Points to note before launching
The Established Framework Lean Six Sigma
• Companies, not individuals, make the decision to go for
• Master Black Belts receive additional training;
Lean Six Sigma
they are “trained to train” Black Belts and
• Lean Six Sigma is a culture, not a campaign – based on
others who will be applying LSS methodologies
teams, measurement, and process-oriented thinking
• Black Belts begin training; the first wave of
• Lean Six Sigma is not free – it takes starting resources
projects is launched
for personnel development and project execution
• Experienced Black Belts begin training Green
• Lean Six Sigma is not instant panacea – successful
Belts
companies take several years to prove the ROI

Development of Lean Six Sigma Projects –


Why are they useful?
Lean Six Sigma Manpower  Do we need to be prepared for greater price competition?

 Do we spend more money and time than we should on fire-fighting and


Effectiveness is not judged by: addressing customer complaints?

• Number of training hours  Is there a market opportunity for better customer satisfaction?

 Are we satisfied with the current rate of improvement?


• Number of people trained
 Do we have a common language and metrics for good services across
• Number of teams formed
the organization?
• Number of meetings held  Do we share enough of your best practices across the company?

• Number of projects done  Do we effectively measure our performance and customer satisfaction?

 Is there room for improvement in our collection and use of information?


What are the Key Objectives? Success Factors
• Cut wastes internally
• Sustained Senior Management’s Support
• Improve time to market for all products/services
• Lead the industry in key technologies/service • Competent and Committed BB
types • Workforce Committed to Learning
• Create world-class manufacturing/service
processes • Cooperative Environment
• Develop strategic supplier relationships • Suppliers Involvement and mprovement
• Provide best-in-class product and process quality • Sustained Focus on Results and Impact
• Develop strategic relationships with key
customers
The prerequisite for change is to have a critical
• Sustained returns to investors mass of people willing to make changes
• Become an employer of choice

Why Change Fails Making Change Succeed


Top barriers in major change programs Factors that helped the most successful companies
achieve their goals
 Functional boundaries 44%  Good communication 100%
 (Lack of) change skills 42%  Strong mandate by senior management 95%
 Middle management 38%  Setting up intermediate goals and deadlines 95%
 Long IT lead times 35%  Having an adaptive plan 91%
 Communication 34%  Having access to adequate resources 86%
 Competing resources 48%  Demonstrating urgency of change 86%
 Employee opposition (resistance) 33%  Setting up performance measures 81%
 Initiative fatigue 32%  Delivering early, tangible results (“quick wins”) 76%
 Unrealistic timetables 31%  Involving customers and suppliers early 62%
 Benchmarking performance vs. competitors 62%
Source: Price Waterhouse Coopers Source: Price Waterhouse Coopers
Launching Lean Six Sigma
Expertise
• Educate top management so that • Inform the top management how

In launching Lean Six Sigma, they understand how to work excellent Six Sigma is and how GE
with Six Sigma, not just why had saved $2 billion a year

what are the ways to succeed • Engage experts with solid • Use consultants with flashy
background presentations
and what are ways that may • Customize training with nature of • Use off-the-shelf material with other
company operations organization’s “success stories”
lead to failures? • Train key company personnel • Select those who can spare the time
• Train personnel who can • Train to meet “people development”
supervise change quota

Launching Lean Six Sigma Launching Lean Six Sigma


Deployment Leadership
• Start in a critical area where you • Start in many areas regardless of • Plan and complete all the • Initiate several activities and
have a good chance to succeed nature of problems
activities initiated; ensure buy-in leave the details to “trained
• Choose proper projects where • Choose projects where results are
of results personnel”
results are needed and not of top priority or not likely to be
• Lead, participate and effect • Stay in the office and refine the
recognized appreciated
changes “on the floor” pre-defined plan
• Integrate Six Sigma in everyday • Make Six Sigma into a high-profile

business campaign • Demand and communicate only • Busy only with activities, such as

• Emphasize cost reduction arising • Focus only on cost reduction itself verified results training, projects and PR
from quality improvement
No instant success… Lean Six Sigma Customer Impact
“… to achieve Six Sigma, an organization • When you start:
must endure extensive psychological – Customers feel good that you’re working to
improve … Customers are waiting to see the
changes. We have found that it takes
results
between three and five years for Six Sigma to • Soon:
become entrenched in even the most – Customers’ biggest issues are attacked and fixed
by Black Belts… Customers take notice
progressive organizations.”
• Future:
– Black Belts work to solve problems in customers’
Harry, M and Schroeder, R, Six Sigma - The Breakthrough factories as part of a “Full Service” supplier
Strategy Revolutionizing the World’s Top Corporations, New
York, NY, Doubleday, 2000, – Lean Six Sigma offers another clear differentiator

LSS not meant to be applied


in isolation

Vitamins
Furthermore… A systemic view of

the application of Lean Six Sigma

Carbohydrates Proteins
LSS not meant to be applied
A “LSS Company”?
in isolation
• To some extent LSS owes its vitality to the absence of certification
or accreditation schemes.
Lean Six Sigma knowledge
• Once there is such a certification scheme - like ISO9000, focus will
and applications
be more on the certification process rather than the application of
the tools themselves after attainment of certification
• Certification renders the sense of “having got there” (at least for the
next three years till the auditors come again!), of reaching the
finishing point, rather than what it should be – of starting the
improvement journey!
• One can already see such an effect in BB or MBB certification –
Hardware Capabilities: Software Capabilities:
Manufacturing capabilities Business Plans & Operations; there is more concern about personal achievements (and having
or products Expertise and Know-how an additional item in one’s résumé for the job market) than about
organizational benefits that could be realized with the acquisition of
professional expertise

What to avoid Directing Lean Six Sigma Projects and


Coaching Lean Six Sigma Personnel:
• The Persian Cat syndrome – built-in muda
• Forgetting “who’s the boss” – becoming the slave of
Changing Paradigms and Shaping Mindsets
MINITAB, rather than the master of it
• The Arabian Camel syndrome – set procedures (e.g.
the all-pervasive p-value) overwhelming practical
considerations
• Missing the forest for the tress – too many tools mask
the real issue: particularly with the certification
process
• The PDCA syndrome – reverse engineering for a
good story
Nature of Lean Six Sigma CUSTOMERS
Projects: The Six C’s • External Customers
• Internal Customers
Customers
• Direct Customers
Complexity
• Indirect Customers
Change
Constraints • Changing Customer Sets
Choice • Changing Customer Requirements
Cost-Effectiveness • Changing Values

Finally… A few words about the Statistics offers techniques of


Application of Statistics information -
• Collection
Statistical methodologies are particularly • Analysis
necessary and useful in Lean Six Sigma • Interpretation
projects because
Necessary for the
Statistics provides the right tools for • Investigation
dealing with variation and incomplete • Understanding
information in troubleshooting and • Management
process improvement studies
of Complex System Behavior
Statistical Thinking Is the typical professional ready
to use statistical tools?
Statistical thinking is a philosophy of learning and action
based on the following fundamental principles:
• All work occurs in a system of interconnected processes; • Matter vs information
• Variation exists in all processes; and
• Deterministic vs probabilistic
• Understanding and reducing variation are keys to
success • Deductive vs inductive
--- ASQ (1966) Glossary of Statistical Terms • Closed vs open

Is the typical professional ready Is the typical professional ready


to use statistical tools? to use statistical tools?
Matter vs information Deterministic vs probabilistic
• Accustomed to transformation and utilization of • Traditional view of engineering: precision and
energy, and arrangement of tangible hardware exactness as virtue
• Unfamiliar with information analysis and information • Tolerance or factor of safety resorted to as admission
flow (Note: confusion with IT) of inadequacy of knowledge
• Need to use data as a source of information & • Reality: Variation is inevitable in the 4 M’s of
knowledge, and medium for problem solving and engineering activities: Men, Machines, Materials,
decision making Methods
• Need to recognize that data does not necessary • Capability to describe, understand, control and
equal information manage variation is essential for working in real-
world situations
Is the typical professional ready Is the typical professional ready
to use statistical tools? to use statistical tools?
Deductive vs inductive Closed vs open
• Engineering is normally taught via deductive reasoning, • Engineers received their training mostly via study of
i.e. using general principles for problem solving in isolated elements or closed systems
specific applications
• Input-output relations are clearly spelt out
• Industrial situations are often the reverse: most studies
are empirical in nature for which available information is • Transfer functions describe systems with well-defined
not necessarily complete, reliable or even relevant boundaries
• Decisions depend more on interpretative skills than • Industrial processes often comprise complex, multi-
technical knowledge staged, interrelated processes; problem definition is
• It is important to understand and limit the weaknesses of essential for effective solution
decision making in the face of uncertainty

OTHER PARADIGM SHIFTS


The new four M’s
(The traditional four M’s:
Man, Machine, Material, Method)
• Product >> Process

• Micro-view >> Macro-view • Methodologies


• Mother Nature
• Single factor >> Multi-factor
• Macro Views
• Controlled changes >> Beyond control • Multi-functionality
Lean Six Sigma in a Lean Six Sigma and
Knowledge-Intensive Environment Knowledge Workers
• Knowledge work is characterized by variety, exception, novelty and even
uncertainty - not regularity and predictability
• Knowledge workers perform in ways different
• Productivity and value-added are the objective of knowledge management
from those in repetitive operations and
- not demonstration of degree of conformance administration, the targeted areas for Lean
Six Sigma applications
• It is impractical to set targets such as “X times better” or to calibrate
improvement in terms of sigma levels; many achievements in knowledge
work are intangible - not quantifiable by a common metric • Knowledge workers such as research
scientists, urban designers and artistic
• It is acquisition, creation and application of knowledge that would fuel the creators tend to detest or resist structured
competitiveness of a knowledge organization or knowledge-based
approaches, and enjoy the freedom of
economy - not a DMAIC doctrine
exploring the unknown

Lean Six Sigma and the Seeking the


Knowledge-Based Economy
competitive
edge
• As economy develops in response to technology Imagination
change and globalization, there is impetus for Vision
migration of manpower from the DMAIC oriented Passion
operational and administrative areas to Insight
knowledge-based activities and organizations Creativity
Curiosity
• Knowledge workers and knowledge societies Judgment
sustain themselves through continuous learning Perseverance
and self-renewal, with constant changes in Synergy
processes and process outputs Breakthrough
Innovation
Entrepreneurship

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