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Designing the System

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In the scrumguide, under "How will the chosen work get done" (page 9), it is explained that -

The development team usually starts by "

a) designing the system
b) and the work needed to convert the product backlog into a working product increment.

Can experts help me understand

a) what does the author mean by "designing the system"?
b) and what "WORK" is referred to to convert the product backlog into a working product increment?

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