K T’s B S C : Becoming the Obvious Choice

1. K T’s B S C :Becoming the Obvious Choice

2. Contents Introduction of KT Balanced Score Card BSC of KT Evaluation Reference

3. 1. Introduction of KT • Established in 1981( Completely privatized in 2002 ) • The largest provider of high-speed internet, local, long-distance and international call services in Korea • Selected as top company in corporate governance excellence for Asia ( 2003 ) • Nominated BSC Hall of Fame (2003)

4. BSC :: Balanced Score Card • Definition • Management practice that attempts to complement drivers of past performance (financial measures) with the drivers of future performance, such as customer satisfaction, development of human and intellectual capital, and learning. • (by BusinessDictionary.com) PRIOR METHOD BSC MUCH MORE CUSTOMER-ORIENTED!! VIEW FROM Financial, Customer satisfaction, Internal business process. and Learning and Growth point ONLY FROM THE FINANCIAL VIEW POINT COMPREHENSIVE

5. BSC of KT – Background KT :: Come to a crisis • Because of the expansion of the wireless market, entry of new competitors are accelerated. • Rapid collapse of the fixed phone market • New business (Ex, Internet) •  Preemption of competitors • KT’s net income fall 1/8 compared to 3 years ago Why did KT select the BSC? • “See” was weak in the management cycle “Plan-Do-See” • Few of the officers knew about vision and strategy • Performance measurement and corporate strategy and objectives were not corresponded. • The indicators that are able to recognize specific activities should be presented • The existing performance management system would be limited in terms of linking between strategies and performance indicators and Monitoring.

6. BSC of KT – Building Process Cyber World Leader BSC Performance Measurement Beliefs and Core Values Responsible Management ABC Profitability Management Activity-Based Budgeting Multidimensional Profitability Analysis Insider trading / Replacement price ABB Planning and Control Forecasting and Planning Distribution of Budget Resources Business Management Account Code ERP/EDW/ICIS System KT :: Integrated Performance Management System Model

7. Institutional Aspects Changes and Administrative Aspects Goal Information System Aspects BSC of KT – Building Process • Executives and managers :: Active Interests and Participation • Established business practices • Enterprise & Departmental Business Strategy  Measurable Index • Monitoring Performance rate against objectives cycle • 3 Month  1 Month • ReformPeriod System (ERP, ABC, ICIS) •  accuracy, timeliness, suitability enhance

8. BSC of KT – Building Process KT :: The Promoting Procedure of BSC 6 Month (1998. 10.~ 1999. 4.) 7Month (1999. 5.~ 1999. 12.) 5Month (2000. 1.~ 2000. 6.) Phase 0 Phase 1 Phase 2 Pilot Perform Full-Scale Development Build System KT Members Survey • Assessment requirements review • Practical possibilities • Bench Marking • Organization of TFT Group and Ready • User Requirements Review • System Integration • Database Development • User Interface Development • Operating Stabilization Strategy Review Develop EnterpriseBSC Develop BSC for Employment and Business department

9. BSC of KT – Building Process KT Members Survey Problems Vision of KT • Recognition About Vision & Mission statement of KT •  Important to achieve company’s outcome • Only about 20% of the members of the company understand the vision • Long-term strategy : Lack of concreteness Communication about Strategy • Communication about the strategy is not performed clearly within the organization • Management goals and incentives are more impacted by the government policy than company • Long-term strategies are not properly reflected in business plan and annual budget of the item • Lack of publicity • Limited channels of information sharing • Instructions, rather than strategy • The department of promoting long-term business strategy is not clear

10. BSC of KT – Building Process BSC Project promoting strategy Cyber World Leader • BSC Promoting Strategy • Development of indicators that is connected to vision, strategy • 2. Timely Offering Performance information through BSC system • Building strategic management process of performance rate Vision of KT Focus Data and wireless business Strategy of KT Improve Performance rate of Project/Organization  Enterprise, Department, Wide Area of Telephone OfficeBSC)

11. BSC of KT - Characteristic Utilize leadership of manager for innovation • BSC development :Strategies, Overall Performances, Internal customers • Management’sobjectives + BSC  KPI •  Executive officer’s interests & participation Convert KT's strategic terms into practical terms Five Principle of BSC • Introduction of BSC system • Integrating data withEDW(enterprise data warehouse) • Providing information with consistent data, systematized data • Strategy map shows the relationship between each strategic goals • Generate KPI Redefine KT's strategies and organization • Relationship between overall strategy and KPI • Relationship between each departments • Relationship between upper class’ performance and lower class’ incentive Make KT's strategy into member's daily business • Creative communication • Increase employee’s understandability of overall strategy and BSC • Increase employee’s supportiveness Improve KT's strategy into continuous process

12. Finance Increasing High Speed Internet Income BSC of KT - Characteristic KT’s ADSL :: Cross-functional Strategy Map New ADSL Customer Customer Customized Services Contents Internal process Strategy Market ADSL facilities Optimization Supporting ADSLnetwork Service Quality Improvement Collaboration with Contents Producer Learning & Growth Expert Training Cross-functional Strategy Map of KT ADSLService

13. Critical KPI Introduction Stage Maturity Stage Growth Stage

14. EVALUATION FROM OUTSIDE Present : 11.78 BSC HALL OF FAME “ … They introduced BSC as a catalyst which provides their vision and strategies to the entire organization in 1999. …It went beyond our expectation…”

15. EVALUATION FROM INSIDE • Net Income • $3.2 Billion (1999) → $15.8 Billion(2002) • EVA Growth rate • -$3.8 Billion(1999) → $1.3 Billion(2002) • 5 million More Subscribers in 3 years • 3 years’ run of CVA Enhancement World Best Internet Service Provider Quantitative Assessment

16. How Well Do you Understand About The KT’s VISION & STRATEGY? Do You Think Your Daily Jobs areRelated to the Company’s Strategies? EVALUATION FROM INSIDE • KPI could be able to be used as a “Second Language” … * Internal Survey (1999. 09 / 2001. 11) Qualitative Assessment

17. Challenges to Sustainable Growth • KT SEM Unified Process FareManagement Order Management Marketing Business CUSTOMER SERVICE PLAN R & D FEEDBACK CommunicationNetwork Installation CommunicationNetwork Management SEE DO Vision /StrategyDevelopment Management Goal Establishment Financial Planning StrategyTranslation

18. FUTURE OF KT

19. Reference • BSC Institute (http://www.balancedscorecard.org/) • Business Dictionary (http://www.businessdictionary.com) • Wikipedia(Eng ver.) • Improve Your Performance “News” – David Wilsey, 2009, Balanced Scorecard Institute) • Strategy map (http://strategymap.com.au/) • The Balanced Scorecard - Measures that Drive Performance Robert S. Kaplan and David P. Norton. 1992, Jan-Feb, Harvard Business Review • https://www.bscol.com/bsc_online/technology/certified/ • http://www.12manage.com/methods_balancedscorecard_ko.html