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

Contents

Reference

Evaluation

BSC of KT

Balanced Score Card

Introduction of KT

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)

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)

ONLY FROM THEFINANCIAL VIEW POINT

VIEW FROMFinancial,Customer satisfaction,Internal business process. andLearning and Growth point

COMPREHENSIVECOMPREHENSIVE

PRIOR METHOD BSC

MUCH MOREMUCH MORECUSTOMER-ORIENTED!!CUSTOMER-ORIENTED!!

BSC of KT – Background

• 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

• “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.

Why did KT select the BSC?

KT :: Come to a crisis

BSC of KT – Building ProcessCyber World Leader

BSC Performance Measurement

Activity-Based

Budgeting

Multidimensional Profitability Analysis

Insider trading /

Replacement price

Forecasting and

Planning

Distribution of Budget

Resources

Business Management

ABC Profitability Management

ABB Planning and Control

Account Code

KT :: Integrated Performance Management System Model

BSC of KT – Building Process

GoalGoalChanges and Administrative Aspects

Institutional Aspects

Information System Aspects

BSC of KT – Building Process

Pilot

Phase 0

Perform Full-Scale Development

Phase 1

Build System

Phase 2

• Assessment requirements review

• Practical possibilities

• Bench Marking

• Organization of TFT Group and Ready

Strategy Review

Develop Enterprise BSC

Develop BSC for Employment and Business department

• User Requirements Review

• System Integration

• Database Development

• User Interface Development

• Operating Stabilization

KT :: The Promoting Procedure of BSC

KT Members Survey

BSC of KT – Building ProcessKT Members SurveyKT Members Survey

• 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 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

Vision of KT

Communication about Strategy

• Lack of publicity

• Limited channels of information sharing

• Instructions, rather than strategy

• The department of promoting long-term business strategy is not clear

BSC of KT – Building ProcessBSC Project promoting strategyBSC Project promoting strategy

Cyber World Leader

Focus Data and wireless business

BSC Promoting Strategy

1.Development of indicators that is connected to vision, strategy

2. Timely Offering Performance information through BSC system

3.Building strategic management process of performance rate

Vision of KT

Strategy of KT

BSC of KT - Characteristic

Utilize leadership of manager for innovation

Convert KT's strategic terms into practical terms

Redefine KT's strategies and organization

Make KT's strategy into member's daily business

Improve KT's strategy into continuous process

FiveFivePrinciple ofPrinciple of

BSCBSC• Creative communication

• Increase employee’s understandability of overall strategy and BSC

• Increase employee’s supportiveness

• BSC development : Strategies, Overall Performances, Internal customers

• Management’s objectives + BSC KPI Executive officer’s interests & participation

• Relationship between overall strategy and KPI • Relationship between each departments

• Relationship between upper class’ performance and lower class’ incentive

• Introduction of BSC system

• Integrating data with EDW(enterprise data warehouse)

• Providing information with consistent data, systematized data

• Strategy map shows the relationship between each strategic goals

• Generate KPI

Cross-functional Strategy Map of KT ADSLCross-functional Strategy Map of KT ADSL ServiceService

BSC of KT - CharacteristicKT’s ADSL :: Cross-functional Strategy Map KT’s ADSL :: Cross-functional Strategy Map

Critical KPI

IntroductionStage

Growth Stage

Maturity Stage

EVALUATION FROM OUTSIDE

BSC HALL OF FAMEBSC 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…”Present :

11.78

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 AssessmentQuantitative Assessment

EVALUATION FROM INSIDE

Qualitative AssessmentQualitative Assessment• KPI could be able to be used as a “Second Language” …

How Well Do you UnderstandHow Well Do you Understand About The KT’s VISION & STRATEGYAbout The KT’s VISION & STRATEGY?

* Internal Survey (1999. 09 / 2001. 11)

Challenges to Sustainable Growth

DODO

SEESEE

PLAN

PLAN

FEEDBACFEEDBACKK

Vision/Strategy

Development

ManagementGoal

EstablishmentStrategy

TranslationFinancialPlanning

KT SEM Unified ProcessKT SEM Unified Process

Marketing

BusinessOrder

Management

Fare

Management

CUSTOMER

CUSTOMER

SERVICESERVICE

Communication

Network Installation

Communication

Network Management

R & DR & D

FUTURE OF KT

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