K T’s B S C :
Becoming the Obvious Choice
Contents
Introduction of KT
Balanced Score Card
BSC of KT
Evaluation
Reference
1. Introduction of KT
 Established in 1981
( Completely privatized in 2002 )
 The largest provider of high-speed internet, local, longdistance 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)
PRIOR METHOD
ONLY FROM THE
FINANCIAL VIEW POINT
COMPREHENSIVE
BSC
VIEW FROM
Financial,
Customer satisfaction,
InternalMUCH
business
process. and
MORE
Learning
and Growth point
CUSTOMER-ORIENTED!!
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
• KT’s net income fall 1/8 compared to
3 years ago
• New business (Ex, Internet)
 Preemption of competitors
Why did KT select the BSC?
• “See” was weak in the management cycle “PlanDo-See”
• Few of the officers knew about vision and strategy
• The indicators that are able to
recognize specific activities should
be presented
• Performance measurement and corporate strategy
and objectives were not corresponded.
• The existing performance management system would be limited in terms of
linking between strategies and performance indicators and Monitoring.
BSC of KT – Building Process
Cyber World Leader
BSC Performance Measurement
ABC Profitability Management
Beliefs and Core
Values
ActivityBased
Budgeting
Multidimensional
Profitability
Analysis
Insider trading
/ Replacement
price
Responsible
Management
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
BSC of KT – Building Process
• Executives and managers :: Active Interests and Participation
• Established business practices
Institutional Aspects
•Enterprise & Departmental Business Strategy  Measurable Index
Changes and
Administrative• Monitoring Performance rate against objectives cycle
3 Month  Goal
1 Month
Aspects
Information System
Aspects
• Reform Period System (ERP, ABC, ICIS)
 accuracy, timeliness, suitability enhance
BSC of KT – Building Process
KT :: The Promoting Procedure of BSC
6 Month (1998. 10.~ 1999. 4.)
Phase 0
Pilot
• Assessment
requirements review
7 Month (1999. 5.~ 1999. 12.)
Phase 1
Phase 2
Perform Full-Scale Development
KT Members Survey
Strategy Review
• Practical possibilities
• Bench Marking
5 Month (2000. 1.~ 2000. 6.)
Build System
• User Requirements Review
• System Integration
• Database Development
Develop Enterprise BSC
• User Interface Development
• Organization of TFT
Group and Ready
• Operating Stabilization
Develop BSC for
Employment and
Business department
BSC of KT – Building Process
KT Members Survey
Vision of KT
• Recognition About Vision & Mission statement
of KT
 Important to achieve company’s outcome
Problems
• Long-term strategy : Lack of concreteness
• Only about 20% of the members of the
company understand the vision
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
BSC of KT – Building Process
BSC Project promoting strategy
BSC Promoting Strategy
Cyber
Vision of KT
1.Development of indicators thatWorld
is connected to vision, strategy
Leader
2.
Timely Offering Performance information through BSC
system
Strategy of KT
Focus Data and wireless
3.Building strategic management
process of performance rate
business
Improve Performance rate of
Project/Organization
 Enterprise, Department, Wide Area of
Telephone Office BSC)
BSC of KT - Characteristic
Utilize leadership of manager for innovation
Convert KT's strategic
terms
into practical terms
• BSC development : Strategies, Overall Performances,
Internal
customers
Five
• Introduction
of objectives
BSC system
• Management’s
+ BSC  KPI
•
Strategy
map
shows
the
relationship
 Executive officer’s
interests
& participation
Principle
of between each strategic goals
• Integrating
data with EDW(enterprise data warehouse)
• Generate KPI
BSC
• Relationship between overall strategy and KPI
Redefine KT's strategies and organization
KT's
strategy into member's
• Providing information with consistentMake
data,
systematized
data daily business
• Relationship between each departments
• Creative communication
Improve KT's strategy into continuous process
• Relationship between upper class’ performance and lower class’ incentive
• Increase employee’s understandability of overall strategy and BSC
• Increase employee’s supportiveness
BSC of KT - Characteristic
KT’s ADSL :: Cross-functional Strategy Map
Increasing
High Speed Internet
Income
Finance
New ADSL
Customer
Customer
Customized
Services
Contents
Internal
process
Strategy
Market
Collaboration
with Contents
Producer
Learning
& Growth
ADSL facilities
Optimization
Supporting
ADSL network
Expert
Training
Cross-functional Strategy Map of KT ADSL Service
Service
Quality
Improvement
Critical KPI
8000000
Introduction
Stage
Number of customers
7000000
6000000
Maturity Stage
Growth
Stage
5000000
4000000
3000000
2000000
1000000
0
1997
Year
1999
2001
Introduction Stage
Period
Strategy
Critical KPI
2003
2005
Growth Stage
2007
2009
Maturity Stage
1997.3~2000.3
2000.4~2001.12
2002.1~
Market realization
Increasing market share
Customer retention
Strengthen loyalty
New products development
New customers
Brand awareness
Service quality index
Investment efficiency
Customer retention rate
ARPU
Service quality improvement
EVALUATION FROM OUTSIDE
BSC HALL OF FAME
Before and after the introduction of BSC
14
12
10
8
8.7
9.6
“ … They
introduced
BSC as a catalyst
(단위 :조
원)
which 11.7
provides their vision and strategies
11.5
10.3 to the entire organization in 1999.
Present :
…It went beyond our expectation…”
11.78
Gross sale
Revenue
6
130000
25000
4
120000
20000
110000
2
100000
0
90000
Net income
Gross Profit
0.26 0.38
1
1.1
2
1998 1999 2000 2001 2002
80000
15000
10000
5000
0
1998 1999 2000 2001 2002 2003 2004 2008
1998 1999 2000 2001 2002 2003 2004 2008
EVALUATION FROM INSIDE
Quantitative Assessment
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
EVALUATION FROM INSIDE
Qualitative Assessment
• KPI could be able to be used as a “Second Language” …
How Well Do you Understand
About The KT’s VISION & STRATEGY?
Do You Think Your Daily Jobs are
Related to the Company’s Strategies?
Certainly
Yes
No
1999
2001
* Internal Survey (1999. 09 / 2001. 11)
Challenges to Sustainable Growth
 KT SEM Unified Process
Vision
Management
* Monitoring
Information
/Strategy
Goal
- Daily
Development
Establishment
- Strategic Performance
Strategy
Translation
R&D
Communication
Communication
- Business
Environment
Analysis
Network
- RiskNetwork
Installation Management
Financial
Planning
FEEDBACK
• Communication
- Poor Indicators’ Career Concern
DO
- Strategy Executing Community
- Assemblies
- CEO’s Instructions
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