A Balanced Scorecard Hall of Fame™ Profile

E-Land Group

HARVARD BUSINESS
SCHOOL PUBLISHING
What is the Balanced Scorecard Hall of Fame?
The Balanced Scorecard Hall of Fame for Executing Strategy™, administered by Balanced
Scorecard Collaborative, recognizes organizations that have achieved breakthrough
performance largely as a result of applying one or more of the five principles of the
Strategy-Focused Organization. These principles, formulated by Balanced Scorecard
creators Robert S. Kaplan and David P. Norton, are described in detail in their book
The Strategy-Focused Organization: How Balanced Scorecard Companies Thrive in the
New Business Environment (Harvard Business School Press, 2001). BSC Hall of Fame
members are personally selected by Drs. Kaplan and Norton.
To learn more about Hall of Fame selection criteria and Hall of Fame members,
visit bscol.com.

The Five Principles of the Strategy-Focused Organization

Each of the five principles of the Strategy-Focused Organization include specific
management best practices that contribute to the achievement of breakthrough
results. These best practices—validated through ongoing research with Hall of Fame
organizations and hundreds of other users of the Balanced Scorecard around the world—
must be embedded in any organization that wants to make strategy execution a core
competency.

Principle #1. Mobilize Change Through Executive Leadership

Executive leadership, driven by a need for change, supports the drive to
establish a new way of managing based on a performance-oriented culture.

Principle #2. Translate the Strategy into Operational Terms

The Balanced Scorecard is used to translate the strategy into a language
that everyone understands.

Principle #3. Align the Organization to the Strategy

The scorecard is used to cascade the strategy to all parts of the
organization and align resources needed to accomplish the strategy.

Principle #4. Motivate to Make Strategy Everyone’s Job

The reward and recognition system is used to align
individual behavior with performance objectives called for
by the strategy.

Principle #5. Govern to Make Strategy a Continual Process

Strategy execution is linked to the budget, and a reporting system
based on scorecard measures is used to provide feedback on
strategic performance.
Balanced Scorecard Hall of Fame Profile: E-Land Group
Table of Contents
Profile ......................................................................................1
Key Results ............................................................................7
Takeaways ..............................................................................7
SFO Spotlight (best practices) ........................................8
Strategy Map ......................................................................11
To Learn More ....................................................................12
ABOUT E-Land Group
Industry: Primarily apparel, but also general merchan-
dising stores, discount stores, department stores, hotels,
furniture, restaurants, school and church construction,
and e-business consulting
Originally a small clothing store in Seoul, E-Land Group
is today a retailing giant with worldwide sales, as well as
a diversified enterprise. Founded in 1980, the company
pioneered the franchise concept in Korean retailing. Of
its eight strategic business units, four are clothing and
retail concerns and a fifth serves the clothing franchise
operations.
E-Land’s early ascent and, later, stellar rise in the
aftermath of the 1997 Southeast Asia currency crisis
are a testament to the company’s strategic discipline and
rigorous management practices. Its structure and
processes—and empowerment of the employee as
front-line knowledge agent—enable it to keenly
monitor changing customer tastes and marketplace
trends and to adapt its strategy with agility.
Net revenues: 2.07 trillion Korean won (KRW)
(approximately $2 billion)*
Retail outlets: 404 company-owned;
2,700 franchisee-owned
Personnel: 4,000
Inducted into the Balanced Scorecard Hall of Fame:
2004
* Based on the July 14, 2005 exchange rate, where 1,031 KRW = 1 USD
For South Korea’s E-Land Group, the late 1990s
Southeast Asian financial crisis represented a
critical turning point. While other companies
failed or faltered, the clothing manufacturer/retailer
dedicated itself to sharpening its competitive strengths
with a strategy based on operational excellence and
innovation. With the Balanced Scorecard as its guiding
framework and a world-class knowledge management
system, E-Land today stands as a striking example of
the power of employees in successful strategy execution.
Seoul, South Korea–based E-Land transformed itself
from a small clothing store to a billion-dollar retail
giant using a constellation of forces: a knack for
identifying market niches, design development, and
low-priced production, along with a talent for cultivating
corporate synergies. Founded in 1980, E-Land pioneered
the franchise concept in Korean retailing. Today, E-Land
Group’s eight strategic business units (SBUs) include
the following:
• E-Land Co., Ltd. (adult casual wear; 810 stores)
• E-Land World Co., Ltd. (children’s clothing and
underwear; 1,504 stores)
• 2001 Outlet Co., Ltd. (the only apparel discount
department store in Korea; comprises six outlets
and one hotel)
• EL International Co., Ltd. (accessories, ladies’
apparel, casual clothing, and food; 360 stores)
• Lead Co., Ltd. (interior design, mainly of
E-Land’s franchise stores)
• E-Land Systems Co., Ltd. (IT solutions and
e-business consulting)
• Francia Co., Ltd. (furniture; 90 stores)
• E-Land Development Co., Ltd. (construction
specializing in schools and churches)
But E-Land’s dizzying ascent stalled in 1997 with
the Southeast Asian financial crisis. The catastrophe
was precipitated when the South Korean company
Hanbo Steel collapsed with $6 billion in debts. Banks
throughout Asia suffered massive losses owing to
nonpayment of loans, which in turn spurred the rapid
and sharp devaluation of regional currencies—driving
many organizations into bankruptcy.
Like other regional organizations left standing, E-Land
had to reappraise and refocus its strategic positioning.
To reactivate—and sustain—its previous success,
company executives decided to draw on E-Land’s
1 © 2005 by Harvard Business School Publishing and Balanced Scorecard Collaborative, a Palladium company
Balanced Scorecard Hall of Fame Profile: E-Land Group
proven strengths in productivity and innovation.
They committed E-Land to a strategy of operational
excellence coupled with world-class innovation. They
also knew they had to strengthen the corporation’s
strategic management and organizational learning
processes. CEO, Chairman, and founder Park Sung-soo
identified the BSC as just the methodology to support
this ambitious transformation. And according to
Chief Knowledge Officer (CKO) Chang Kwang-kyeu,
“There was a firm conviction that the BSC would
make a substantial contribution to building a process
of organizational learning within our workforce.”
The pilot programs’ success demon-
strated the critical importance
of having BSC champions—catalysts
for wider employee buy-in—within each
unit. It also showed the wisdom of testing
a new methodology on a small scale.
Underlying the new strategic vision was Park’s deep-
seated belief in the employee’s role in determining
organizational success. Employees, he maintains,
want to succeed. And when they’re clearly informed
about the company’s objectives, they are motivated to
excel. From this conviction sprang E-Land’s strategic
emphasis on human and information capital, an
emphasis that has delivered spectacular performance—
notably, a thirtyfold increase in net profit from 1998
to 2004.
Trying the Scorecard on for Size
E-Land piloted the BSC in 1998 at E-Land Co., Ltd.,
its oldest casual-clothing unit. Senior executives,
expecting resistance from unit executives who were
busy recovering from the currency crisis, saw a pilot
program as the only way to secure unit leaders’ buy-in.
An in-house task force from Group headquarters,
self-taught in the BSC, facilitated the program, with
the active involvement of the unit head. The unit
developed a strategy map featuring the four traditional
perspectives, which contained objectives such as
“Easy access to information” and “Acquire core
knowledge and share information” (in the learning
and growth perspective); “Shorten production
lead-time” and “Build nice shopping environment”
(internal process perspective); “Positive buying
experience” and “Good brand image” (customer
perspective); and “Corporate value improvement”
and “Brand value improvement” (financial perspective).
Within one year, E-Land, Ltd. had doubled its
productivity. A second pilot program, at Roem
(an SBU within EL International Co., Ltd. focusing
on ladies’ casual wear and jewelry), yielded a 50%
productivity increase in its first year. Roem’s strategy
map also emphasized knowledge sharing and contin-
uous learning in its learning and growth perspective.
Its remaining perspectives contained such objectives
as “Low material cost” and “Store display management”
(internal process); “Satisfied customer” and “Good
brand image” (customer); and “Improving profitability”
and “Improving capital productivity” (financial).
During the pilots, task force members guided SBU
leaders in developing, implementing, and managing
their own BSCs. The pilot programs’ success
demonstrated the critical importance of having BSC
champions—catalysts for wider employee buy-in—
within each unit. It also showed the wisdom of testing
a new methodology on a small scale. Manager Kim
Kwang-rae, who led the Roem SBU and served as
the BSC change agent during the pilot program,
likens the scorecard methodology to “great medicine.”
As with an experimental drug or treatment, Kim
explains, the piloting of the BSC verified the
“medicine’s” potential value, its “fit for the body
type,” and the proper application to “overcome the
[ailment and] regain health.” Both E-Land, Ltd. and
Roem rewarded their employees with performance-
based bonuses for exceeding targets during the pilot.
The two pilot programs also opened doors for high-
potential employees to demonstrate their strategic
thinking and engineer valuable process improvements—
and earn valuable recognition in the process.
(See “Driving Sales Revenue at Roem,” p. 5, for
one example.)
Communicating Strategy to the Workforce
E-Land has established a communication program
to ensure that all employees remain aware of and
fully understand the organization’s strategic priorities.
At the crux of this program is the monthly strategy
review conducted by teams and business units. At
these gatherings, managers and employees assess
performance on strategic objectives, amend objectives
and initiatives if necessary, and share knowledge
gained over the previous month. They also present
after-action reviews of completed initiatives—analyzing
the key factors in both successful and failed efforts,
and developing new plans for the following months.
2 © 2005 by Harvard Business School Publishing and Balanced Scorecard Collaborative, a Palladium company
Balanced Scorecard Hall of Fame Profile: E-Land Group
A Performance-Oriented Culture
In 2001, the E-Land Group rolled out the BSC to
its remaining six units. Corporate implemented its
own BSC in 2002. The BSC proved to be “the turning
point” in advancing E-Land toward a performance-
oriented organizational culture, says E-Land BSC
Program Manager Kim Gyo-yeon. The company
linked incentive compensation to the BSC from the
start, though developing individual targets proved
painstaking. Executives needed time to define targets
that were neither too low nor too high. They also
wanted to ensure that nonfinancial indicators in
particular were fair across SBUs, given the units’ relative
variation in market position and profit-loss results.
Though the employees who took part in the two
pilot programs earned performance-based bonuses
from surplus profits, E-Land did not establish a formal
incentive compensation program based on individual
contributions until 2002. As CKO Chang notes, waiting
until 2002 enabled executives to ensure that “we
were confident that each BSC contained the right
objectives and measures and that we were accurately
weighting the value of each nonfinancial measure in
driving financial outcomes.” Ultimately, the incentive
compensation system hinged on a bonus fund allotted
to each SBU based on its financial and nonfinancial
performance—from which bonuses were distributed
to individual employees based on their own
performance.
Executives also knew that employee and organiza-
tional objectives had to be linked—and organizational
performance made transparent—to the company’s
then 2,300 employees. (Forty-one percent of E-Land’s
workforce is devoted to sales and sales management;
another 21% is in design and development; and 21%
fills clerical and administrative positions.) Employee
performance had to be equally transparent. A prime
example: early on, some employees were wary of
the “value-added employee” measure, which tracked
employee unit productivity. But once they saw
these actual figures alongside some of the company’s
negative financials, they understood the reason for
budget cutbacks—and perceived the direct connection
between their efforts and improved performance.
Equally important, they shared the same sense of
urgency for change that managers were feeling.
The Knowledge Management/Strategy Connection
Knowledge management formed the cornerstone
of E-Land Group’s operational excellence strategy.
Thus the CKO’s team (which includes the in-house
Driving Sales Revenue at Roem
In late 2000, E-Land’s Roem unit renovated 100 stores in
just eight months, with an eye toward revitalizing the
brand. However, though brand awareness did increase,
actual sales growth fell short of expectations—spawning
concern among investors and store owners. The company
challenged managers to identify strategies for doubling
monthly sales revenues from 50 million to 100 million
KRW. Many managers considered this objective impos-
sible, given the small size of most stores’ sales floors
and the brief retailing experience of many employees.
Primed for the challenge, Chung Soo-jung, a store
manager, tackled the problem by first defining the
factors that generate sales revenue. She calculated that
sales growth depended on the number of customers
entering a store, their rate of purchase, the unit prices
of the products they bought, and their rate of repeat
purchases. By personally observing shoppers, she then
learned that, on average, 170 people visited her store
every day. Thirty-five percent of them bought some-
thing, at an average purchase price of 40,000 KRW.
And 5% of them made repeat purchases.
Chung next set out to increase each of these factors—
launching initiatives that drew additional window shop-
pers into her store and that inspired them to buy more
once they were in the store. But because she was limit-
ed by the store’s size, she focused her efforts on raising
customers’ repeat purchase rate. Her results proved
remarkable: sales in the first half of 2001 were 202%
higher than the same period in the previous year. And
by November 2001, sales volume had reached
20 million KRW—double the goal the company had set.
According to Roem’s CEO Oh Sang-heun, Chung’s
success demonstrated a “can-do” spirit to other store
managers who blamed flat sales on the current economic
downturn and delivered only lukewarm performance.
It also showed the power of effective cause-and-effect
thinking—and of a clear performance objective in
motivating people to excel.
Chung’s success formula has been acknowledged as
a best practice in E-Land’s apparel marketing and has
been benchmarked by many other company affiliates.
In addition, she won the “Most Outstanding Person”
award at E-Land’s 2001 Knowledge Festival, and was
promoted to the officer position of brand manager at
Roem the following year.
3 © 2005 by Harvard Business School Publishing and Balanced Scorecard Collaborative, a Palladium company
Balanced Scorecard Hall of Fame Profile: E-Land Group
BSC consultants) created an integrated knowledge
management/performance management infrastructure.
Key components included tools and processes for
capturing and sharing best practices and lessons
learned—specifically, an online knowledge management
system (KMS) that is fully integrated with E-Land’s
BSC. Software for automating the scorecard was
initially developed in-house in early 1999, and was
“We often find that the best practices
created by one team had previously
been discarded as impossible by others.
This is proving to be a great way to
motivate employees to stretch their
thinking, which is the cornerstone of
the innovation strand of our corporate
strategy.”
–CKO Chang Kwang-kyeu
based on an online analytical processing (OLAP)
tool that allowed analysis of performance at multiple
levels in the organization. Since then, two of E-Land’s
business units have automated their BSCs through a
certified vendor’s application.
As another step toward managing knowledge, a Chief
Strategy Officer (CSO) communicates the company’s
vision, mission, and strategy to the SBUs. He also
oversees all monthly BSC review meetings. In the
Group-level monthly review—an intensive, two-day
event at which participants gather at 6:30 in the
morning and push on until 11:00 at night—the CEO,
CSO, and CKO receive strategy updates from SBU
heads, assess strategic objectives and measures, and
reevaluate the link between employee and corporate-
level objectives. E-Land also makes the knowledge
capital/value creation connection in other ways than
through its CSO and CKO roles. Every year, business
leaders use BSC indicators to prepare a Knowledge
Asset Monitor (KAM), an assessment of each unit’s
process infrastructure and competencies. They then
use this assessment to set mid- to long-range corporate
strategy. Based on the work of knowledge manage-
ment thought leader Karl Erik Sveiby, a KAM enables
organizations to evaluate their external and internal
intangible assets—such as customer and supplier
relationships, business processes, and managerial
competencies.1
Celebrating and Rewarding Knowledge
In addition to working with the KAMs generated
at Group level, employees participate in corporate
and SBU evaluation meetings to review actions and
initiatives and debrief on outcomes, both successful
and failed. Lessons learned are presented at the
company’s semiannual Knowledge Festival if they
meet following criteria:
• The new knowledge had to be applied on the
work site.
• Its application had to generate a tangible result.
• The discoverer must provide sufficient information
for others to use the knowledge at their own
work sites.
• The knowledge must be able to help enhance the
company’s productivity within the next two years.
Individuals and teams responsible for exceptional
discoveries are known as “knowledge capitalists”
and receive the E-Land Knowledge Award, which
includes a financial reward and a promotion.
Chang maintains that the Knowledge Festival and
Knowledge Award send a powerful message to the
entire workforce: that the company prizes the contri-
bution of mission-critical knowledge by individuals
and teams, and that it prioritizes the sharing of best
practices across the organization. Moreover, he says,
“we often find that the best practices created by one
team had previously been discarded as impossible
by others. This is proving to be a great way to motivate
employees to stretch their thinking, which is the
cornerstone of the innovation strand of our corporate
strategy.”
A Tale of Lingerie Display:
Knowledge Management in Action
The innovative thinking of Kang Shin-geun, a
production manager in E-Land’s intimate apparel
unit, is one example of the power of knowledge
management at the company. The business unit
had been using window displays (in both company-
owned and franchise stores) to spur female shoppers’
interest in lingerie sets. However, the upper and
lower components of these sets were made of
different materials and were provided by different
suppliers, so components for a single set of lingerie
were sent separately from the factories to E-Land’s
warehouses. If one component arrived before the
other, the stores had to wait for delivery of the other
before they could display the entire product as
planned. Result? Lost selling opportunities.
4 © 2005 by Harvard Business School Publishing and Balanced Scorecard Collaborative, a Palladium company
Balanced Scorecard Hall of Fame Profile: E-Land Group
To address this problem, executives challenged the
unit to improve the warehousing of product sets. The
company defined a metric known as “set warehousing
rate”—which tracks the on-time arrival rate of set
products (those that have several components made
by different suppliers) from the factory to the ware-
house. “Set warehousing rate” is the number of
sets delivered on time divided by the number of
all sets designed in that season.
To improve performance on this important metric,
Kang discovered and removed a key barrier to set
warehousing: inadequate communication among
manufacturing plants. He encouraged plant managers
to regularly inform one another of their jobs’ status,
so they could better coordinate the warehousing of
complete sets. The unit’s sales ballooned 33% in the
next year, and the set warehousing rate rose from a
dismal 11% to 56%. Kang won the E-Land Knowledge
Award and is recognized as an expert on the use of
Goldratt’s theory of constraint to remove barriers to
progress.2
Knowledge Trees and Ad Hoc Workshops
The “knowledge tree”—a template used at every
level within E-Land—is another useful tool for linking
knowledge management to strategy. The knowledge
tree aligns objectives, initiatives, and action plans to
the organization’s strategic objectives, and includes
targets and schedules. Every employee’s action plan
is entered into the KMS, which everyone can access.
Action plans include descriptions of employees’ new
experiences that created valuable new knowledge
that can be shared across the company. Executives
scan the KMS each week, discussing new learnings at
their weekly off-sites and identifying up-and-coming
talent based on the information found in the action
plans. Employees, knowing their contributions to best
practices are visible to top management, feel even
more motivated.
As another element in its KMS, E-Land created its
off-the-job meetings (OJM) program. Through this
initiative, managers can request that ad hoc workshops
be convened to tackle specific tasks or problems
that prove difficult to address in the workplace or
that require intra-team or cross-functional sharing
of knowledge. Established in 1998, OJM has proven
indispensable in enabling E-Land’s managers to
execute the company’s strategy.
Continuous Feedback, Evolving Strategy
Retailing’s volatility demands that strategy be evaluated
and, if necessary, refreshed regularly. Thus, with the
guidance of the CSO and CKO, executives annually
conduct a comprehensive assessment of corporate
and SBU strategies and the scorecard overall, using
this eight-stage process:
1. Analyze research data on changes in market dynam-
ics and customer requirements. For example, in the
children’s wear market, the customer value proposition
was changed from “low price” to “high quality” and
“comfortable store environment.”
2. Clarify the strategy and prepare two- to three-year
strategic scenarios. Scenarios for each year may
emphasize different high-level objectives, such as
“Improving productivity,” “Enhancing profitability,”
or “Growing sales 20%.” These objectives, in turn,
are backed (respectively) by strategies such as
“Productivity management through measurement
repositioning,” “System-improving incentives,” and
“Expanding the importing route.”
3. Assess SBU strategies and scorecards to confirm
alignment with corporate strategy. E-Land conducts
a rigorous, structured three-month process each year
to assess that each SBU’s (or brand’s) strategy is up
to date and still conforms to the overall corporate
strategic direction. First, the CSO systematically examines
each aspect of SBU strategy; then each SBU executive
repeats the process, using the strategy map and strategy
knowledge tree. Next, executives perform horizon
analysis and brand life cycle analysis on each brand.
Once each brand is strategically positioned (or repo-
sitioned), E-Land can align SBU strategy and corporate
strategy.
4. Review/amend the strategy map and metrics. After
the analyses, executives make whatever adjustments
are needed to targets (for example, if a brand is
beginning to mature, the sales growth targets would
likely be lowered.) E-Land sets standardized values
each year, which it presents as a guideline to all SBUs.
5. Develop methods for measuring newly added
objectives. For example, for the internal process
objective “Improve shop image,” the ROEM brand
BSC initially used “number of shop interiors remod-
eled.” After 2000, this measure was discontinued and
replaced with “number of stores with more than 100
million KRW in monthly sales” and “number of new
shops.”
6. Help SBU leaders establish team and individual
objectives. Unit managers conduct one-on-one
interviews with individual employees to review
objectives and develop plans and new targets
for achieving them.
5 © 2005 by Harvard Business School Publishing and Balanced Scorecard Collaborative, a Palladium company
Balanced Scorecard Hall of Fame Profile: E-Land Group
7. Have individual employees record their knowledge
trees and action plans in the KMS. Transparency is
key, and E-Land executives believe the ability to see
everyone’s objectives is both a learning tool and
motivating force.
8. Determine who will manage strategic initiatives
launched at the enterprise or division level, then
launch projects. SBU executives, using input from
their human resources manager, choose managers
to oversee strategic initiatives. Expertise and commit-
ment are the most important factors in the choice.
Indeed, through the use of this process, E-Land’s
strategic focus has shifted—from operational
excellence (1998 to 2001) to, more recently,
customer value. (As part of this shift in focus,
the company changed 30% to 40% of its KPIs
since adopting the BSC.)
In particular, with brand equity now providing its
primary competitive advantage, E-Land wants to better
understand customers’ perceptions of its brands—and
respond proactively. In 2003, E-Land’s acquisition of
numerous apparel brands (Deco Co., Ltd., New Core
Co., Ltd., El Den, New Golden, and Caps) made brand
management more crucial than ever. Accordingly, the
company has regularly conducted broad customer
and market research to refine and revise strategy.
Knowledge Management Pays Off
E-Land’s integration of knowledge and strategy
management has paid big dividends. From 1998
to 2004, for example, Group revenues have more
than doubled—from 550 billion KRW (about $US
533.5 million) in 1998 to 2.07 trillion KRW (about
$2 billion) in 2004.3 During those same years, net
profit after taxes skyrocketed from approximately
$8.6 million in 1998 to $276.4 million in 2004.
Meanwhile, the company’s employee satisfaction
index rose from 5.5 (on a 1 to 10 scale) in 1999 to
7.4 in 2004. Since 2002, E-Land has also garnered a
long list of honors from publications, trade groups,
and the government. The following list says it all:
2000: Korea Ratings selects E-Land as a member
of the “Clean Company Club,” based on its sterling
restructuring practices. In addition, Maeil Economic
Daily and Booz Allen honor E-Land’s “good KM start”
with their second Knowledge Management Award.
2001: The Economist bestows its CFO Asia Best
Practices Award in Turnaround Management on
E-Land. The company also wins the New Millennium
Knowledge Management Award, given by the Korea
Management Association and Korea Economic Daily.
2002: Maeil Economic Daily and Booz Allen again
honor E-Land for its “Knowledge-Based Transformation”
with their fourth Knowledge Management Award.
2004: Chairman Park receives the Grand Award of
Most Respected CEO from the Federation of Korean
Industries. That same year, E-Land also wins the
Forbes Quality Management Grand Award for
Knowledge Management, the Grand Award for Social
Welfare (given by the Korea Economic Daily), the
Korean President’s Award for the Logistics Industry,
and the Grand Award for Ethical Management
(bestowed by the Korea Management Association).
So zealous is E-Land about the role of information
capital and knowledge in its strategic success that
the company has spread its message to hundreds of
South Korean companies through lectures at business
conferences. Twice, representatives of the company
have even been invited by the Blue House (the office
of South Korea’s president, Roh Moo-hyun) to deliver
lectures on how knowledge management, based
on the BSC framework, can be implemented within
government organizations.
As BSC Program Manager Kim observes, the BSC
is not merely a system, but a “core management
competency” at E-Land. This powerful management
discipline will no doubt help propel the organization
to even greater heights—demonstrating the value of
human knowledge in strategic success, even for a
product as tangible as clothing.
1
Karl Erik Sveiby, The New Organizational Wealth: Managing
and Measuring Knowledge-Based Assets (Berrett-Koehler, 1997).
2
Not to be confused with constraint theory, which relates to the
mathematics of engineering shortcuts in working through per-
mutations that involve many variables to avoid computational
dead-ends. Goldratt’s theory of constraint concerns an overall
framework for helping businesses identify practical solutions to
change. Goldratt also offers specific ideas about how manufac-
turers can apply his principles to solve production problems.
3
Based on the July 14, 2005 exchange rate of 1,031 KRW = 1 USD.
6 © 2005 by Harvard Business School Publishing and Balanced Scorecard Collaborative, a Palladium company
Balanced Scorecard Hall of Fame Profile: E-Land Group

KEY RESULTS

• From 1998 to 2004, E-Land Group revenues more than doubled,

hitting approximately $2 billion.

• In that same period, net profit after taxes increased thirtyfold, to $276.4 million.

• Employee satisfaction has increased substantially. On a scale of 1 to 10, it rose from

5.5 in 1999 to 7.4 in 2004.

• Since implementing the BSC, E-Land continues to capture numerous honors from leading
economic publications (including The Economist, Forbes, Korea Economic Daily, and Maeil
Economic Daily), industry associations (such as the Korea Management Association and the
Federation of Korean Industries) and the government. It is most often recognized for its
excellence in knowledge management.

• The South Korean president has invited E-Land executives to give lectures on how knowledge
management and the Balanced Scorecard can be used in government organizations.

• By encouraging the achievement of seemingly impossible goals—and rewarding the results—

E-Land empowers employees and encourages a performance-oriented, innovative culture.

TAKEAWAYS

• A pilot program is a good way to begin adopting the BSC, particularly for large organizations.
It helps prove the value of the BSC methodology, thus quelling the objections of naysayers,
and allows companies to iron out any implementation problems.

• Transparency is paramount. When you give employees a view of company performance, you
help them understand their connection to corporate performance and strategy. When you
show them cause-and-effect, they learn to apply it in their own role. They also become more
invested in outcomes. By publicizing and rewarding success, you encourage problem solving
and innovation by all.

• Rigorous processes and systems that contain feedback mechanisms help ensure the
organization adapts to market forces and internal change.

• Recognition is just as important as cash compensation in motivating employees.

• Realize the importance of continual organizational learning to strategy execution.

• Even in more traditional industries such as manufacturing and retailing, intangible assets—
human and information capital—provide the competitive edge.

7 © 2005 by Harvard Business School Publishing and Balanced Scorecard Collaborative, a Palladium company
Balanced Scorecard Hall of Fame Profile: E-Land Group

SFO SPOTLIGHT

All Balanced Scorecard Hall of Fame organizations exemplify the five principles of the
Strategy-Focused Organization. E-Land Group is especially noteworthy as an exemplar of
the following SFO best practices:

• Case for change clearly articulated: In the wake of the late 1990s financial crisis in Asia,
E-Land executives recognized the urgent need for a new strategy—and a system with which
to implement it. Moreover, E-Land’s scale now posed a greater challenge to the company in
adapting readily to the volatility of the retail market. E-Land required new, more rigorous
processes by which to gauge change, overcome production and other operational problems,
reach new levels of performance, and leverage unit successes enterprisewide. [Principle #1:
Mobilize Change Through Executive Leadership]

• Vision and strategy clarified: E-Land executives realized that cost cutting could not
be a path to sustaining performance in the new business environment. Chairman Park
Sung-soo understood that harnessing and disseminating employee knowledge and promoting
best practices could be the means of achieving a strategy of operational excellence and
innovation—and a high-performance culture. [Mobilize principle]

• Strategy map developed and Balanced Scorecard created: Recognizing the hurdles
to manager buy-in (weariness from job pressures, employees’ apprehension about being
measured), E-Land piloted the BSC at two SBUs in succession. An in-house task force from
Group headquarters has helped all the SBU teams build their strategy maps and BSCs.
Objectives, measures, and initiatives are reviewed monthly and annually at all levels and
revised as necessary. With the shift in strategy from operational excellence (1998 to 2001) to
customer value (2001 to the present), some 30% to 40% of the corporation’s key performance
indicators have changed. [Principle #2: Translate the Strategy into Operational Terms]

• Targets established: Targets are monitored monthly and revised, as needed, every year. As
part of its eight-step annual planning process, E-Land performs two types of analysis—horizon
and brand life cycle—from which it repositions each brand. Brand maturity governs target
setting. For example, executives project slower growth at a more mature product line, and
thus lower the line’s targets accordingly. [Translate principle]

• Corporate role defined: E-Land Group headquarters sponsored the BSC program from its
inception and carefully designed an implementation strategy to yield the greatest buy-in from
the start. The company provided internal consulting resources through a task force to help
SBU executives design strategy maps and BSCs, and to this day oversees and coordinates all
strategy review activities. Corporate also developed the knowledge management program,
processes, and system, which are used uniformly by all SBUs. [Principle #3: Align the Organization
to the Strategy]

• Corporate– SBUs aligned: Through intensive monthly meetings, E-Land Group executives
monitor the progress and strategic alignment of all SBUs. The annual planning processes
represent another way in which SBUs stay in sync with corporate’s overall strategic goals.
[Align principle]

8 © 2005 by Harvard Business School Publishing and Balanced Scorecard Collaborative, a Palladium company
Balanced Scorecard Hall of Fame Profile: E-Land Group

SFO SPOTLIGHT

• Strategic awareness created: Instead of a traditional campaign to inform employees

about the strategy, E-Land takes a more action-oriented approach to inculcating strategic
awareness. Transparency about company performance is a major factor in fostering awareness.
For example, early on, employees were wary about being measured on their unit productivity;
but upon seeing the figures alongside the negative company financials, they understood
the need for budget cutbacks and the link between individual productivity and company
performance. E-Land widely publicizes success stories within the corporate family as a way
of promoting innovative, creative thinking by employees that yields strategic results. The
company also communicates the strategy by routinely involving employees in corporate and
SBU strategic evaluation meetings. Best-practice sharing validates the effectiveness of the
strategy, which, in turn, enhances employees’ strategic orientation and understanding.
[Principle #4: Motivate to Make Strategy Everyone’s Job]

• Personal goals aligned: Each employee has a customized program by which he or she
is aligned to the company strategy. This includes an action plan, objectives, targets, and a
timetable. [Motivate principle]

• Personal incentives aligned: To secure early buy-in, the company rewarded employees
at the two units that piloted the scorecard with bonuses for exceeding targets. Executive
compensation has been linked to the BSC from the time each unit’s BSC was launched. But
the enterprise waited until 2002 before formally tying non-executive incentive compensation
to the BSC. Executives wanted to be sure BSCs contained the right objectives and measures,
and that they were weighting nonfinancial measures appropriately. Awards and recognition
play an equally important role in incentivizing individual performance. Individual successes
are widely touted through the knowledge management system, and prestigious Knowledge
Awards honor important employee and team contributions. [Motivate principle]

• Competency development aligned: Every employee has an individual knowledge list

consisting of his or her strategic goals and an action plan and timeframe for achieving them,
along with measures. Plans and their results are entered into the knowledge management
system, which is shared by all SBUs and visible to all E-Land employees. By using the BSC to
pinpoint performance gaps, tasking employees to devise solutions, and publicly recognizing
those employees, E-Land has promoted a culture of knowledge sharing and problem solving—
thus boosting employee competency on an ongoing basis. [Motivate principle]

• Strategic review meetings conducted: E-Land’s extensive, almost exhaustive, strategic

checks-and-balances involve a variety of regular strategy and BSC reviews in which all
employees participate. These include monthly team, SBU, and Group-level meetings in
which performance against objectives is scrutinized, objective and targets amended (if
necessary), progress on initiatives evaluated, and successes and failures studied. Every
year, E-Land conducts an eight-step assessment that combines BSC evaluation with scenario
planning, brand and market analysis, and general strategic planning. [Principle #5: Govern to
Make Strategy a Continual Process]

9 © 2005 by Harvard Business School Publishing and Balanced Scorecard Collaborative, a Palladium company
Balanced Scorecard Hall of Fame Profile: E-Land Group

SFO SPOTLIGHT

• Knowledge sharing linked to strategy: Knowledge sharing is both art and science at
E-Land, with multiple processes dedicated to capturing and disseminating employee knowledge
and best practices to leverage success. Employees’ own action plans and performance results
are entered into the knowledge management system, which is accessible to all. The Knowledge
Asset Monitor is used by business unit executives to assess process infrastructure and
competencies, and to further apply this information to set mid- to long-range corporate
strategy. Knowledge trees and templates are used throughout the enterprise. The ultimate
recognition is the Knowledge Award, given out annually to teams and individuals. At the
semi-annual Knowledge Festival, employees convene to exchange ideas and compete for
the coveted annual award. [Govern principle]

• Strategy management office established: Through the roles of the corporate-level chief
strategy officer (CSO) and chief knowledge officer (CKO), E-Land has institutionalized a
strategy management process that encompasses the entire organization. The CSO and CKO
coordinate the BSC, administer performance review, and oversee alignment, all with the
partnership of other top executives. Strategy is reviewed and revised regularly as conditions
dictate, and objectives, measures, and targets are adjusted accordingly. A rigorous strategic
planning process is undertaken every year. [Govern principle]

10 © 2005 by Harvard Business School Publishing and Balanced Scorecard Collaborative, a Palladium company
Balanced Scorecard Hall of Fame Profile: E-Land Group

THE E-LAND CO., LTD. STRATEGY MAP

Improve
corporate
value
Financial
Perspective Manage
Improve financial
brand value resource
productivity

Increase Successfully
Customer customer launch
Perspective satisfaction new brands

Create
Build Create satisfying
brand image positive buying shopping
experience environment

Manage Develop Keep Make Build nice Supply

marketing on-target consistent access to shopping high-quality
quality
Internal productivity products
level
stores easy environment service
Perspective
Maintain
Manage defective Develop Enter Maintain
customer goods new core business product display
loyalty prevention channels area for easy
process selection

Manage Shorten Continously

customer Manage Manage
production core store renew and Standardize
information lead-time redesign store service
channels* suppliers productivity
interiors

Customer relationship Operational excellence to support customer value

Learning & Provide easy Acquire core Develop Issue rewards

knowledge and pool of management and incentives
Growth access
to information share candidates for employee
Perspective information expertise

Employee satisfaction and growth

* Information sources such as a Gallup survey or preseason product show

Strategy map of E-Land Co., Ltd., E-Land Group’s oldest casual-clothing unit and first BSC adopter.

11 © 2005 by Harvard Business School Publishing and Balanced Scorecard Collaborative, a Palladium company
Balanced Scorecard Hall of Fame Profile: E-Land Group
TO LEARN MORE
To learn more about E-Land and its Balanced
Scorecard program, see:
• Balanced Scorecard Hall of Fame Report 2005,
which features a profile on E-Land and the
17 other Hall of Fame inductees from 2004
(Product #9157).
• The Balanced Scorecard Report article
“Integrating Knowledge Management with the
BSC at E-Land Group,” by Lauren Keller Johnson,
Contributing Writer (with James Creelman), BSR
September–October 2005 (Reprint #B0509B).
• The BSC library: BSC portal members with
access to the library can search the keyword
“E-Land” for a complete list of resources,
including conference presentations and
executive video interviews. (For information
on becoming a BSC Portal member, go to
www.bscol.com.)
• Web site: www.eland.co.kr
ADDITIONAL RESOURCES
• For more information on the Strategy-
Focused Organization (SFO) principles,
visit BSC Online. Membership is free. Go
to www.bscol.com/bsc_online.
• For additional guidance on the SFO principles,
and to learn about best practices in use at other
organizations that have successfully executed
strategy, go to www.bscol.com/toolkits. Here,
you’ll find many resources available for purchase,
including Strategy Execution Toolkits.
• For access to the largest compilation of
published materials on the Balanced Scorecard
and the Strategy-Focused Organization, visit
www.sfo.harvardbusinessonline.org.
Editorial Advisers
Robert S. Kaplan
Professor, Harvard Business School
David P. Norton
President, Balanced Scorecard Collaborative
Edward D. Crowley
Executive Director–HBR Specialty Publications
Publisher
Robert L. Howie Jr.
SVP, Balanced Scorecard Collaborative
Director of Research
Randall H. Russell
Balanced Scorecard Collaborative
Editor
Janice Koch
Balanced Scorecard Collaborative
Writers
Lauren Keller Johnson
James Creelman
Design
Robert B. Levers
About Balanced Scorecard Collaborative
Balanced Scorecard Collaborative (BSCol), a Palladium
company, is a global family of professional service firms
that helps clients use the Balanced Scorecard to successfully
execute strategy. BSCol offers a wide range of services,
including education (conferences, publications, research),
training (public seminars, in-house, online), consulting
(strategy, performance, change), and technology (“BSC
Portal™,” “BSC First Report™,” toolkits). To learn more,
visit www.bscol.com, or call 781.259.3737.
About Harvard Business School Publishing
Harvard Business School Publishing is a not-for-profit, wholly
owned subsidiary of Harvard University. The mission of
Harvard Business School Publishing is to improve the
practice of management and its impact on a changing
world. We collaborate to create products and services in
the media that best serve our customers—individuals and
organizations that believe in the power of ideas.
Ordering Information
To order additional copies of this profile (in print or by
download), call HBSP at 1-800-668-6705 (617-783-7474
outside the U.S.) and request product #124X or visit
www.sfo.harvardbusinessonline.org and insert the product
number into the search field, or type in “Hall of Fame.”
Here you’ll find a list of all available Hall of Fame profiles
and other products for the Strategy-Focused Organization.
© 2005 by Harvard Business School Publishing and Balanced Scorecard
Collaborative, a Palladium company. Quotation is not permitted. Material
may not be reproduced in whole or in part in any form whatsoever
without permission from the publisher. Balanced Scorecard Hall of Fame
for Executing Strategy™ and Balanced Scorecard Hall of Fame Profiles™
are trademarks of Balanced Scorecard Collaborative. The trademarks
referenced in this publication are the property of their respective owners.
12 © 2005 by Harvard Business School Publishing and Balanced Scorecard Collaborative, a Palladium company
 TRANSLATE STRATEGY
INTO ACTION WITH THE
BALANCED SCORECARD REPORT

The ability to execute strategy is the most important

capability an organization needs to quickly adapt and
thrive in today’s global economy. But implementing
strategy may be the single most difficult task you face.
For twelve years, Strategy-Focused Organizations like Motorola, Hilton Hotels,
Equifax, Thomson Financial, Siemens, and literally thousands of others have
been using the Balanced Scorecard to transform strategy into action.

Now you too can benefit from an invaluable tool that’s helping companies
around the world get the most from their Balanced Scorecards—the
Balanced Scorecard Report newsletter. Every issue is packed with the
latest thinking of BSC founders Robert Kaplan and David Norton and
their five principles of the Strategy-Focused Organization—principles
that can help you translate ideas into action—

MOBILIZE change through executive leadership

TRANSLATE the strategy into operational terms

ALIGN the organization to the strategy

MOTIVATE to make strategy everyone’s job

GOVERN to make strategy a continual process

Each bimonthly issue of
Balanced Scorecard Report The Balanced Scorecard Report
takes you behind the scenes is a resource you’ll return to again
through case studies of actual
and again—subscribe today.
BSC implementations. These
case studies showcase organi-
zations that have achieved 1-800-668-6705
tremendous results with the bsr.harvardbusinessonline.org
BSC and will help speed
your own BSC program.
 The Balanced Scorecard Hall of Fame™ Profile Series
Learn how each of these Balanced Scorecard Hall of Fame organizations
became strategy-focused. Each individual profile provides a source of
information on how to “do it right”, including a profile narrative, Strategy-
Focused Organization spotlight best practices, key results and takeaways.

Chrysler Group

City of Charlotte

Crown Castle International

Economic Development Administration

(U.S. Department of Commerce)

Hilton Hotels

Media General

Mellon Europe

Mobistar

Motorola’s Government and Enterprise Mobility Solutions

Royal Canadian Mounted Police

Tennessee Valley Authority

Unibanco

U.S. Army

To learn more visit: www.sfo.harvardbusinessonline.org

or call 1-800-668-6705 (617-783-7474 outside U.S.)

HARVARD BUSINESS
SCHOOL PUBLISHING Product Number 124X