θωερτψυιοπασδφγηϕκλζξχϖβνµθωερτψ υιοπασδφγηϕκλζξχϖβνµθωερτψυιοπασδ φγηϕκλζξχϖβνµθωερτψυιοπασδφγηϕκλζ ξχϖβνµθωερτψυιοπασδφγηϕκλζξχϖβνµ POSCO MIT&E θωερτψυιοπασδφγηϕκλζξχϖβνµθωερτψ JOKO WIDYARISTA HARAHAP υιοπασδφγηϕκτψυιοπασδφγηϕκλζξχϖβν µθωερτψυιοπασδφγηϕκλζξχϖβνµθωερτ ψυιοπασδφγηϕκλζξχϖβνµθωερτψυιοπα σδφγηϕκλζξχϖβνµθωερτψυιοπασδφγηϕκ λζξχϖβνµθωερτψυιοπασδφγηϕκλζξχϖβ νµθωερτψυιοπασδφγηϕκλζξχϖβνµθωερτ ψυιοπασδφγηϕκλζξχϖβνµθωερτψυιοπα σδφγηϕκλζξχϖβνµθωερτψυιοπασδφγηϕκ λζξχϖβνµρτψυιοπασδφγηϕκλζξχϖβνµθ ωερτψυιοπασδφγηϕκλζξχϖβνµθωερτψυι οπασδφγηϕκλζξχϖβνµθωερτψυιοπασδφγ ηϕκλζξχϖβνµθωερτψυιοπασδφγηϕκλζξ χϖβνµθωερτψυιοπασδφγηϕκλζξχϖβνµθ ωερτψυιοπασδφγηϕκλζξχϖβνµθωερτψυι οπασδφγηϕκλζξχϖβνµθωερτψυιοπασδφγ ηϕκλζξχϖβνµθωερτψυιοπασδφγηϕκλζξ χϖβνµθωερτψυιοπασδφγηϕκλζξχϖβνµθ

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Challenge in the beginning • Since 1948 the Korean government tried to establish an integrated steel mill in Korea to meet the rising demand. The challenge is that to build such factories usually it requires advanced technologies, massive amount of capital, a domestic market large enough to enable economies of scale, and access to natural, which Korea does not have. Financially the World Bank & other developed countries also do not support Korea to build such mills hence the funding is hard. Poor knowledge & experience. In the initial construction phase, POSCO had to rely on technology experts from Japan Group for the entire installation process of the first blast furnace in the Pohang steel mill. They did not have any choice.

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Success Factor • A strong leader POSCO’s founder is CEO Park, Tae-­‐Jun. Failing to get international loans, TJ Park requested Japan to provide capital and technology support, and closed the deal by using his personal network. He pays attention to details and perfectionism, and his people-­‐centered leadership encouraged all employees to unite with a strong sense of commitment and loyalty. • Same Mission & Goal Park stressed a strong commitment to steel mill construction as it borrowed capital and technology from Japan as compensation for its colonial rule, often saying, “Let’s turn right and jump into the East Sea, in case we fail in the construction of the steel mill.” This has taken hold as what is called “Right-­‐ Turn Spirit” of POSCO, which created a unique corporate culture emphasizing a sense of mission, dedication to goal achievement, group loyalty and personal sacrifice. • Valuing Talent TJ Park although pressing his people to work without holidays, value talent. He attracts talented people with housing & believes that POSCO employee (not foreigners) should lead the company. He invested on learning & trainings. POSCO made tremendous investments in training their employees. The number of trained workers totaled about 61,400 from 1968 to 1979, of which 4,200 were trained outside the company, while 1,513 joined overseas training programs • Continues Improvement POSCO workers were encouraged actively engage in productivity and quality improvement. Employees willingly participated in the “proposal system” where they made proposals to enhance quality at the worksite. To minimize downtime, they adopted a preventive maintenance system. To stabilize facility management, they implemented a process monitoring system to identify problems and resolve them through a thorough review of detailed information. It was not until Phase 3 construction that the computer-­‐based process monitoring system was adopted, as the manual monitoring system was considered handy or the workers to absorb technologies and know-­‐how. It was at that time that POSCO went through process innovation by adopting Six Sigma, and reducing defects to the lowest level in the world. Today, POSCO is rated as the global leader in steel mill design, construction and facility management.

What Kind of Innovation you can find. • Leadership Transformation POSCO had several changes of leader after TJ Park. With every leader there is always new innovations in the way the company works.

2003 1998 1994 1993 • Chairman Chung, Myung-­‐ Sik • 1. New organization under the ‘NewPOSCO Vision.’ In an attempt to streamline the organization • 2. changes in POSCO’s traditional domestic market-­‐oriented strategy to ‘Comprehensive Export Strategy’ • Chairman Kim, Mahn-­‐Je • initiated ‘Green Management’ which aimed at ‘Wlexible organization’, ‘democratic management’ and ‘transparent management’ • Established the three key pillars-­‐ steel, engineering & construction, and telecommunications. • Responsibility Management System to enhance the accountability of line managers. • Chairman Yoo, Sang-­‐Boo • Initiated an aggressive ‘export-­‐drive’ program introduced ‘Process Innovation’ to streamline the company’s key processes and develop a more Wlexible, customer-­‐ oriented culture throughout the company • Chairman Lee, Ku-­‐Taek • Emphasized management priorities: 1)transparent operation through management by principles, 2)sustainable growth, 3)competitive advantage through innovation, 4)management valuing human resources, 5)trust-­‐ building with stakeholders

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Technology Development POSCO set up a collaborative R&D network among industry, academia and research centers by establishing Pohang University of Science and Technology (POSTECH) in 1986, the Research Institute of Industrial Science and Technology (RIST) in 1987, and reorganized its R&D organization in 1996 to accelerate the development of new technologies. As customers’ needs became more sophisticated and more demanding, the company had to change its existing strategy which mainly focused on producing low-­‐cost, commodity steel, and develop more high value-­‐added specialty products The development of FINEX is a good example of POSCO’s recent technology development efforts. Compared to the blast furnace process, the FINEX method enables cost reduction in facility investment as it does not require coke or sinter plants that pre-­‐process iron ore and bituminous coal. This method can save raw material costs as it uses powdered iron ores that are cheaper and more abundant and general coal that is also cheaper Process Innovation Process Innovation (PI) that started in 1999 was aimed at streamlining the company’s core processes from raw material purchasing, production to customer delivery, and transforming the company’s systems and culture into one that is more customer and profit-­‐oriented. POSCO implemented the whole process in a comprehensive and disciplined manner and achieved significant cost savings and operational improvement.