United Nations Public Service Awards Case Studies

From the mid 1990s, Busan Metropolitan City (BMC) was in a crisis where city competitiveness was low and citizens’ confidence had been eroded by both economic recession and the inefficiency of public administration. Prior to 1995, BMC mayors were appointed from Seoul, after the implementation of local autonomy and the free election of mayors, even elected mayors had failed to improve the quality of life of citizens and to change the indolent behavior of public organization staff.

The above crisis and the response are summarized in five sections below.

1. Failure of intra-innovation policies; civil servant group. City government staff did not actively participate in the existing intra-innovation program, and the program intra-innovation was not broadly disseminated. BMC had adopted a performance management system as an administration initiative from 1999, but this initiative had failed to attract staff participation due to the lack of interest by the mayor, the absence of a reward system for performance, and inappropriate learning and evaluation systems.

2. Failure of customer relationship management (CRM); ordinary citizens. The absence of CRM and Knowledge Management (KM) in the previous innovation process resulted in a lack of understanding of customers’ demands. These shortcomings combined with the ineffective problem solving capabilities of city government’s staff brought about the tendency of following former policy continued. Bureaucratic red-tape continued in the form of work delays and lack of cooperation toward ordinary citizens.

3. Economic decline; low income, aged and unemployed. BMC’s local industries had begun to decline, the population was steadily decreasing. Financial soundness in the city consequently began to weaken and citizens’ satisfaction with employment, traffic, environmental and welfare standards was low compared to other metropolitan cities.

4. Leadership Crisis and Trust; ordinary citizens and civil servants. Frequent changes of mayors created a leadership succession problem. The first citizen-elected mayor was not reelected due to charges of bribery; the second mayor was reelected but did not finish his term after also facing charges of bribery. Consequently, confidence in the mayor’s office was not firmly established until early 2005, with the election of the current mayor in a by-election.

5. “Danuri”; ordinary citizens and civil servants. As a response to citizens’ grievances and to instill confidence in the mayor’s office, the current mayor created an administrative initiative named “Danuri” – literally “embrace all issues.”

There was a heightened demand for change from elected city council members, NGOs and the local media. No specific alternatives were proposed but they all stressed the need for drastic changes and innovation to deal with the crisis in confidence in city management. The cynical resistance by city government staff to administration innovation began to soften. As the crisis began to deepen, many public servants also recognized that drastic administration innovation was strongly needed.

It was mostly citizens and public servants who were affected to the inefficiency of administration system, economic condition throughout the society.

What is the initiative about? (the solution)
The key benefits resulting from the implementation of “Danuri” - the public service management system of BMC - are; citizen’s quality of life, administrative innovation, qualitative city improvement, a larger budget and improved public budget efficiency resulting in a multiplier effect of results and the securing of a sound financial base. Improved quality of life was a result of tying citizen satisfaction with public servants’ responsibility to provide quality service. Compared to the outcomes in the first year of Danuri (Year 2006); external customer satisfaction increased from 78.4% to 83.2% in the third year of Danuri (Year 2008), major policy satisfaction increased from 59.2% to 66.8%, and satisfaction with phone responses increased from 82.2% to 88.9. The index of financial benefit per citizen, which is directly linked to quality of life, increased from US $1,411 (before Danuri) to US $1,900, a 34.7% increase. BMC began to change the organizational culture by emphasizing innovation orientation, strengthening efficiency and increasing transparency. Compared to the outcomes in the first year of Danuri (Year 2006) ; reduction in the civil application waiting period improved from 32% to 51%, government official incorruption increased from an index of 8.7 points to 9.1 points on a scale of ten, citizens’ recognition of city policy increased from 59% to 64%. Along with improved professionalism and job efficiency, government staff also began to take pride in providing civil services and had the expectation of proportional rewards for their performances. After the implementation of Danuri: Yearly local exports increased from 5.1% to 26%, foreign investment attraction from $300 million to $403 million, yearly abroad marketing contract from $100 million to $190 million, small & medium size enterprise working days, as a per annum percentage, increased from 78.1%to 84%, job creation for seniors increased to 8,700 jobs, and for handicapped persons to 230 jobs, local unemployment rate fell from 4.3% to 3.9%. A larger public budget and more efficient use of resources, accompanied by securing sound finances, enabling more effective tax collection and secured increased subsidies from the central government. The central government subsidy increased by 30.9% from USD 1.9 billion to USD 2.5 billion in the third year of Danuri, grants-in-aid increased by 203% from USD 130 million to USD 400 million. Tax collection also increased by 11.8% from USD 2.4 billion to USD 2.7 billion. The deferred tax levy increased from 17.1% to 20.5%. A customer satisfaction consulting company is employed by the BMC to measure quality of life indices. There are also quantitatively measurable results such as, reductions in labor costs, civil application time period reductions that are measured by statistics. Non-measurable indices such as the government official incorruption level are evaluated by a consulting company. City development is also measured by government statistics and official reports.

Who proposed the solution, who implemented it and who were the stakeholders?
The initiative began with proposals from citizens, BMC staff, especially the offices of the mayor and administration innovation, who suggested innovation principles and directions with assistance outside consultants. The current mayor noted that previous administrative services did not fulfill citizen satisfaction and that BMC should strive to change from a production focus (bureaucratic orientation) to a customer focus (citizen orientation) The mayor then committed himself to administrative innovation during his election campaign. After the election, he directed the office of innovation to identify specific alternatives to implement a customer and performance oriented public service. Taking an all inclusive approach for political, administrative support and enforcement for service innovation, the mayor and top executives established a Task Force Team (TFT), of working-level officials, academics and business professionals TFT produced creative ideas to engage citizens and innovative solutions for each administrative sector with advice from the office of innovation and working-level departments. After reviews and evaluation from citizens and professionals, TFT made specific innovation plans and timelines for implementation. TFT opened workshops for external advisers and NGOs to produce high quality innovative solutions and far-reaching discussions, defining the conceptual framework and principles of “Danuri” specifically, information-technology application, a systematic scheme and required budget. TFT took a leading role in disseminating “Danuri” into a whole organization focus, strengthening the three functions of the new administrative innovation system; customer-oriented service, performance-oriented implementation and knowledge management administration, which enabled continuous utilization and sharing of creative ideas and work experiences. By connecting these three functions together, “Danuri” established a service concept and increased efficiency improved the speed of responses to citizens’ requests. The deputy mayor was also fully committed to the implementation of Danuri, demonstrating leadership as the Chief Innovation Officer. With his support, the TFT appointed representatives to every department, opened job training for the full implementation of Danuri throughout the organization, and set up the Information Technology and budgeting. External consultants advised the TFT and helped provide IT solutions while NGOs both audited and advised on the Danuri process. It was citizen groups, however, who had the most influence on propelling the innovation initiative and to reap its benefits. The citizen group incorporated its complaints and requests actively into Danuri, which ignited the public’s desire for innovation.

Describe how and when the initiative was implemented by answering these questions
a. What were the strategies used to implement the initiative? In no more than 500 words, provide a summary of the main objectives and strategies of the initiative, how they were established and by whom.
The new administrative innovation system” Danuri” is one of the strategic approaches to establish the vision of a north-eastern maritime capital city in the 21st C, suggested in the “2020 vision and strategy for Busan development.” The overall objective of Danuri is to pursue high quality service innovation, a city of dynamism and high quality of life. Specific objectives are as follows; establish citizen satisfaction through administrative innovation, take a leading role in introducing a new administrative paradigm and ideas into public service, and stimulating a synergy effect in the organization operation by opening up the organization culture. The TFT for the implementation of Danuri was formed on Mar 2, 2005, and began target setting and strategy formulation. The TFT with the input of top executives and external professionals confirmed the current shape of Danuri during an open workshop on Sept.17, 2005. The implementation of the customer and performance orientation of Danuri, voluntarily initiated by administration innovation team, involved the creation of a comprehensive management system incorporating customer (Customer Relations Management), knowledge (Knowledge Management System) and performance management (Performance Management System) with IT. The CRM incorporates customer information, listens to the opinions of customers on the internet and provides customized services; it also opens all civil application procedures to the public and led to reform of the civil appeals systems. The KMS manages regulations, evaluations and rewards on the sharing of knowledge, promotes the creation of new best practices and values and established a network for personnel and knowledge resources. The Performance Management System (PMS) establishes corporate strategies, performance contracts and opens performance results to the public. Customer opinions, received on the internet, are rapidly processed utilizing the experience and ideas of KMS and the results are then sent to customers. The task result is managed and evaluated on a real time basis on the PMS. The TFT set up five strategies for efficient implementation of Danuri. Firstly, Danuri aims for customer oriented change that strengthens citizens’ quality of life from a production oriented, and government employee oriented administration. Secondly, top management support from the mayor and an effective reward system. The Mayor actively participated in the change management process and rewarded staff with who had achieved performance targets. Thirdly, Danuri promotes citizen participation and information sharing. Two-way communication between citizens and the city ensures the transparency of administrative procedures, and citizen participation in the evaluation process. Fourthly, “Danuri” incorporates new concepts into the public service and actively pursues a mature e-government system. The BMC was the first public sector organization in Republic of Korea to begin innovation in CRM, KMS and PMS. Fifthly, “Danuri” strives for continuous change and development.

b. What were the key development and implementation steps and the chronology? No more than 500 words
“Danuri,” is a process of continuous administrative innovation of BMC and gradually took shape through the stages outlined below. Firstly, “Danuri” began with a new definition of innovation in 2005 compared to previous administration’s definitions of innovation. BMC began innovation from late 1999, and had only made partial progress in improving the quality of public service outcomes. Secondly, the preparation stages for actual implementation began with an implementation plan, budgeting and priority selection. TFT wrote an overall plan to set up the “Danuri” system, including guidelines for a subsystem from August to September 2005. Customer satisfaction levels and customer management processes were studied from September 2005 to December 2006 and a strategic plan for new initiatives for customer management was established. Key performance indicators (KPI) were developed from November 2005 to August 2006 for each department. Thirdly, system establishment and implementation commenced. CRM was set up and launched its service from February 2006 to January 2007, followed by a citizen call center being set up from August 2006 to February 2007. PMS was set up from August to November 2006. The intra-information system was also changed to better reflect the changes in knowledge management regulations. All these subsystems were incorporated into one system “Danuri” on Jan.6, 2007, improving performance in the connectivity of the administration process, the accuracy and consistency of data, and the satisfaction of citizens’ needs for information. Fourthly, strengthening through performance evaluation commenced. A citizen satisfaction survey on the newly established CRM was implemented from March to July 2006, and a citizens’ survey to verify the validity of performance objectives and performance initiatives was carried out from May to September 2006. BMC won the grand prize in the Korea Knowledge Administration Awards in December 2005 from Maeil Business Newspaper and Booz Allen Hamilton Consulting. From the central government evaluation on December 2006 and December 2008, BMC was selected as the best organization in Knowledge Management. “Danuri” substantially upgraded innovation levels, being selected as the best brand for local government administration innovation by the central government in June 2007. BMC won the grand prize in the Korea BSC Award hosted by Korea Daily Newspaper and Wesleyquest Consulting on June 2008 and finally was inducted in the Balanced Scorecard Hall of Fame for Executing Strategy by Palladium Group, Inc in September 2008. Fifthly, distribution stage from city headquarters to county and district levels within the city. Many public organizations including central government and other local government and public sector organizations have visited BMC to benchmark the best practice of Danuri for the successful achievement of knowledge management, performance management and customer management from April 2007 up to the present. BMC launched distribution of PMS into the county and district levels from January 2008

c. What were the main obstacles encountered? How were they overcome? No more than 500 words
The biggest obstacle confronting BMC was building motivation and a desire for change amongst its public servants. The resistance and disbelief on Danuri was far greater than the previous attempts at innovation as being doomed to the same fate as the previous perfunctory attempts. Even the labor union as well as some of the executive level staff declared that Danuri was a waste of administrative expenditure. Secondly, there were technical difficulties in developing the new model. As Danuri was the first developed public service management system, TFT confronted problem of linking integrated knowledge with IT system between working-level officials and external professionals Thirdly, there was indifference from the city council and citizens in the initial stages. While Danuri focused on the reflecting citizens’ requests and demands for the public service and improving public service through citizen evaluation, citizen and NGO’s participation level was low. The city council’s attention was low due to the vague results of innovation in the beginning process of Danuri. Fourthly, mayor’s leadership crisis was not a small problem. The mayor’s leadership ability was weakening due to the continued bribery scandal just before adopting Danuri. As the previous mayor could not finish his term, the just elected current mayor from a by-election could not establish firm leadership across the organization. The driving forces to overcome these obstacles were the mayor’s strong will and the mobilization of support from the Danuri supporter group led by TFT. Despite the weakened leadership and internal and external difficulties, the mayor expressed his will that he would not retreat from implementing the new system. The deputy mayor’s public management skills bolstered the mayor’s policy and talented, aspirational managers in the innovation department and the TFT overcame these obstacles. To institutionalize staff participation in Danuri, BMC enacted regulations for the reward system of Danuri, the evaluation process was designed with fairness and transparency. TFT began an education program for the new system for all staff and started individual persuasion of un-cooperative executive officers and labor union members. The TFT organized employees who had a strong interest in reform and organized workshops with employees and external professionals to broaden understanding amongst staff. Secondly, TFT overcame technical problems through knowledge sharing with external professionals. In the process of unifying concept of Danuri into the IT system, TFT held regular meetings and discussions between internal staff and external professionals and developed a specific application model of two way communication technology to share knowledge. Thirdly, to increase citizen participation, TFT selected target groups to participate in the performance management work and held presentations for the city council to secure additional budgetary and human resource support.

d. What resources were used for the initiative and what were its key benefits? In no more than 500 words, specify what were the financial, technical and human resources’ costs associated with this initiative. Describe how resources were mobilized
Danuri includes non-quantifiable values such as creative ideas, knowledge, work experience, human resource qualities, as well as quantifiable values such as time, technology and equipment. BMC tried every means and efforts to obtain budgets for public service innovation. To secure the central government budget, BMC submitted business plans for approval and also submitted actual plans to the city council for stable financial support. All the budget execution results were approved by the city and city council for transparency and appropriateness. All the financial, technical costs on public service innovation amounted to USD 1.2 million from 2005 up to the present. Costs were as follows; CRM system USD 803,606; USD 142,640 for Information Strategy Planning, USD 660,966 for system set up such as program development and network set up. For KMS, to reinforce the previous system, the cost was USD 286,780 for software upgrades. PMS; USD 75,000 for program development and network set up. With the help of independent execution by staff, USD 250,000 was saved in cost cutting efforts in strategy and initiative development. For integrating these three subsystems into Danuri, the cost was USD 116,500 for networking and integration. Organization members subjectively participated in the planning and incorporation of the previous system, while the system was established by outsourcing, the city retained technological resources that were continuously input into establishment of Danuri system. Danuri TFT was the main human resource leading the innovation process from the beginning of innovation on March 2005 up to the present, consisting of each representative from each department and the seven special members from the strategy planning office. Special members were involved from the planning period of Danuri, procured creative ideas and challenging initiatives and devised strategies to bring innovation into BMC. Seventy TFT members played a role in disseminating innovative initiatives and changing the organization culture. The costs associated with human resources can not be measurable. It includes all the city government staff, who participated in the workshops, seminars and job training for Danuri learning, as well as the creative ideas and driving force of TFT members.

Is the initiative sustainable and transferable?
As Danuri was first launched by the mayor’s strong will for innovation, it is now in a continuous development stage with visible results. The sustainability and stability of Danuri are outlined below. Firstly, Danuri standardized public services and improved their quality. As targets and performances for every initiative are measured, performance is evaluated quarterly and yearly and its quality is maintained to bring continuous improvement Secondly, Danuri reward system was institutionalized. BMC regulated public service related laws to secure appraisal fairness and to integrate performances and rewards by institutionalizing the Danuri system. This enables members to focus on their behavior in alignment with organizational objectives. Thirdly, Danuri is a registered brand name for public service innovation. Three sub management systems(customer, knowledge, performance) have been technically incorporated as Danuri, their conceptual elements and overall operational management are written as a standardized manual, BMC developed Danuri as a customized brand for public service management with operational experience and applied Danuri to the Korean Intellectual Property Office as a registered trademark on April 2008. Fourthly, Danuri is an economic system that requires a small maintenance cost. The system requires hardware set up cost, but once established, ten percent per annum of the total establishment costs are required to maintain the system. The application of the Danuri system to other domestic local governments, as well as, foreign public sector organization will bring far-reaching dissemination of the achievements of Danuri in terms of citizen satisfaction, internal administrative innovation, improvement of city competitiveness and financial stability. Firstly, disseminating into local government is relatively easy as it complements other Korean local government performance management systems, is technically compatible, and requires few additional costs for additional system build up. Secondly, the standardized manual of Danuri, including the IT system set up and operational management enables dissemination into the foreign public sector. Increased tax income and sound finances will offset additional maintenance costs through administrative innovation. Over the period April 2007 to December 2008, fifty nine domestic public and private organizations benchmarked the Danuri system. The BMC also presented the KMS, a subsystem of Danuri, to the government knowledge management workshop, during the 7th World Government Innovation Forum on June 2007 in Austria. BMC has begun technical and financial implementation of Danuri to five local Busan districts, with further dissemination to the remaining eleven local districts to commence from 2009.

What are the impact of your initiative and the lessons learned?
By achieving far-reaching accomplishments in a short period, Danuri, invigorated the depressed city economy, brought self confidence to BMC staff and earned the trust of citizens. Administration innovation effects last long and accelerate its speed. Staff tended to resist innovation in the beginning but after experiencing success staff began to actively participate in innovation activities. Administration innovation can be a tool to accomplish democracy. With the same amount of human resources and financial resources, innovation initiatives brought citizens more meaningful accomplishment to improve quality of life. Acknowledgment and reward for the accomplishment is important for improvement. BMC won the grand prize in the Korea Knowledge Administration in 2005 and 2006; the Korea BSC Award in 2008; was inducted in the Balanced Scorecard Hall of Fame in 2008. These awards helped instill confidence in BMC staff and support from citizens and the city council. BMC first listened to the opinions of citizens and received support from citizens and the city council. There were frequent criticisms over administrative accomplishments from telephone responses to economic results before Danuri, but satisfaction and support during the process of policy evaluation were high after Danuri, which helped to sustain the city council’s supports for innovation. The mayor’s determined leadership and the support of highly competent managers in the area of innovation, made innovation highest priority and played a decisive role in the success of Danuri. Furthermore, despite the above described leadership crisis, the mayor expressed a strong will for Danuri and did not hesitate to demonstrate political and financial support. Extensive participation by staff helped reduce resistance to Danuri and resistance rapidly diminished as staff began to participate in the innovation process. Though the previous attempts at innovation had failed to achieve acceptable results and to build consensus amongst employees consent, the previous attempts helped members to endure the new technical management system with a basic understanding of innovation philosophy. Lastly, there was extensive participation from citizens, who provided citizen oriented advice and from external professionals, who provided competent and impartial advice.


Institution Name:		Busan Metropolitan City
Institution Type:		Government Agency
Contact Person:		Yeong-Tae Cho
Title:		*: Performance Evaluation Manager
Telephone/ Fax:		82-51-888-2183
Institution's / Project's Website:		82-51-888-2199
E-mail:		y25ng@korea.kr
Address:		: 2001 Jungang-ro, Yeonjae-ku
Postal Code:		: 611-735
City:		Busan
State/Province:
Country:

The Problem

Solution and Key Benefits

Actors and Stakeholders

(a) Strategies

(b) Implementation

(c) Overcoming Obstacles

(d) Use of Resources

Sustainability and Transferability

Lessons Learned

Contact Information