CLARITY

KOREA

John Scott reviewed the 2003 revenue projections of Clarity Korea with growing unease. It had
been 6 months since he arrived in Korea as Co-CEO of the joint venture. So far, he seemed to
have achieved very little. While Clarity was the world leader in ophthalmic lenses, its
operations in Korea showed weak sales and poor growth. In an effort to turn the joint
venture around, Scott had attempted to build a core of committed and capable employees.
However, these efforts seem to have largely failed. The predominantly Korean-speaking team
viewed him and those he hired with mistrust. It seemed that despite many months of hard
work there was a no common ground on which to build a successful business.
The Ophthalmic Lenses Industry
The ophthalmic lenses industry had two principal segments. The commodity segment
consisted of non-branded, single-focus lenses that were mass-produced by large Asian
manufacturers and sold for US$1-2. Clarity stayed away from this segment. The premium
segment consisted of technologically sophisticated, customized lenses dominated by a few
global brands. By 2003, Clarity had a worldwide market share of approximately 25% and was
more than three times as large as its next major global competitor Taiyo, a Japanese
company. Eye care professionals paid between US$20-300 for Claritys lenses. Claritys
laboratories, which produced these high-end lenses, were amongst the largest and most
efficient in the world.
The Korean Experience
Across the globe, users changed glasses approximately every 2-3 years. Koreans changed
glasses on average every year. Younger, more fashion conscious consumers, changed them
every 6 months. As a result, despite a relatively small population, Korea was a key market for
ophthalmic lenses in Asia.
Clarity established a wholly-owned subsidiary in Korea in 1987. Korea was predominantly a
market for single focus lenses for myopia correction, so the demand for Claritys progressive
lenses was limited. In 1993, faced with mounting losses, Clarity sold its business to Hae
Trading (Hae), a medium-sized, publicly listed Korean trading company. For several years, it
continued to sell small numbers of its premium progressive lenses through Hae.
Clarity Korea and John Scott
By 2000 Clarity realized that to be a market leader in Asia they had to have a significant
presence in Korea and dislodge Taiyo, who dominated the Korean branded lens market. To do
this they needed a partner that would provide a manufacturing base as well as access to the
local Korean market. In December 2002 Clarity re-entered Korea with a 50-50 joint venture
(JV) with its Korean distributor, Hae. Clarity agreed to provide the JV with its high-end brands,
marketing expertise and lenses technology. Hae, in turn, would give Clarity access to the
Korean market as well laboratories to manufacture these high-end products.

Indira Pant, 2015

The JVs operating agreement stipulated that Clarity Korea would be led by two co-CEOs. The
first co-CEO, a Hae nominee, would also be President of the JV. The other co-CEO would be
picked by Clarity and carry the title of Vice-President.
In January 2003, a month after Clarity Korea was formed, John Scott, 49, arrived in Korea.
Before joining Clarity, Scott had worked for 16 years in the lenses industry. Eight of those
years had been spent in Asia where he had successfully launched a major brand of soft
contact lenses. Scott knew that Korea was one of the toughest markets in Asia. He realized
that the key to his success would be finding a good team of people who were open to change.
The First Six Months
In accordance with the JVs operating agreement, Scott was appointed the Vice President and
co-CEO of Clarity Korea. The other co-CEO and President of Clarity Korea was S.S. Cho, 59.
Cho had worked for 20 years in the optical products operations of Hae. He was part of Haes
senior management team and had a strong background in finance and project execution.
During his first few months in Korea, Scott was able to build good relations with the largest
shareholders of Hae S.K. Park and his son C.Y. Park. Scott commented on this relationship:
My philosophy was to go in, listen and learn. I believe that you shouldnt start to
change things until you understand the mindset of the people with whom you are
working. The Parks were open and welcoming. So at the highest level, things were good.
The picture was very different at the day-to-day operating level. Hae had historically operated
largely in the non-branded segment of the business where its sales people were trained to sell
almost purely on price. Since profit margins were slim, Hae focused on cost control and
efficiency. Scott, as well as Claritys management, strongly believed that Krystal, Claritys
flagship lenses, would be the JVs engine of growth. Manufacturing and selling Krystal
required Haes employees to adopt an innovative and entrepreneurial mindset.
Clarity gave Scott a free hand to manage the JV. Based on his past experience Scott focused
first on understanding the Korean market. He worked with an 8-member team responsible for
marketing, sales and customer service. (The President, Cho had his own management team to
take care of the manufacturing, laboratory and finance functions.) Scott began working with
his team to jointly create vision and mission statements as well as goals for the next 5 years.
He held regular meetings to discuss day-to-day operations. Scott believed that in doing so, a
team would develop and he would also strengthen his own credibility with the staff.
Only one member of Scotts management team spoke English Kim Sung-min who was in
charge of marketing, operations and logistics. Sung-min had risen through the ranks at Hae
and was seen as a vital player in the new JV. In fact, Scott had been explicitly asked by the
Park family to seek Sung-mins help. While Scott respected Sung-min for his experience and
expertise, challenges emerged. Scott explained:
Very soon I found I needed Sung-min to get anything done. I had to bring him to meetings
just to translate which was a waste of his talent. Also Sung-min reported to the President,
Indira Pant, 2015

which worried me. When translating, Sung-min was supposedly speaking for me, but I
couldnt always be sure that he was. I had to be very careful with what I said.

By the end of his first month on the job, Scott realized he had to hire a full-time, English-
speaking administrator. The terms of the operating agreement for the management of the JV
stipulated that the President had to approve all new hires. Cho turned down Scotts hiring
proposal. Scott described what followed:
I went straight to S.K. Park and explained how an administrator would help me achieve my
goals, which could help him achieve his goals. S.K. Park, a wise man, was always open to
new approaches. He immediately approved the hire. By mid-April, I had a new
administrator, Ms. Shin Ji-woo.
Scott realized, more than ever, that he had to build an open line of communication with the
President. He, therefore, invited him to all his team meetings and even discussed the agenda
in advance with him. This courtesy was never reciprocated. Scott was not invited to any of
Chos management team meetings. This did not unduly concern him at the time because the
meetings were conducted in Korean and he had his hands full already. What was a serious
concern to Scott, however, was that after attending Scotts meetings, Cho would sometimes
undermine Scotts authority by issuing conflicting instructions directly to his marketing team.
Conflicts with Cho continued over the next few months. Whenever decision-making reached
an impasse, Scott would turn to S.K. Park. As Scott explained:
I relied on these one-on-one meetings with S.K. Park to get anything done. I hated to go
over the Presidents head, but he didnt speak any English. More critically he did not share
my vision for the JV. Hae did not have the expertise to manufacture Claritys premium
lenses and quality problems were enormous. Also, I did not report to Cho. Formally, I
reported to the leadership of Clarity Asia Pacific based in Singapore and they were
growing increasingly impatient with the JVs poor numbers.
Challenges with the Team
Scotts attempts to build a more effective team were also proving difficult. While the monthly
team meetings were dutifully held, high quality, two-way dialogues rarely happened. The use
of Ji-woo as a translator complicated the communication process. People would merely listen
without contributing ideas or opinions. After 3 months, Scott decided to go back to Sung-min
for advice. Sung-min was forthright in his feedback. This is the Korean way. We dont want a
dialogue. We just want you to tell us what to do and well do it, he said. This was complete
anathema to Scott who wanted to build from the bottom up and you cant do that by telling
people what to do.
Another important stumbling block was that no one seemed willing to embrace Scotts
ambition for Clarity Korea to be the number one branded lens company in Korea. Recalled
Scott, Whenever I talked about overtaking the market leader, Taiyo, they typically shook their
heads, convinced it could not be done. Even the President was deeply skeptical. Cho was far
more concerned with stability and immediate profits rather than long-term strategic issues.
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Scott hoped that by building a strong team he would be able to bring the rest of the
organization as well as the President to a point where they could share his vision.
To achieve his plan Scott identified 3 additional English-speaking executives he wanted to
recruit but again encountered resistance from Cho. The President wanted to maintain
harmony within the organization. There were people who had been working with Hae for 10
years who were being paid less than half of what Scott wanted to pay the more qualified,
English-speaking new hires. So the President imposed salary caps that made it impossible for
Scott to hire the people with the skill sets he needed. Instead, he had to recruit people who
were qualified for positions two levels below.
The first person hired was a university graduate with a few years of experience in business.
Unfortunately, within days of joining Clarity Korea, the new hire came to Scott and confided,
I dont fit in. Nobody here seems to like me. And, they dont like you either. At about the
same time, Scott hired a new Customer Service manager. Within three weeks she quit. In her
exit interview she told Scott, They dont want to change. Theyre not listening. Its not going
to work, so I am leaving. The other new hires also seemed to be struggling.
Meanwhile, Scotts first appointment, Ji-woo, the administrator, privately approached him to
say that she too was unhappy working. No one here seems to trust me, she told him. I
think it is because I understand English. They think that you are using me as some kind of spy.
It seemed that a sharp divide had formed between the old and new employees. This had
occurred despite both the President and Sung-min being involved in the selection process. The
new hires were seen as Scotts people and were therefore excluded and mistrusted by the
old guard. One Korean manager complained, The reason were paying the new staff more is
not because theyre more qualified. Its because they speak English and the only reason we
need them is because Scott cant speak Korean. So hes the problem.
By October 2003, business was stagnating, service and quality problems were growing and the
JV had not introduced any new products in the Korean market. Scott knew that Clarity would
not be happy with the revenue projections before him and he was running out of both ideas
and time.
1. Identify the key challenges facing Scott.
2. What should Scott do to address them?
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Adapted from a case written by Indira Pant, Allen Morrison and Vibha Gaba. The names of all
individuals and organizations have been changed.

Indira Pant, 2015