(Note: This is a reply to Mr. G.'s thread in USeP-IC Web Forum - Assignment 6: Identify and discuss the steps for "critical success factors" approach?)
In the world of business, there are so many things that need to be noticed. With a lot of issues in the organization that gains your attention, it is quite difficult to oversee them all and take charge all at once. There is a tendency that you might not also notice some important matters and it will be left behind. This is one of the reasons why you are not alone in doing business; you have your colleagues and business associates which may help you in looking after the concerns of the company. But it could also be difficult for you to get them into looking at the same directions and share with your concerns and eventually get them into action. This is probably the reason why there are “critical success factors” being set in the organization.
By definition, Wikipedia describes a critical success factor, or CSF, as the term for an element that is necessary for an organization or project to achieve its mission. It is a critical factor or activity required for ensuring the success of your business. The term was initially used in the world of data analysis, and business analysis. Some other definitions include any of the aspects of a business that are identified as vital for successful targets to be reached and maintained. Critical success factors may change over time, and may include items such as product quality, employee attitudes, manufacturing flexibility, and brand awareness. They are normally identified in such areas as production processes, employee and organization skills, functions, techniques, and technologies.
Technically, critical success factors are important for an organization to focus their attention and actions to certain common goals and to achieve it by making efforts in ways that the critical success factors they have set will be attained. In the event that all of the human resources of the company, especially the management team, are all busy doing their own respective tasks, although the firm’s vision mission statements or goals and objectives are on their minds, it is highly important that there are certain points on which they are to base their actions to achieve these goals. Identifying critical success factors therefore will aid every individual in the organization to have a common point of reference to know exactly what the most important thing to do is, and this might help them perform their tasks in the right perspective so to pull them together into the same overall aims.
Actually, the concept of “success factors” was developed by D. Ronald Daniel in 1961 and was then refined and popularized by John F. Rockart in 1986. Rockart defined CSFs as:
"The limited number of areas in which results, if they are satisfactory, will ensure successful competitive performance for the organization. They are the few key areas where things must go right for the business to flourish. If results in these areas are not adequate, the organization's efforts for the period will be less than desired."
He also concluded that CSFs are "areas of activity that should receive constant and careful attention from management."
The critical success factors (CSF) are just connected to the vision and mission of the organization and the goals and objectives in particular. The mission and goals provides the company a direction on what is to achieve and focuses on the aims. The critical success factors on the other hand, focus on the most important areas which guides every member of the organization on what to achieve and how to achieve it.
Basically, there are four (4) types of critical success factors (CSFs) (RapidBI): Industry CSFs (resulting from specific industry characteristics), Strategy CSFs (resulting from the chosen competitive strategy of the business), Environmental CSFs (resulting from economic or technological changes), and Temporal CSFs (resulting from internal organizational needs and changes).
Some of the common critical success factors are: money, customer satisfaction, quality, and many more.
There are five (5) key concepts or main aspects of critical success factors according to Rockart and Bullen: the industry, competitive strategy and industry position, environmental factors, temporal factors, and managerial position.
Industry position. Each organization does actually differ in some sort of ways from one another based on the industrial aspect. Every firm has unique characteristics thus making unique critical success factors. Companies which are operating in the same industry have logically almost the same common CSFs. This is because they may have similar goals. On the contrary, diverse industries do not have similar CSFs since there are different sectors having dissimilar orientation.
Competitive strategy and industry position. There may be cases that although firms that belong to the same industrial category have dissimilar CSFs. This is because every organization defines its own unique strategies, resources, and capabilities. Furthermore, the firm’s current position in the industry will characterize the company’s suitable CSFs at a given point in time.
Environmental factors. Such changes that may occur should also be considered in formulating the CSFs of the company. Some of these include economic and political factors, regulations in the industry, and population trends. These are important factors which the firm cannot control yet should be taken into account.
Temporal factors. These issues are usually related to short-term situations and short-lived ones. A best example of this could be crisis in the industry. Organizations should take into account some possible turning points in business giving way to formulating important critical success factors necessary in the situation.
Managerial position. This is significant to the manager of the company most importantly if the CSF's are considered from an individual’s point of view. For example, a manager’s performance in a particular area of responsibility is being taken into account, this may be critical to the success of the firm. Managers of departments which focus into customer satisfaction, a CSF for managers in this section would typically be customer relationship management.
To have an actual example, let us use the case analysis presented by Mind Tools: Farm Fresh Produce mission aims to become the number one produce store in Main Street. To achieve these, the firm set the following goals: to gain market share locally of 25%; fresh food from farm to customer in 24 hours for 75% of products; sustain a 98% customer satisfaction rate; expand product range to attract more customers; extend store space to accommodate new products and customers. To be able to identify the possible critical success factors (CSFs), we must examine the mission and objectives and see which areas of business need attention so they can be achieved. The critical success factors could be: create successful relationships with customers, attract and satisfy new customers, and secure financing for expansion.
I have searched some suggested steps on how to write good critical success factors (CSFs). Here are some important principles: (1) ensure a good understanding of the environment, the industry and the company. Of course, in identifying factors you have to get to know the company and the industry where it belongs including the environment where it is involved; (2) build knowledge of competitors in the industry. Knowing the competitors’ positions in the industry, their capabilities and resources, can possibly identify how it will give impact to the organization and could result in strategic CSFs; (3) develop CSFs which result in observable differences. It is important to write critical success factors which are observable versus those that cannot be measured. CSFs that are possible measurable in certain aspects would be easier to focus on these factors; (4) develop CSFs that have a large impact on an organization’s performance. Since critical success factors are the most critical factors in the organization or an individual, it is highly important that identification of these factors should be well taken care of especially that they are the ones which could give the largest impact to the company.
Additionally, here are the steps which will help identify the critical success factors (CSFs) for your company or project:
1 – Establish your business’s or project’s mission and strategic goals. This is basically the first thing to do. The company’s mission and goals and objectives and critical success factors are intertwined with each other. But before identifying the specific factors one must first recognize the mission of the company and its business objectives. Here is a sample template that could help:
Vision / Mission / Profile (What do we want to become / what is our purpose: )
Mission:
Vision:
Strategic Goals (What do we have to do to get there: )
Strategic Goal #1:
Outcomes / Critical Success Factors (How we will get there: )
1.1
1.2
1.3
1.4
Strategic Goal #2:
Outcomes / Critical Success Factors (How we will get there: )
2.1
2.2
2.3
2.4
2.5
Strategic Goal #3:
Outcomes / Critical Success Factors (How we will get there: )
3.1
3.2
3.3
3.4
3.5
Strategic Goal #4:
Outcomes / Critical Success Factors (How we will get there: )
4.1
4.2
4.3
2 - For each strategic goal, ask yourself "what area of business or project activity is essential to achieve this goal?” By answering the questions, you could develop your critical success factors.
3 - Evaluate the list of candidate CSFs to find the absolute essential elements for achieving success. Not all candidate CSFs you have identified can be your final critical success factors. Sometimes it is useful to limit the number of CSFs so to maintain the impact and give good direction and prioritization.
4 - Identify how you will monitor and measure each of the CSFs. Naturally, your critical success factors must be measured, supervised and evaluated.
5 - Communicate your CSFs along with the other important elements of your business or project's strategy. Since your critical success factors are somehow related to your business goals, these are factors that need to communicate with the company’s strategies and overall plans.
6 - Keep monitoring and reevaluating your CSFs to ensure you keep moving towards your aims. It would be very useful to identify how to monitor and evaluate your CSFs as this will measure how far you have reached in your business strategies.
In general, critical success factors (CSFs) provide the critical points which serve as target points for the organization to achieve their goals.
I would like to acknowledge the following resources as my references:
Critical Success Factors: Identifying the things that really matter for success, MindTools Essential Skills for an Excellent Career
http://www.mindtools.com/pages/article/newLDR_80.htm
Critical Success Factors – Analysis: Determine the Critical Success Factors for your Organization, RapidBI: Knowledge, Understanding, Action, May 2009
http://rapidbi.com/created/criticalsuccessfactors.html
Microsoft Encarta Dictionaries
By definition, Wikipedia describes a critical success factor, or CSF, as the term for an element that is necessary for an organization or project to achieve its mission. It is a critical factor or activity required for ensuring the success of your business. The term was initially used in the world of data analysis, and business analysis. Some other definitions include any of the aspects of a business that are identified as vital for successful targets to be reached and maintained. Critical success factors may change over time, and may include items such as product quality, employee attitudes, manufacturing flexibility, and brand awareness. They are normally identified in such areas as production processes, employee and organization skills, functions, techniques, and technologies.
Technically, critical success factors are important for an organization to focus their attention and actions to certain common goals and to achieve it by making efforts in ways that the critical success factors they have set will be attained. In the event that all of the human resources of the company, especially the management team, are all busy doing their own respective tasks, although the firm’s vision mission statements or goals and objectives are on their minds, it is highly important that there are certain points on which they are to base their actions to achieve these goals. Identifying critical success factors therefore will aid every individual in the organization to have a common point of reference to know exactly what the most important thing to do is, and this might help them perform their tasks in the right perspective so to pull them together into the same overall aims.
Actually, the concept of “success factors” was developed by D. Ronald Daniel in 1961 and was then refined and popularized by John F. Rockart in 1986. Rockart defined CSFs as:
"The limited number of areas in which results, if they are satisfactory, will ensure successful competitive performance for the organization. They are the few key areas where things must go right for the business to flourish. If results in these areas are not adequate, the organization's efforts for the period will be less than desired."
He also concluded that CSFs are "areas of activity that should receive constant and careful attention from management."
The critical success factors (CSF) are just connected to the vision and mission of the organization and the goals and objectives in particular. The mission and goals provides the company a direction on what is to achieve and focuses on the aims. The critical success factors on the other hand, focus on the most important areas which guides every member of the organization on what to achieve and how to achieve it.
Basically, there are four (4) types of critical success factors (CSFs) (RapidBI): Industry CSFs (resulting from specific industry characteristics), Strategy CSFs (resulting from the chosen competitive strategy of the business), Environmental CSFs (resulting from economic or technological changes), and Temporal CSFs (resulting from internal organizational needs and changes).
Some of the common critical success factors are: money, customer satisfaction, quality, and many more.
There are five (5) key concepts or main aspects of critical success factors according to Rockart and Bullen: the industry, competitive strategy and industry position, environmental factors, temporal factors, and managerial position.
Industry position. Each organization does actually differ in some sort of ways from one another based on the industrial aspect. Every firm has unique characteristics thus making unique critical success factors. Companies which are operating in the same industry have logically almost the same common CSFs. This is because they may have similar goals. On the contrary, diverse industries do not have similar CSFs since there are different sectors having dissimilar orientation.
Competitive strategy and industry position. There may be cases that although firms that belong to the same industrial category have dissimilar CSFs. This is because every organization defines its own unique strategies, resources, and capabilities. Furthermore, the firm’s current position in the industry will characterize the company’s suitable CSFs at a given point in time.
Environmental factors. Such changes that may occur should also be considered in formulating the CSFs of the company. Some of these include economic and political factors, regulations in the industry, and population trends. These are important factors which the firm cannot control yet should be taken into account.
Temporal factors. These issues are usually related to short-term situations and short-lived ones. A best example of this could be crisis in the industry. Organizations should take into account some possible turning points in business giving way to formulating important critical success factors necessary in the situation.
Managerial position. This is significant to the manager of the company most importantly if the CSF's are considered from an individual’s point of view. For example, a manager’s performance in a particular area of responsibility is being taken into account, this may be critical to the success of the firm. Managers of departments which focus into customer satisfaction, a CSF for managers in this section would typically be customer relationship management.
To have an actual example, let us use the case analysis presented by Mind Tools: Farm Fresh Produce mission aims to become the number one produce store in Main Street. To achieve these, the firm set the following goals: to gain market share locally of 25%; fresh food from farm to customer in 24 hours for 75% of products; sustain a 98% customer satisfaction rate; expand product range to attract more customers; extend store space to accommodate new products and customers. To be able to identify the possible critical success factors (CSFs), we must examine the mission and objectives and see which areas of business need attention so they can be achieved. The critical success factors could be: create successful relationships with customers, attract and satisfy new customers, and secure financing for expansion.
I have searched some suggested steps on how to write good critical success factors (CSFs). Here are some important principles: (1) ensure a good understanding of the environment, the industry and the company. Of course, in identifying factors you have to get to know the company and the industry where it belongs including the environment where it is involved; (2) build knowledge of competitors in the industry. Knowing the competitors’ positions in the industry, their capabilities and resources, can possibly identify how it will give impact to the organization and could result in strategic CSFs; (3) develop CSFs which result in observable differences. It is important to write critical success factors which are observable versus those that cannot be measured. CSFs that are possible measurable in certain aspects would be easier to focus on these factors; (4) develop CSFs that have a large impact on an organization’s performance. Since critical success factors are the most critical factors in the organization or an individual, it is highly important that identification of these factors should be well taken care of especially that they are the ones which could give the largest impact to the company.
Additionally, here are the steps which will help identify the critical success factors (CSFs) for your company or project:
1 – Establish your business’s or project’s mission and strategic goals. This is basically the first thing to do. The company’s mission and goals and objectives and critical success factors are intertwined with each other. But before identifying the specific factors one must first recognize the mission of the company and its business objectives. Here is a sample template that could help:
Vision / Mission / Profile (What do we want to become / what is our purpose: )
Mission:
Vision:
Strategic Goals (What do we have to do to get there: )
Strategic Goal #1:
Outcomes / Critical Success Factors (How we will get there: )
1.1
1.2
1.3
1.4
Strategic Goal #2:
Outcomes / Critical Success Factors (How we will get there: )
2.1
2.2
2.3
2.4
2.5
Strategic Goal #3:
Outcomes / Critical Success Factors (How we will get there: )
3.1
3.2
3.3
3.4
3.5
Strategic Goal #4:
Outcomes / Critical Success Factors (How we will get there: )
4.1
4.2
4.3
2 - For each strategic goal, ask yourself "what area of business or project activity is essential to achieve this goal?” By answering the questions, you could develop your critical success factors.
3 - Evaluate the list of candidate CSFs to find the absolute essential elements for achieving success. Not all candidate CSFs you have identified can be your final critical success factors. Sometimes it is useful to limit the number of CSFs so to maintain the impact and give good direction and prioritization.
4 - Identify how you will monitor and measure each of the CSFs. Naturally, your critical success factors must be measured, supervised and evaluated.
5 - Communicate your CSFs along with the other important elements of your business or project's strategy. Since your critical success factors are somehow related to your business goals, these are factors that need to communicate with the company’s strategies and overall plans.
6 - Keep monitoring and reevaluating your CSFs to ensure you keep moving towards your aims. It would be very useful to identify how to monitor and evaluate your CSFs as this will measure how far you have reached in your business strategies.
In general, critical success factors (CSFs) provide the critical points which serve as target points for the organization to achieve their goals.
I would like to acknowledge the following resources as my references:
Critical Success Factors: Identifying the things that really matter for success, MindTools Essential Skills for an Excellent Career
http://www.mindtools.com/pages/article/newLDR_80.htm
Critical Success Factors – Analysis: Determine the Critical Success Factors for your Organization, RapidBI: Knowledge, Understanding, Action, May 2009
http://rapidbi.com/created/criticalsuccessfactors.html
Microsoft Encarta Dictionaries
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