1.5 THE STRATEGIST IN YOU: Critical Success Factors

(SHORT NOTES FROM STRATEGY TOOLS:

Core Strategy Tools at http://www.mindtools.com)

 

So many important matters can compete for your attention in business that it's often difficult to see the "wood for the trees".  Critical Success Factors (CSFs) also known as Key Results Areas (KRAs), are the essential areas of activity that must be performed well if you are to achieve the mission, objectives or goals for your business or project.

CSFs create a common point of reference to help direct and measure the success of business or project.  CSFs help everyone in the team to know exactly what's most important.  This helps people perform their own work in the right context and so pull together towards the same overall aims.

The idea of CSFs was first presented by D. Ronald Daniel in the 1960s. It was then built on and popularized a decade later by John F. Rockart, of MIT's Sloan School of Management.  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."  CSFs are strongly related to the mission and strategic goals.  Mission and goals focus on the aims and what is to be achieved, Critical Success Factors focus on the most important areas and get to the very heart of both what is to be achieved and how you will achieve it.

Using the Tool: An Example Produce Store "Farm Fresh Produce"

Mission: "To become the number one produce store in Main Street by selling the highest quality, freshest farm produce, from farm to customer in under 24 hours on 75% of our range and with 98% customer satisfaction."
strategic objectives	·        Gain market share locally of 25%. ·        Achieve fresh supplies of "farm to customer" in 24 hours for 75% of products. ·        Sustain a customer satisfaction rate of 98%. Expand product range to attract more customers. ·        Have sufficient store space to accommodate the range of products that customers want
brainstorming the Critical Success Factors
Objective	Candidate Critical Success Factors
Gain market share locally of 25%	Increase competitiveness versus other local stores Attract new customers
Achieve fresh supplies of “farm to customer” in 24 hours for 75% of products	Sustain successful relationships with local suppliers
Sustain a customer satisfaction rate of 98%	Retain staff and keep up customer-focused training
Expand product range to attract more customers	Source new products locally
Extend store space to accommodate new products and customers	Secure financing for expansion Manage building work and any disruption to the business
consider the absolute essential and identify the truly Critical Success Factors
Identified CSFs	relationships with local suppliers attract new customers financing for expansion

 

SUMMARY STEPS
1	Establish your business's or project's mission and strategic goals
2	Identify area of business or project activity is essential to achieve this goal (candidate CSFs)
3	Evaluate the list of candidate CSFs Find the absolute essential elements for achieving success (Criticial Success Factors)
4	Identify monitoring and measuring methods of each CSFs
5	Communicate the CSFs
6	Keep monitoring and reevaluating your CSFs