Critical Success Factors
In simple terms, any organization that produces products and/or delivers services should be viewed as a transformation mechanism requiring continuous process improvement and innovation. When appropriate events and conditions trigger action (process initiation), customer requirements and organizational resources such as raw materials, money, information, and yes, processes are transformed into goods, services, and business outcomes for the customers' benefit or for the process completion.
What is a Critical Success Factor?
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."
Critical Success Factors (CSF’s) are the critical factors or activities required for ensuring the success your business. The term was initially used in the world of data analysis, and business analysis.
Most smaller and more pragmatic businesses can still use CSF’s but we need to take a different, more pragmatic approach.
Critical Success Factors have been used significantly to present or identify a few key factors that organizations should focus on to be successful.
As a definition, critical success factors refer to "the limited number of areas in which satisfactory results will ensure successful competitive performance for the individual, department, or organization”.
Critical success Factors define key areas of performance that are essential for the organization to accomplish its mission. Identifying the business drivers for change and the critical success factors is the most important element of any business transformations. John F. Rockart concludes that CSF’s are areas of activity that should receive constant and careful attention from management. Critical success factors are strongly related to the mission and strategic goals of your business project. Whereas the 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.
The critical success factor (CSF) approach is a technique that will aid health administrators, planners and managers to identify, specify and sort among the most relevant and critical factors determining an organization's survival and success. Following a top-down management perspective, this paper discusses the CSF methodology as a strategic information management process comprising several important phases: (i) understanding the external factors such as the organization's industry, market and environment; (ii) achieving strong support and championship from top management; (iii) encouraging the proactive involvement of management and staff in generic CSF identification; (iv) educating and directing the participation of staff members in CSF verification and further refinement of generic CSFs into specific CSFs; and (v) aggregating, prioritizing and translating activity-related CSFs into organizational information requirements for the design of the organization's management information infrastructure. The implementation of this CSF approach is illustrated in the context of a British Columbia community hospital, with insights provided into key issues for future health researchers and practitioners.
For most businesses, there are only a generally a limited number of areas – like sales or product development – which makes a business succeed. We can select critical success factor with insights and analysis. The success or failure of your business depends on how you approach your unique set of critical success factors. Understanding these factors and spending 100 percent attention to them is a sure way to add power to your efforts and jump start towards a new level of performance.
Identifying Critical Success Factors is important as it allows firms to focus their efforts on building their capabilities to meet the Critical Success Factor's, or even allow firms to decide if they have the capability to build the requirements necessary to meet Critical Success Factors (CSF's).
Critical Success Factors is identifying as a very iterative process. Every mission, strategic goals and Critical Success Factors are essentially linked and each will be refined as you develop them.
Here are five steps to Critical Success Factors that will directly affect your success in achieving any goal:
- Establish your businesses or project's mission and strategic goals.
In achieving a success for an organization it is always a must to identify your mission, goals and objectives because these will serve as a basis on how will you decide what could be the possible Critical Success Factors that you are going to apply. You cannot skip on choosing your critical success factors unless you identify your mission and goals. In identifying your Critical Success Factors is just like identifying your plans or your ways of achieving your goals and objectives and making your mission possible to happen. For a project to have its significance and completion in due time, it would start with a mission and a set of goals. A project can also be done without these goals and mission but it is best for a team to be specific in what they would want to conquer within the whole development duration. It would also be easy for them to identify the activities that they will be dealing with towards the endpoint since a precise set of targets are known from the very beginning.
- For each strategic goal, ask yourself "what area of business or project activity is essential to achieve this goal?" The answers to the question are your candidate CSFs.
There are four basic types of Critical Success Factor's.
Industry Critical Success Factor's (CSF's) resulting from specific industry characteristics; these factors result from specific industry characteristics. These are the things that the organization must do to remain competitive.
Strategy Critical Success Factor's (CSF's) resulting from the chosen competitive strategy of the business; these factors result from the specific competitive strategy chosen by the organization. The way in which the company chooses to position themselves, market themselves, whether they are high volume low cost or low volume high cost producers, etc.
Environmental Critical Success Factor's (CSF's) resulting from economic or technological changes; these factors result from macro-environmental influences on an organization. Things like the business climate, the economy, competitors, and technological advancements are included in this category.
Temporal Critical Success Factor's (CSF's) resulting from internal organizational needs and changes; these factors result from the organization's internal forces. Specific barriers, challenges, directions, and influences will determine these CSFs.
Towards these given types of Critical Success Factors, you are then ready to answer the step two and would mainly used in the business process your organization operates.
- Evaluate the list of candidate CSFs to find the absolute essential elements for achieving success - these are your Critical Success Factors.
After it, you should have identify the resources, assistance, information or anything else that might be needed to reach the goal. As you identify and evaluate candidate CSFs, you may uncover some new strategic objectives or more detailed objectives. So you may need to define your mission, objectives and CSFs iteratively. Deriving other data or information about the subject of your project or goal is also important. After you have identified and specify your strategic goals and objectives, then you have to list down the possible Critical Success Factors that could be used to help that goals and objectives be achieved. This helps you maintain the impact of your Critical Success Factors, and so give good direction and prioritization to other elements of your business or project strategy.
- Identify how you will monitor and measure each of the CSFs.
The monitoring and measuring each CSF’s is effectively done during surveys, interviews and research toward the people. The most important data collection activity is conducting interviews with participants. In this activity, the participants have an opportunity to talk about their management challenges and their contributions to the organization and/or the operational unit’s successes and failures. The interactive nature of the interview process provides opportunities for clarification and for guiding the interview in areas that might expose particular barriers and obstacles to accomplishing the mission.
Step Five: Communicate your CSFs along with the other important elements of your business or project's strategy.
It is a basic thing that every element in an organization communicates with each other in order to organize all the data that work along with the business strategies.
Step Six: Keep monitoring and reevaluating your CSFs to ensure you keep moving towards your aims. Indeed, whilst CSFs are sometimes less tangible than measurable goals, it is useful to identify as specifically as possible how you can measure or monitor each one.
Critical Success Factor is a great element of an organizational activity which is central to its future success. Critical success factors may change over time, and may include items such as product quality, employee attitudes, manufacturing flexibility, and brand awareness. This can enable analysis. Thus giving any organization the courage to make plans and establishing business strategies according to the mission, vision, objectives and goals that set by the company. It is a nice start for every company so that every end of the day, they could see a beautiful result from all their hardships which is the great success they have made.
http://www.mindtools.com/pages/article/newLDR_80.htm
http://www.army.mil/ArmyBTKC/focus/cpi/csf.htm
http://rapidbi.com/created/criticalsuccessfactors.html
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