Critical Success Factors (CSF)

Critical Success Factors are the essential areas of activity that must be performed well if organization wants to achieve their mission, objectives or goals for your business or project.

Critical Success Factors helps to create a common point of reference to help you direct and measure the success of your business or project. As a common point of reference, CSFs help everyone in the team to know exactly what's most important. And 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, and has since been used extensively to help businesses implement their strategies and projects.

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 are strongly related to the mission and strategic goals of your business or 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.

Below are the summary steps that will help you identify the CSFs for your business or project:

Step One: Establish your business's or project's mission and strategic goals.

Step Two: For each strategic goal, ask yourself "what area of business or project activity is essential to achieve this goal?"

Step Three: Evaluate the list to find the absolute essential elements for achieving success – these are your Criticial Success Factors. As you identify and evaluate CSFs, you may uncover some new strategic objectives or more detailed objectives. So you may need to define your mission, objectives and CSFs iteratively.

Step Four: Identify how you will monitor and measure each of the CSFs

Step Five: Communicate your CSFs along with the other important elements of your business or project's strategy.

Step Six: Keep monitoring and reevaluating your CSFs to ensure you keep progressing 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.

To make sure you consider all types of possible CSFs, you can use Rockart's CSF types as a checklist.

•Industry – these factors result from specific industry characteristics. These are the things that the organization must do to remain competitive.
•Environmental – 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.
•Strategic – 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.
•Temporal – these factors result from the organization's internal forces. Specific barriers, challenges, directions, and influences will determine these CSFs

Source: www.mindtools.com