Critical Success Factors

For an introduction, first I will give insights about critical success factors. To start, so many important matters can compete for your attention in business that it's often difficult to see the "wood for the trees". What's more, it can be extremely difficult to get everyone in the team pulling in the same direction and focusing on the true essentials. That's where Critical Success Factors (CSFs) can help. CSFs 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. By identifying your Critical Success Factors, you can 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.

So the question is identify and discuss the steps for “critical success factors” approach. So this is the question that needs to be answered. But in order for me to answer it, I should discuss all about what is a “critical success factor”? so what is a critical success factor or (CSF), according to wikipedia.org it is 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. For example, a CSF for a successful Information Technology (IT) project is user involvement. Others also says that it is an an element of 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. Or any of the aspects of a business that are identified as vital for successful targets to be reached and maintained. Critical success factors are normally identified in such areas as production processes, employee and organization skills, functions, techniques, and technologies. These are some of the definition about what critical success factor or (CSF) means. So we proceed to the next.

There are four basic types of CSF's

They are:

1. Industry CSF's resulting from specific industry characteristics;
2. Strategy CSF's resulting from the chosen competitive strategy of the business;
3. Environmental CSF's resulting from economic or technological changes; and
4. Temporal CSF's resulting from internal organizational needs and changes.

Things that are measured get done more often than things that are not measured. Each CSF should be measurable and associated with a target goal. You don't need exact measures to manage. Primary measures that should be listed include critical success levels (such as number of transactions per month) or, in cases where specific measurements are more difficult, general goals should be specified (such as moving up in an industry customer service survey). So next let us diccuss the factors involving CSF.

Factors:

· Money: positive cash flow, revenue growth, and profit margins.
· Your future: Acquiring new customers and/or distributors.
· Customer satisfaction: How happy they are.
· Quality: How good is your product and service?
· Product or service development: What's new that will increase business with existing customers and attract new ones?
· Intellectual capital: Increasing what you know is profitable.
· Strategic relationships: New sources of business, products and outside revenue.
· Employee attraction and retention: Your ability to extend your reach.
· Sustainability: Your personal ability to keep it all going.

Typically, critical success factors can be categorized into five primary categories:
1. leadership;
2. culture;
3. structure, roles, and responsibilities;
4. information technology infrastructure; and
5. measurement.

Leadership plays a key role in ensuring success in almost any initiative within an organization. Nothing makes greater impact on an organization than when leaders model the behavior they are trying to promote among employees.

Culture is the combination of shared history, expectations, unwritten rules, and social customs that
compel behaviors. It is the set of underlying beliefs that, while rarely exactly articulated, are always there to influence the perception of actions and communications of all employees.

Cultural issues concerning KM initiatives usually arise due to the following factors:
· Lack of time
· Unconnected reward systems
· Lack of common perspectives
· No formal communication

Structure, Roles, and Responsibilities
Although the structure is put in place to establish ownership and accountability, if there is no overall
ownership of knowledge and learning within the organization and the leadership does not "walk the talk," it will be difficult to sustain any sharing behavior.

Information Technology (IT) Infrastructure
Without a solid IT infrastructure, an organization cannot enable its employees to share information on a
large scale. Yet the trap that most organizations fall into is not a lack of IT, but rather too much focus on
IT.

Success factors related to IT.
· Approach
· Content
· Common platforms
· Simple technology
· Adequate training

Measurement
Because many variables may affect an outcome, it is important to correlate activities with business
outcomes, while not claiming a pure cause-and-effect relationship. Increased sales may be a result not
only of the sales representatives having more information, but also of the market turning, a competitor
closing down, or prices dropping 10 percent. Due to the inability to completely isolate knowledge-sharing results, tracking the correlations over time is important.

Start with a vision:
· Mission statement
· Develop 5-6 high level goals
· Develop hierarchy of goals and their success factors
· Lists of requirements, problems, and assumptions
· Leads to concrete requirements at the lowest level of decomposition (a single, implementable idea) Along the way, identify the problems being solved and the assumptions being made Cross-reference usage scenarios and problems with requirements
· Analysis matrices
· Problems vs. Requirements matrix
· Usage scenarios vs. Requirements matrix
· Solid usage scenarios
· Relationship to Usage Scenarios
· Usage scenarios or "use cases"; provide a means of determining:
o Are the requirements aligned and self-consistent?
o Are the needs of the user being met as well as those of the enterprise?
o Are the requirements complete
· Results of the Analysis

Now, I will give examples of CSF.

Statistical research into CSF’s on organizations has shown there to be seven key areas. These CSF's are:

1. Training and education
2. Quality data and reporting
3. Management commitment, customer satisfaction
4. Staff Orientation
5. Role of the quality department
6. Communication to improve quality, and
7. Continuous improvement

These were identified when Total Quality was at its peak, so as you can see have a bias towards quality matters. You may or may not feel that these are right or indeed critical for your organization.

The Critical Success Factors we have identified and us in the BIR process are captured in the mnemonic PRIMO-F

1. People - availability, skills and attitude
2. Resources - People, equipment, etc
3. Innovation - ideas and development
4. Marketing - supplier relation, customer satisfaction, etc
5. Operations - continuous improvement, quality,
6. Finance- cash flow, available investment etc

Steps in identifying CSF.

In reality, identifying your CSFs is a very iterative process. Your mission, strategic goals and CSFs are intrinsically linked and each will be refined as you develop them.

Here are the summary steps that, used iteratively, will help you identify the CSFs for your business or project:

Step 1:
Establish your business's or project's mission and strategic goals

Step 2:
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.


Tip: How Many CSFs?
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.

Step 3:
Evaluate the list of candidate CSFs to find the absolute essential elements for achieving success - these are your Criticial Success Factors.

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.

Step 4:
Identify how you will monitor and measure each of the CSFs.

Step 5:
Communicate your CSFs along with the other important elements of your business or project's strategy.

Step 6:
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.

And lastly, I will just share a little CSF on DLPC. This is the data I gathered during the interview. Critical success factors that involve DLPC is their peopleware, project cost, support from business owner, time, and budget. These are the factors that is critical to the success of a project. So these are all I want to share. Thanks!

References:
http://docs.google.com
http://en.wikipedia.org/wiki/Critical_success_factor
http://www.mindtools.com/pages/article/newLDR_80.htm
http://rapidbi.com/created/criticalsuccessfactors.html