Things that really matters for success : CRITICAL SUCCESS FACTORS
It’s often difficult to see the “wood for the trees” in business because many important matters compete for your attention. Likely to said, 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 can help. These 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, it will 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.
As we try to browse the internet and many other resources, we can find and will discover that there are potential but confusing variety of definitions and uses of Critical Success Factors.
Definitions
Critical Success Factor
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. This can enable analysis.
Critical Success Factor
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. The identification and strengthening of such factors may be similar.
Critical Success Factor
Is a business term for an element which is necessary for an organization or project to achieve its mission. For example, a CSF for a successful Information Technology (IT) project is user involvement.
In the Re.ViCa project a critical success factor is defined as follow:
A critical success factor is a factor whose presence is necessary for an organization to fulfill its mission - in other words, if it is not present then its absence will cause organizational and/or mission failure.
Those are just some of various definitions that we could find when we will try to look for the critical success factors.
History/Background
The idea of identifying critical success factors as a basis for determining the information needs of managers was proposed by Daniel (1961) but popularized by Rockart (1979). The idea is very simple: in any organization certain factors will be critical to the success of that organization, in the sense that, if objectives associated with the factors are not achieved, the organization will fail - perhaps catastrophically so. Rockart (1979: 85), by referring to Daniel (1961), gives the following as an example of the CSFs: new product development, good distribution, and effective advertising for the food processing industry - factors that remain relevant today for many firms.
As we start to discuss the Critical Success Factors, it is important to realize that the specific factors relevant for you will vary from business to business and industry to industry. The key to using Critical Success Factors effectively is to ensure that your definition of a factor of your organizations activity which is central to its future will always apply.
Therefore success in determining the Critical Success Factors for your organization is to determine what is central to its future and achievement of that future.
What is a Critical Success Factor?
Critical Success Factors 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.
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”.
Inevitably, the CSF concept has evolved, and you may have seen it implemented in different ways.
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.
The term “Critical Success Factor” is used differently, due to ambiguity of the word “critical”. But whichever definition we may use, just be sure it is understood by all the managers.
Types of Critical Success Factor
Four Basic Types:
1. Industry - resulting from specific industry characteristics;
2. Strategy - resulting from the chosen competitive strategy of the business;
3. Environmental - resulting from economic or technological changes; and
4. Temporal - resulting from internal organizational needs and changes.
It is said that 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. It’s not necessarily that you need exact measures to manage. Primary measures that should be listed include critical success levels or, in cases where specific measurements are more difficult, general goals should be specified.
Identifying Critical Success Factors is important as it allows firms to focus their efforts on building their capabilities to meet the CSF's, or even allow firms to decide if they have the capability to build the requirements necessary to meet Critical Success Factors.
Using the Tool: Summary Steps
In reality, it is said that identifying a CSFs is a very iterative process. The mission, strategic goals and CSFs are intrinsically linked and each will be refined as it is developed.
Below are the Summary Steps that used iteratively that will help us identify the CSFs for the business or project:
Step One: Establish your business's or project's mission and strategic goals.
This is the mission statements and the vision statements. Vision Statements and Mission Statements are the inspiring words chosen by successful leaders to clearly and concisely convey the direction of the organization. By crafting a clear mission statement and vision statement, you can powerfully communicate your intentions and motivate your team or organization to realize an attractive and inspiring common vision of the future.
Step Two: 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.
1. Industry - these factors result from specific industry characteristics. These are the things that the organization must do to remain competitive.
2.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.
3. 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.
4. Temporal - these factors result from the organization's internal forces. Specific barriers, challenges, directions, and influences will determine these CSFs.
Step Three: 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 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 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.
Examples of Critical Success factors
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 use 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
Key Points
Critical Success Factors are the areas of your business or project that are absolutely essential to its success. By identifying and communicating these CSFs, you can help ensure your business or a project is well-focused and avoids wasting effort and resources on less important areas. By making CSFs explicit, and communicating them with everyone involved, you can help keep the business and project on track towards common aims and goals
References/ Sources:
http://www.mindtools.com/pages/article/newLDR_80.htm
http://rapidbi.com/created/criticalsuccessfactors.html#WhatareCSFs
http://informationr.net/ir/6-3/paper108.html
http://www.mindtools.com/pages/article/newLDR_90.htm
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