What Are Critical Success Factors?

How can we aim for, or even define, business success, if we don't know what it is? Critical success factors (CSFs) are an important element in business, and essentially entail identifying what really matters. In this blog post, we will explain exactly what critical success factors are, and take you through some of the different types.

Deciding what matters

Does your team have its eye on the ball? Critical success factors can be a help in this regard, allowing you to measure and track your progress in achieving overarching business objectives. You can refer to them whenever you need to, ensuring that your strategies are on track. The disparate activities of various departments within the same organisation can be better aligned, with the common goal taking on a new clarity. 

A sales team for example, may identify critical success factors such as closer customer relationships, increased number of sales partners and increased motivation within the team.

How to define 'CSFs'?

CSFs are the brainchild of D. Ronald Daniel, who described the concept in a Harvard Business Review article entitled 'Management Information Crisis' all the way back in 1961. They can be differentiated from other measurements of success, such as Key Performance Indicators (KPI), and are key areas, rather than metrics, that are seen as critical to an organisation enjoying success in its market. The nature of CSFs means that they should be constantly scrutinised by management.

CSF types

Now, let's take a look at the four different types of CSFs, as described by John F. Rockart, from Massachusetts Institute of Technology in the United States, who developed the ideas of Daniel:

1. Industry Factors – These will vary depending on the specific sector a company inhabits. Businesses will need to define the key actions that need to be carried out in response to these factors, to remain competitive. 

2. Environmental Factors - These external factors have the ability to influence the direction of a business and range from competitors, the general business climate and advances in technology.

3. Strategic Factors - These stem from the competitive advantage a company has already identified in a particular market and can range from being able to provide a product or service in large quantity to having expertise in certain areas. 

4. Temporal Factors – These come from short-term developments within an organisation, such as internal changes or problems that arise, and can be considered a normal part of business growth.

Click here to access John F. Rockart's research paper on critical success factors.