How to write a Critical Success Factor (CSF)
Being practical when using CSF’s
Academic Background/ History
Types of Critical Success factors
Definitions
Five key sources of Critical Success factors
How to write a good Critical Success factor
Key Performance Indicators (KPI’s) and Critical Success factors
The Critical Success Factor (CSF) Method
Using Critical Success factors for Strategic and business planning
Examples of Success factors
Sample Critical Success factor templates
Critical Success Factors for Projects
Critical Success Factors (CSF’s) are the Critical factors or activities required for ensuring the success of your business. The term originated 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 practical approach.
Critical Success Factors have been used significantly to present or identify a few key factors that organisations 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 organisation”.
As you read this and many other resources on the internet, you will discover that there are potentially a confusing variety of definitions and uses of Critical Success Factors.
Before you start the journey looking at CSFs, it is crucial to realise that the specific factors relevant for you will vary from business to business and industry to industry. The key to using CSFs effectively is to ensure that your definition of a Factor of your organisations activity which is central to its future will always apply.
Therefore success in determining the CSFs for your organization is to determine what is central to its future and achievement of that future.
This page is primarily written for students of management and business, to keep things simple for application in smaller organisations remember to only have 5-7 critical factors for YOUR organisation, and I am sure one of those will be cashflow!
Identifying CSF’s 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 can build the requirements necessary to meet Critical Success Factors (CSF’s).
The principle of identifying critical success factors as a basis for determining the information needs of managers was proposed by RH Daniel (1961 Harvard Business Review – HBR) as an interdisciplinary approach with a potential usefulness in the practice of evaluation within
library and information units but popularized by F Rockart (1979 Harvard Business Review – HBR). In time many academics have applied the methodology increasingly outside the educational establishment.
The idea is straightforward:
in any organisation, certain factors will be critical to the success of that organisation, in the sense that, if objectives associated with the elements are not achieved, the organisation will fail – perhaps catastrophically so.
The following is an example of generic CSF’s:
Factors that remain relevant today for many organisations.
With a phrase like Critical Success Factors having ‘common usage’ within technical environments, it is difficult to identify its real history in the context of business, management and human resources. One test for originality is the use of the TLA (Three Letter Acronym) of CSF. And one of the earliest methods of this is by
Chief executives define their own data needs. By: Rockart, John F.. Harvard Business Review, Mar/Apr79, Vol. 57 Issue 2, p81-93, 13p
In this earlier work:
MANAGEMENT INFORMATION CRISIS. By: Daniel, D. Ronald. Harvard Business Review, Sep/Oct61, Vol. 39 Issue 5, p111-121, 11p
Ronald does not use the term CSF or even the phrase Critical Success Factors, but does discuss critical elements and non essential elements of a business leading to “controlling competitive success” Daniel also uses the term “success factors” in the context that we would understand today.
Predating these pieces is a short entry:
THE CASE STUDY METHOD AND THE ESTABLISHMENT OF STANDARDS OF EFFICIENCY.By: Lebreton, Preston P.. Academy of Management Proceedings, 1957, p103-103, 1p
In which students looking into the efficiency of businesses for case studies are recommended to look at “the factors which
seem to be paramount in determining success in this industry” this is by far the earliest mention of what we today know as “Critical Success Factors”
To our mind, the first published work of this approach is by Rockart. This pages reproduced from RapidBI.com
Other sources of research:
Management Control Systems: Text, Cases and Readings
By Robert Newton Anthony, John Dearden, Richard F. Vancil
Published by R. D. Irwin, 1972 p151
This publication seems to be one of the earliest and most extensively cited books in the early days of CSFs.
10 problems that worry presidents. By: Spencer, Lyle M.. Harvard Business Review, Nov/Dec55, Vol. 33 Issue 6, p75-83, 9p
In this article, Spencer asks the question: “What are the essential factors that
produce success in my company?” which for 1955 is getting close to the beginnings of CSFs – so for those interested in the early beginings worth a look.
How to write a Critical Success Factor (CSF)
There are four basic types of CSF’s
They are:
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 the number of transactions per month) or, in cases where specific measurements are more complicated, general goals should be specified (such as moving up in an industry customer service survey).
Critical Success Factor
an element of organisational 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 organisation skills, functions, techniques, and technologies. The identification and strengthening of such factors may be similar. ..
Critical Success Factor (CSF) or Critical Success Factors
is a business term for an element which is necessary for an organisation or project to achieve its mission. For example, a CSF for a successful Information Technology (IT) project is user involvement.
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The Industry Critical success factor |
Industry: There are some CSF’s common to all companies operating within the same industry. Different industries will have unique, industry-specific CSF’s An industry’s set of characteristics define its own CSF’s Different industries will thus have different CSF’s, for example, research into the CSF’s for the Call centre, manufacturing, retail, business services, health care and education sectors showed each to be different after starting with a hypothesis of all sectors having their CSF’s as market orientation, learning orientation, entrepreneurial management style and organisational flexibility. In reality, each organisation has its own unique goals, so while thee may be some industry-standard – not all firms in one industry will have identical CSF’s. Some trade associations offer to benchmark across possible common CSF’s.
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Competitive strategy and industry position Critical success factor |
Competitive position or strategy: The nature of the position in the marketplace or the adopted strategy to gain market share gives rise to CSF’s Differing strategies, and positions have different CSF’s Not all firms in an industry will have the same CSF’s in a particular industry. A firm’s current position in the industry (where it is relative to other competitors in the industry and also the market leader), its strategy, and its resources and capabilities will define its CSF’s The values of an organisation, its target market etc. will all impact the CSF’s that are appropriate for it at a given point in time.
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Environmental Factors Critical success factor |
Environmental changes: Economic, regulatory, political, and demographic changes create CSF’s for an organisation. These relate to environmental factors that are not in the control of the organisation but which an organisation must consider in developing CSF’s Examples for these are the industry regulation, political development and economic performance of a country, and population trends. An example of environmental factors affecting an organisation could be a demerger.
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Temporal Factors Critical success factor Critical success factor Critical success factor |
Temporal factors: These relate to short-term situations, often crises. These CSF’s may be critical but are usually short-lived. Temporal factors are temporary or one-off CSF’s resulting from a specific event necessitating their inclusion. Theoretically, these would include a firm which “lost executives as a result of a plane crash requiring a critical success factor of rebuilding the executive group”. Practically, with the evolution and integration of markets globally, one could argue that temporal factors are not temporal anymore as they could regularly exist in organisations. For example, a firm aggressively building its international business would require a core group of executives in its new markets. Thus, it would have the CSF of “building the executive group in a specific market”, and it could have this every year for different markets. |
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Managerial Position Critical success factor Critical success factor |
Managerial role: An individual role may generate CSF’s as performance in a specific manager’s area of responsibility may be deemed critical to the success of an organisation. Managerial position. This is important if CSF’s are considered from an individual’s point of view. For example, manufacturing managers who would typically have the following CSF’s: product quality, inventory control and cash control. In organisations with departments focused on customer relationships, a CSF for managers in these departments may be customer relationship management. |
In an attempt to write good CSF’s, several principles could help to guide writers. These principles are:
For the organisation following the CSF method, the foundation for writing good CSF’s is a good understanding of the environment, the industry and the organisation In order to do so, this requires the use of information that is readily available in the public domain. Externally, industry information can be sourced from industry associations, news articles, trade associations, prospectuses of competitors, and equity/analyst reports to name some sources. These would all be helpful in building knowledge of the environment, the industry and competitors. Internally, there should be enough sources available to management from which to build on their knowledge of the organisation. In most cases, these won’t even have to be anything published as managers are expected to have a good understanding of their organisation Together, the external and internal information already provides the basis from which discussion on CSF’s could begin.
The information mentioned above can largely be accessed through the internet. Other sources which would be helpful, and not necessarily accessible through the internet, are interviews with buyers and suppliers, industry experts and independent observers.
A “good” CSF begins with an action verb and clearly and concisely conveys what is important
and should attended to. Verbs that characterise actions: attract, perform, expand, monitor,
manage, deploy, etc. (“poor CSFs” start with: enhance, correct, up-grade, …)Examples: “monitor customer needs and future trends”
After having developed a hierarchy of goals and their success factors, further analysis will lead
to concrete requirements at the lowest level of detail
Some CSFs might influence other CSFs or factors such as markets, technologies, etc.
Such CSFs could be rephrased into “key influence factors” For example: “physical size” or “trained staff”
A critical success factor is not a Key Performance Indicator (KPI). Critical success factors are elements that are vital for a strategy to be successful. KPI’s are measures that quantify objectives and enable the measurement of strategic performance.
For example:
Start with a vision:
For other strategic business planning models, please see our management models page
Analytical research into CSF’s on organisations has shown there to be seven key areas. These CSF’s are:
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 organisation.
The Critical Success Factors we have identified and use in the BIR process are captured in the mnemonic PRIMO-F
This list should serve only as a guide to get you started. Some of these factors will be irrelevant in a particular industry or competitive situation; others may need to be added, as appropriate.
The factors are grouped into three categories of organisational competency, and you will use your differentiators.
Examples of Success Factors:
Understanding of Market:
Marketing Variables:
Decision making:
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Critical Success Factors for __________________ Dated ____________
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| Critical Success Factor | Source of CSF | Primary Measures& Targets |
Industry,
Strategy,
Environmental,
Temporal [delete as appropriate]
Industry, Strategy, Environmental, Temporal [delete as appropriate] Industry, Strategy, Environmental, Temporal [delete as appropriate] Industry, Strategy, Environmental, Temporal [delete as appropriate] Industry, Strategy, Environmental, Temporal [delete as appropriate]
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Critical Success Factors for __________________ Dated ____________
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| Success Criteria | Potential Benefit | Approach |
| What do you want to be? Vision / Mission / Strategic Goals / Critical Success Factors |
| Vision / Mission / Profile |
| What do we want to become / what is our purpose: |
|
Mission: Vision:
|
| Strategic Goals |
| What do we have to do to get there: |
| Strategic Goal #1: |
| Outcomes / Critical Success Factors |
| How we will get there: |
| 1.1 |
| 1.2 |
| 1.3 |
| 1.4 |
| Strategic Goal #2: |
| Outcomes / Critical Success Factors |
| How we will get there: |
| 2.1 |
| 2.2 |
| 2.3 |
| 2.4 |
| 2.5 |
| Strategic Goal #3: |
| Outcomes / Critical Success Factors |
| How we will get there: |
| 3.1 |
| 3.2 |
| 3.3 |
| 3.4 |
| 3.5 |
| Strategic Goal #4: |
| Outcomes / Critical Success Factors |
| How we will get there: |
| 4.1 |
| 4.2 |
| 4.3 |
What should you measure?
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Measure Identification Worksheet
This worksheet helps create a list of measures to support each Critical Success Factor
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| Critical Success Factor | ||||||||
| Measures | ||||||||
| Supporting Measure Name | Definition / Formula | Is it a true indicator of this CSF? What is it telling you? |
||||||
The owner (who’s accountable?)
Is Data Available? If yes, Data Source?
If no, is it possible to collect?
Quality of Data?High / Low
Are targets Available?Yes/no
Discard?
Future? Keep?
Initiatives / Activities Supporting Initiative / ProjectUnit / Person ResponsibleImplementation Team Member AssignedTarget Start DateTarget Completion DateBudget/ Resources
Research has shown that to complete a project successfully, the following critical success factors apply:
You can have all of the above elements, but if you lack an engaged and involved business sponsor, your chances for success are greatly lessened.
According to a recent Gartner Institute study, 50% of all projects were delivered above schedule and/or budget.
Many projects were delivered with significant functionality missing, often cancelled after requirements definition.
In 2001, the Gartner group updated their research to include lack of executive sponsorship as a major contributor to project failures.
According to a 2000 Standish Group Report, the top success factors for projects were as follows. The list is in decreasing order of percentage factors responsible for success.
% – Success Factors
Other useful pages on the RapidBI website include: BIR Creatrix Employee Engagement SWOT Analysis
See more articles on our articles microsite.
Written in 2010, Reviewed June 2014
How to write a Critical Success Factor CSF
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