Critical success factors
What are critical success factors?
With every organization, process or product there are some critical factors on which their success depends. The success of a book is not whether there is an unwanted printing mark on a page - it is whether the book lives up to the readers expectations and that is more to do with the substance than with materials. The success of electronic equipment is dependent on appearance, function and reliability. The success of an automobile depends on appearance, function, safety, reliability and maintainability. In most cases these factors will be defined in the product specification and will be the functions that the product is required to perform. With processes, success may depend on throughput, resource consumption, traceability and/or response. With the organization, success may depend on market intelligence, retaining competent people, short product development timescales, the quality of conformity or service standards - these will be the organizations objectives
Why is it important to understand critical success factors?
Critical success factors either drive or impede your performance and constrain the manner in which a process operates. Drivers will help you succeed, they will propel you towards your goal. Barriers will get in the way and stop you achieving your goal. Some of these are external to the organization and out of your control. Others are internal to the organization and within your control. You can change these should there be the motivation to do so. This is where we enter the arena of the management of change. It is not only technological change but changes in attitude, behaviour, belief etc that may be needed depending on what the goal is and the environment in which this goal is to be achieved.
How are critical success factors determined?
The CSFs can be determined simply by asking the question of the organization or a particular business proposition, What factors affect our ability to get it right, or to realise our vision or to fulfil our mission, or to achieve out objectives? It rather depends on the level at which you ask the question. The result might be a mixed bag of things, some of which may be more relevant to a process risk assessment. Two techniques have emerged that are more methodical, one is a PEST analysis and the other is a SWOT analysis. A PEST analysis measures a market whereas a SWOT analysis measures a business.
PEST (Political, Economic, Social and Technological) analysis measures the market relative to a particular organizational goal or business proposition. It serves to identify what is going on in the external environment that could affect the future direction of the organization or the success of a business proposition. Strategies that do not take these influences into account are invariably doomed to failure.
The SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis looks at the organization itself or a business proposition or indeed a competitor. The PEST affects the SWOT but not visa versa. Without a clear understanding of an organization’s strengths, weaknesses, opportunities and threats business plans may fail, goals will be missed and new product or service development programmes will fail to live up to their potential. The analysis of strengths and weaknesses looks inwards on the organization, whereas the analysis of opportunities and threats looks outwards and can therefore be derived from the PEST.
What do I do once I have identified the critical success factors?
Critical success factors shape your objectives.
- If your success depends on the safety of your products, you need safety objectives.
- If your success depends on securing the integrity of information entrusted to you by your customers, then you need security objectives.
- If your success depends on the impact your operations have on the environment, you need environmental objectives.
- If your success depends on capital investment in modern plant and machinery, you need financial objectives.