Critical success factors (Chapter 7)

Introduction to chapter (page 71)

In the previous chapter we discussed the features of operational plans on a general level. Based on these, now we start building the operational plan – our surfboard. To begin we must define the first building blocks: critical success factors. These are the non-negotiable conditions for winning income from customers, and thus for success in surfing our big wave.

Critical success factors (CSFs) may exist anywhere in the entire business ecosystem – within or outside of our company.

Identifying the wrong CSFs will make the rest of our operational plan useless. To get them right we must search the whole business system and make sure that they are the real drivers that will lead our business system to the goal.

What are critical success factors?

Must achieve conditions

Critical success factors are the prime business success factors: the conditions under which customers will award profitable business to a company or company unit.
From business management's point of view they are conditions of the business ecosystem which must be met in order to achieve a business's or unit's operational goal

Anywhere in the business ecosystem

These business success factors may be located anywhere in the ecosystem:
  • both company internal (example: product features meeting customers' requirements)
  • and outside of the internal system (example: successful resellers of products)

Also valid for competitors

As CSFs are determined by customers they are valid both for for a company and its competitors.

Six rules for defining the right critical success factors (CSFs) (pages 72-76)

  1. Make CSFs serve both short term and longer term goals,
  2. Phrase CSFs as system states - not actions
  3. Consider CSFs for the social dimension - example: cultural values.
  4. Check the entire business ecosystem for CSFs, not just your internal business functions.
  5. Ensure causal necessity for the operational business goal
  6. Keep CSFs separate from "necessary conditions" (NCs are goals in which we want to measure progress in CSFs)

Critical success factors example

In the book SURF THE WAVES OF OPPORTUNITY (pages 77/78) you find a step-by-step example of how to develop critical success factors.