Critical Success Factors & Key Performance Indicators

by Paul Simister on April 2, 2013

Critical Success Factors (CSF) are unique to implementing your particular strategy.

Key success factors will be common across many of the businesses within an industry and (hopefully) each business has identified a small number of key factors of difference to differentiate itself away from theĀ  competition.

The combination of key success factors and key factors of difference you need to focus on to deliver your strategy become your critical success factors.

Critical Success Factors Are Individually Necessary & Together Sufficient

These CSF are the factors which are individually necessary and together sufficient for your business to succeed in its mission.

There are normally about seven critical success factors for a business. If you identify more than ten, you need to go back and have a look at what you’re trying to do and test each success factor to see if it is really critical.

The reason is simple.

The critical success factors become the guide to managing your business and assessing your daily decisions and actions. You can remember five to seven success factors and check that actions that improve one won’t have an unnecessarily detrimental effect on another.

The Problem Of Having Too Many Critical Success Factors

But trying to juggle thirteen or fourteen success factors makes the process too mentally demanding.

You lose focus when the entire purpose of identifying success factors is to create focus on the few things that really make a difference.

Your business becomes complicated and confusing when the intention is to make success simple to understand and simpler to do.

Communicating Your Critical Success Factors With Key Performance Indicators

I sometimes talk to business owners and directors who have a problem with communicating their critical success factors with their staff and suppliers. It seems that there is this idea that having done all the hard work, thinking and analysis, your strategy should be kept secret.

Bits of it should be but not your critical success factors. Your staff need to understand the important elements that really matter and the success factors should be converted into performance measures and targets.

Performance measurement systems are important for monitoring how well the business is achieving its critical success factors and the Balanced Scorecard is the best well known technique.

Your customers need to be told about your key differentiation factors and they need to experience for themselves that the words turn into consistent performance, benefits and experience. And if your customers can see your differentiation factors, then so can competitors.

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