Critical Success Factor
(CSF) is a business
term for an element which is necessary for an organization or project to achieve its mission
. They are the critical factors or activities required for ensuring the success your business. The term was initially used in the world of data analysis, and business analysis. For example, a CSF for a successful Information Technology
(IT) project is user involvement.
The concept of "success factors" was developed by D. Ronald Daniel
of McKinsey & Company
in 1961. The process was refined by Jack F. Rockart
in 1986. In 1995 James A. Johnson and Michael Friesen applied it to many sector settings, including health care
A plan should be implemented that considers a platform for growth and profits as well as takes into consideration the following critical success factors:
- Money: positive cash flow, revenue growth, and profit margins.
- Your future: Acquiring new customers and/or distributors.
- Customer satisfaction: How happy are they?
- Quality:How good is your product and service?
- Product or service development: What's new that will increase business with existing customers and attract new ones?
- Intellectual capital: Increasing what you know that's profitable.
- Strategic relationships: New sources of business, products and outside revenue.
- Employee attraction and retention: Your ability to do extend your reach.
- Sustainability: Your personal ability to keep it all going.
Key success factors generally include exceptional management of several of the following:
- Product design
- Market segmentation
- Distribution and promotion
- Securing of key personnel
- Research and development
- Maintenance of quality/value
- Securing key suppliers
Relation to Key Performance Indicator
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. KPIs are measures that quantify management objectives
and enable the measurement of strategic performance.
- KPI = Number of new customers.
- CSF = Installation of a call centre for providing quotations.