Critical Success Factors

Description

• Description of what an organisation must excel in—in the eyes of  the customer—to realise the (Confirmed) Business Vision.   Critical Success Factors are the means by which the general corporate vision is translated into concrete, measurable guidelines that can be acted upon. They are not always defined for the overall enterprise, but can be defined for any business functional or process area of responsibil­ity that is sponsoring a BPI effort.
• Critical Success Factors are always oriented towards the needs of the “end-customer” of the organisation. This perspective yields the maximum possible degree of performance improvement for the BPI initiative.
• However, for some organisations, Critical Success Factors must also take into consideration additional factors such as the needs/constraints of stakeholders which must be weighed against customer desires.  Similarly, Critical Success Factors may need to be developed in organisations that have made a strategic decision to adopt a “balanced” view to management.  In such circumstances, additional factors such as financial performance, business process performance and organisational learning are also considered.

Business Value

• Critical Success Factors bridge between the company vision and its actual implementation within the organisation.  Linking Critical Success Factors to the (Confirmed) Business Vision, helps the BPI program serve a strategic business purpose rather than degenerating to “yet another trendy management exercise”.
• If the company vision is not in alignment with customer-oriented Critical Success Factors then the improved processes may not support the achievement of that vision.

Approach

To develop Critical Success Factors a first draft is developed up front by the consultant to serve as a baseline through the remainder of the development process. A final set of Critical Success Factors is determined, with the consequences of each factor clearly identified (e.g. on a Critical Success Factors Specification Sheet).and the consequences are analysed using the Critical Success Factor specification sheet.

1. Review the (Confirmed) Business Vision and Holistic Business Model to identify potential “strawman” Critical Success Factors.
2. Conduct interviews with selected senior managers who represent different functions/processes within the organisation.  Using the strawman as a starting point, formulate into a series of statements or short paragraphs the Critical Success Factors for the organisation.
1. The project team often have to challenge initially-proposed Critical Success Factors by asking the following question: “What must we do extremely well to make the clients of our competitors come over and stay?”
3. Conduct a workshop with senior management to obtain consensus and buy-in for the Critical Success Factors and their impacts.
1. During the workshop, it is important to ensure that participants recognise and understand the anticipated impact on the organisation of each of the Critical Success Factors being proposed.  Executives’ initial thinking on these issues can be focused by identifying ways to measure the success of the Critical Success Factors (i.e. Key Performance Indicators), as well as the consequences for people, information technology and business processes.  Identifying expectations regarding the timeframe for achieving success in these areas establishes the degree to which the leadership team is “on the same wavelength”.
4. Validate the finalised Critical Success Factors with selected external or internal customers to ensure a “reality check” on management’s proposals. (Customer Profiling)

Guidelines

Problems/Solutions

• Managers have a tendency to propose as Critical Success Factors issues that may at one time been critical to success but which are now taken for granted within the industry (e.g., “safety” in the airline industry).  Such factors need to be weighed into decisions made at all points of the BPI exercise.  Thus, they should not form the “cornerstone” of a set of Critical Success Factors intended to set the organisation apart from the competition.
• Organisations and Project Team Members often confuse Critical Success Factors with the quantitative results they wish to achieve from the BPI project. For example the following statements are all “desired results” (i.e. Stretch Targets) but are not Critical Success Factors:
• “Revenue will increase by 100%”
• “Cost will be reduced by 50%”
• “Customer complaints will be reduced to 1 in 1000 transactions within 2 years”
• These statements do not describe ways to satisfy the customer or provide clear directions. Instead, ask: “How are we as a company going to achieve these results?” or “What do we have to do to make these results happen?”.
• Where possible, validate the (Confirmed) Business Vision and Critical Success Factors with the organisation’s own external customers.  Be aware that while organisations typically claim they know what their customers want, all-too-often they do not.  In reality, even those departments having frequent customer contact (e.g. Sales, Marketing, customer Service) are preoccupied with day-to-day internal operational problems, leaving little time to reflect on the broader issues of strategy and future orientation.
• It is easy for the project team members to lose control of this part of the exercise.  Participants are often senior company executives who have fixed ideas and must therefore be led through a structured process to evoke new perspectives.  Team members must take care not to over contribute in workshop sessions, as senior management must ultimately buy into and take ownership of the Critical Success Factors.

Tactics/Helpful Hints

• Critical Success Factors are typically expressed as a series of three to five descriptive statements or paragraphs.  It is often beneficial to phrase these statements in the following format: “We must be able to ……”.  Critical Success Factors should be expressed using a level of language that reflects the organisation’s own words, ideas and beliefs.
• The organisation’s progress towards the realisation of the stated Critical Success Factors should be measurable.

Resources/Timing

• Workshops to determine the (Confirmed) Business Vision and Critical Success Factors are typically facilitated by the Project Manager and a Senior Manager or Strategic Planning specialist (preferably in the client's industry).  Other key project team members may participate in conducting background interviews and as workshop observers.
• The Critical Success Factors are usually defined through a half day/day work­shop with executives. Often this work is conducted at the tail end of workshops to develop a (Confirmed) Business Vision.