In establishing a goal in every endeavor we have, there are things that should need to be considered. With the different issues and circumstances to occur during the process, it is very important to have focus and well plan to assist the situation in any ways. The doers or actors should be open to any possible happenings, positive or not, to be made and to encounter later on. Problems should have a solution and has always a solution, the only thing is, and at least one should have anticipated the happenings to be able to come up with a better and suitable solution.
Any organization inherently possesses a mission which states why it exists and a vision which states where it is headed. In order to achieve the mission of an organization, all of the members of that particular organization should participate and contribute for the achievement of the goals and objectives of the organization as a whole. As our professor once said, every member should embrace the “one and only game plan” of the organization or else the organization will find it hard if not impossible to succeed. In addition, the organization must consistently concentrate on the key areas to achieve the mission. These key areas can be different from each organization depending on the type of organization and the type of industry that they are in. These key areas are what we call as the organization’s critical success factors. In the world of business, there are so many things that need to be noticed. With a lot of issues in the organization that gains your attention, it is quite difficult to oversee them all and take charge all at once. There is a tendency that you might not also notice some important matters and it will be left behind. This is one of the reasons why you are not alone in doing business; you have your colleagues and business associates which may help you in looking after the concerns of the company. But it could also be difficult for you to get them into looking at the same directions and share with your concerns and eventually get them into action. This is probably the reason why there are “critical success factors” being set in the organization.
These are the Most Critical Success Factors:
- Money: positive cash flow, revenue growth, and profit margins.
- Your future: Acquiring new customers and/or distributors.
- Customer satisfaction: How happy they are.
- 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 is profitable.
- Strategic relationships: New sources of business, products and outside revenue.
- Employee attraction and retention: Your ability to extend your reach.
- Sustainability: Your personal ability to keep it all going.
Academic Background/ History
The principle of identifying critical success factors as a basis for determining the information needs of managers was proposed by RH Daniel (1961 Harvard Business Review - HBR) as an interdisciplinary approach with a potential usefulness in the practice of evaluation within library and information units but popularized by F Rockart (1979 Harvard Business Review - HBR). In time many academics have applied the methodology increasingly outside the educational establishment.
The idea is very simple: In any organization certain factors will be critical to the success of that organization, in the sense that, if objectives associated with the factors are not achieved, the organization will fail - perhaps catastrophically so.
The following as an example of generic CSF's:
• New product development,
• Good distribution, and
• Effective advertising
Factors that remain relevant today for many organizations.
Five Key Sources of Critical Success Factors
MAIN ASPECTS OF Critical Success Factors and their use in analysis
CSF's are tailored to a firm's or manager's particular situation as different situations (e.g. industry, division, individual) lead to different critical success factors. Rockart and Bullen presented five key sources of CSF's:
1.The industry,
2.Competitive strategy and industry position,
3.Environmental factors,
4.Temporal factors, and
5.Managerial position (if considered from an individual's point of view). Each of these factors is explained in greater detail below.
An element of organizational activity which is central to its future success. Critical success factors may change over time, and may include items such as product quality, employee attitudes, manufacturing flexibility, and brand awareness. This can enable analysis.
Critical Success Factor
Any of the aspects of a business that are identified as vital for successful targets to be reached and maintained. Critical success factors are normally identified in such areas as production processes, employee and organization skills, functions, techniques, and technologies. The identification and strengthening of such factors may be similar. Is a business term for an element which is necessary for an organization or project to achieve its mission. For example, a CSF for a successful Information Technology (IT) project is user involvement. In the Re.ViCa project a critical success factor is defined as follow:
A critical success factor is a factor whose presence is necessary for an organization to fulfill its mission - in other words, if it is not present then its absence will cause organizational and/or mission failure. Those are just some of various definitions that we could find when we will try to look for the critical success factors. The idea of identifying critical success factors as a basis for determining the information needs of managers was proposed by Daniel (1961) but popularized by Rockart (1979). The idea is very simple: in any organization certain factors will be critical to the success of that organization, in the sense that, if objectives associated with the factors are not achieved, the organization will fail - perhaps catastrophically so. Rockart (1979: 85), by referring to Daniel (1961), gives the following as an example of the CSFs: new product development, good distribution, and effective advertising for the food processing industry - factors that remain relevant today for many firms. As we start to discuss the Critical Success Factors, it is important to realize that the specific factors relevant for you will vary from business to business and industry to industry. The key to using Critical Success Factors effectively is to ensure that your definition of a factor of your organizations activity which is central to its future will always apply. Therefore success in determining the Critical Success Factors for your organization is to determine what is central to its future and achievement of that future. Critical Success Factors 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. Critical Success Factors have been used significantly to present or identify a few key factors that organizations should focus on to be successful. As a definition, critical success factors refer to "the limited number of areas in which satisfactory results will ensure successful competitive performance for the individual, department, or organization”. Inevitably, the CSF concept has evolved, and you may have seen it implemented in different ways. Critical Success Factors are strongly related to the mission and strategic goals of your business or project. Whereas the mission and goals focus on the aims and what is to be achieved, Critical Success Factors focus on the most important areas and get to the very heart of both what is to be achieved and how you will achieve it. The term “Critical Success Factor” is used differently, due to ambiguity of the word “critical”. But whichever definition we may use, just be sure it is understood by all the managers.
Four Basic Types Of Critical Success Factor:
1. Industry - resulting from specific industry characteristics;
2. Strategy - resulting from the chosen competitive strategy of the business;
3. Environmental - resulting from economic or technological changes; and
4. Temporal - resulting from internal organizational needs and changes.
It is said that things that are measured get done more often than things that are not measured. Each CSF should be measurable and associated with a target goal. It’s not necessarily that you need exact measures to manage. Primary measures that should be listed include critical success levels or, in cases where specific measurements are more difficult, general goals should be specified. Identifying Critical Success Factors is important as it allows firms to focus their efforts on building their capabilities to meet the CSF's, or even allow firms to decide if they have the capability to build the requirements necessary to meet Critical Success Factors.
How to Identify the Critical Success Factors
1. Identify your predicament. Identifying the critical success factors of your business starts with determining the roadblocks or challenges that may hinder your company's ability to grow and fulfill its goals. These roadblocks can be internal (i.e., company politics or employee dissatisfaction) or external (i.e., economic policies, political climate that affects business, etc.).
2. Create a strategic plan. Identifying the challenges that your business is faced with will help in developing a strategic plan that sufficiently addresses these hindrances. A strategic plan is one that will cover these roadblocks and help the organization anticipate them.
3. Understand your targeted customers. To fulfill your business goals, you need to learn more about the behavior of your targeted consumers. This means understanding the demographic of someone who is more likely to avail your product or service.
4. Compare your service with your competition. You want to assess how you serve this market niche in relation to your direct competitors to find out how your product is faring among other brands. Identify what your consumers expect from your product and then find out if your product is actually delivering according to these expectations. Look at other brands and do the same analysis.
5. Examine the competition on the basis of how they operate. After looking at how your competitors serve your targeted market, you now move onto analyzing how the competing brands produce their products. Examine quality control metrics, performance and production cycles. A look at a particular product's ingredients, for instance, will shed some light as to its . Compare these practices with your own way of producing your merchandise and identify the shortcomings of the competition's strategy.
6. Adjust your production strategies as needed. Looking at how your competitors produce the same product will allow you to determine the weaknesses of your own strategy. If a competitor, for instance, is able to provide the same product at a significantly lower price, then it stands to reason that you may have issues with the efficient use of production resources. Look at how you can cut down costs of production without sacrificing the quality of your product. This will become one of your critical success factors: improving production efficiency.
Steps for Critical Success Factor Approach
Based on what I have understood and read, I come up with some steps for critical success factors. These are the following steps. First, start with a vision and a mission statement. Second, develop a high level and hierarchy of goals and their success factors. Next, list of requirements, problems, and assumptions. Then, analysis matrices. Afterwards, solid usage scenarios. And finally, the result of the analysis.
Start with a vision and a mission statement. Every organization has its own unique vision and mission that they want to follow. It is important to know what are the firm’s vision and mission before you can start pointing out the firm’s critical success factor.
Develop high level and hierarchy of goals and their success factors. It is always good to know the goals of the organization since critical success factor is a step in ensuring the organizations success. With critical success factor, you are focusing on what the company aims in the future and if the firm is able to achieve those goals and dreams that was already a success.
List of requirements, problems, and assumptions. It is necessary to gather all the data and information with regards to the organization, site all the problems that the organization are facing or might be facing in the future, and identify the following assumptions on how to the company will get over with those problems.
Analysis matrices. Part of these analysis matrices is the problem versus requirements matrix and the usage scenarios versus requirements matrix. You have to know if all the requirements you have gathered are consistent enough. Analyze if the requirements are completed and appropriate. Analyze the problems and set some solutions on how to solve those problems. Examine if the needs of the company has been cope up. And evaluate how the company gain success would in the future.
Solid Usage Scenarios. Usage scenarios or in other words “use cases” which is very much familiar when using unified modeling language. This provides an idea on determining if the requirements are aligned and self-consistent, if the needs of the user being met as well as those of the enterprise, and if the requirements are complete.
Result of the Analysis. After having a couple of analysis, you can now list what are the things that can be considered as critical for the success of the organization. You will know the factors that would benefit and affect for the success of the firm.
Every firm has its own critical success factors. It depends on their strategy on how they can obtain success. Example of a critical success on an organization are the training and education, quality data and reporting, management commitment, customer satisfaction, staff orientation, role of the quality department, communication to improve quality, and continuous improvement. There may be several of critical success factors but it is necessary that you have to make sure that it is in line with the organizations vision, mission and goals. If the organization has achieved its goals, you can already declare that the organization has succeeded. In some cases, companies want to complete a project successfully that could be a big benefit for the company’s success. As what I have read, there has been a research that shows that there are critical success factors that should be applied to complete a project successfully. This includes the following: Match changes to vision, Define crisp deliverables, Business need linked to vision, have a formal process to define vision, and organizational culture supports project management. Critical Success factor is necessary for an organization in order to fulfill its mission. Without critical success factor, it will definitely cause organizational and/or mission failure. No one wants an organization to fail, everyone aims to succeed.
In general, to identify the critical success of an organization in every project or new activity the company will engage, it is a must because it has a big factor and influence to the success of the effort. By identifying it, the organization can have a wider focus in those critical factors and consider it during the start of the process. Critical success factors (CSFs) provide the critical points which serve as target points for the organization to achieve their goals.
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