An introduction to the Critical Success Factor

This article provides you with a brief introduction to what the term "Critical Success Factor" means, particularly in terms of strategic thinking, in a business environment. The CSF is also something that can be used in determining career success.

Critical Success Factor

A Critical Success Factor (CSF), sometimes referred to as a “Key Success Factor”, is an element that is vital to success. In a corporate sense, a CSF is something that must go right for an operation to be successful. This could either refer to individual projects or to the larger business as a whole, in which case, the survival of the company relies on the Critical Success Factors to be met.

Importance of CSF

What is strategic thinking? Corporate structure can be split into three levels: An operational level (low-level management)
A tactical level (middle-management)
A strategic level (eg. a board of directors). At the strategic level, managers determine the long-term plans and strategies of the company and here, it is important to know what the company’s CSF’s are. Such knowledge enables strategic focus to be narrowed to considerations “critical” to the success of the business. Indeed, no matter how many things go well, success will be unattainable for a business failing to meet its CSF’s, and failing to identify CSF’s can be indicative of an ineffective board of directors. Companies can have more than one CSF, depending on their strategies. Most will in some way recognise the value of human resource, but other considerations such as brand awareness or lowest price can be critical in some business models (budget airliners remain priced low in the market, this is a CSF for them, as it represents their only selling point; a high-priced “no-frills” airline would quickly lose market share and go bankrupt). CSFs are thus identified at a strategic level, but they still need to be recognised in the goals that are passed down through the corporate structure. One way of ensuring goal congruency is through the development of Key Performance Indicators (KPIs), which are used to track, and incentivise progress and performance against the CSFs. If success factors such as “high quality” or "product reliability" are identified for a product, then a KPI of “Complaints per month” could be suitable, and targets could be set based on this KPI.

Career success

CSFs need not be reserved for corporate use alone. Personal planning, particularly regarding the achievement of long-term goals (career success), benefit from the concept of the CSF. Identifying actions or behaviours that are essential to your success forms a key part of personal strategy and identification of CSFs. In personal life, it will positively contribute to personal success, as effectively as it would, at a corporate level.