Identify and discuss the steps for "critical success factors" approach? (at least 1,500 words)
Critical Success Factor
A key area where satisfactory performance is required for the organization to achieve its goals
A means of identifying the tasks and requirements needed for success
At the lowest level, CSFs become concrete requirements
A means to prioritize requirements
Critical Success Factors are the essential areas of activity that must be performed well to achieve the mission, objectives or goals for a business or project. By identifying the Critical Success Factors, it can create a common point of reference to help direct and measure the success of the business or project. As a common point of reference, Critical Success Factors help everyone in the team to know exactly what's the most important. And this helps people perform their own work in the right context and so pull together towards the same overall aims.
Executives and employees spend a fair amount of time doing things which don't really make the business more successful. When you stop to consider it, there are only generally a limited number of areas - like sales or product development - which make your business succeed. With insight and analysis you can select these things, the critical success factors. A business will succeed or fail depending on how you approach your unique set of critical success factors. Understanding these factors and paying 100% attention to them is a sure way to add power to your efforts and jump start towards a new level of performance.
Steps in Critical Success Factors Approach:
Step 1: Identify your critical success factors
Step 2: Establishing the measurements
Step 3: Setting the baseline
Step 4: Set new goals
Step 5: Closing the gap
Step 6: The Ben Franklin Rotation Program
Step 1: Identify your critical success factors
The first step is to identify the special set of CSFs. This may have already crossed peoples mind in the past, and answered it by instinct. The answers maybe correct answers, but they have to think deeper and broader. I have read from http://www.paullemberg.com/criticalfactors.html a list of factors believed to critical in an enterprise. The list below are only based on that site, this also depends on the business that you have. You may add factors to the list to describe the critical influences on a business' success.
It is a must to be specific when identifying the CSFs. Don't say "people" when the issue is recruiting, employee satisfaction, training or compensation. Don't say "marketing" or "sales" when the issue is lead generation. Test your assumptions by imagining a decline in a particular factor. You should be able to think of the pros and cons of each factors then come up with a solution for each cons.
In selecting factors, limit your list to no more than seven. Why seven? Cognitive theory suggests that human minds are efficient at juggling from five to nine separate trains of thought - the average and oft- quoted number is seven. Our plan is for you to keep your eye on the ball, you want to limit the balls to those you can keep your eye on.
Step 2: Establishing the measurements
Your next step is to establish a measurement scale for each critical factor. Some of these measures will be quantitative; some qualitative. Sales is an easy one: dollars of revenue measured against budget. Leads generated is also easy - how many? You can further break down sales by product and leads by sources, or you can stick to the consolidated numbers. Choose the measure which best reflects your understanding of how the issue affects your business.
Everything is measurable, you just need the right system. How can you measure your effectiveness in sales compensation? You could establish a compound metric which includes total compensation as a percentage of sales revenue, juxtaposed against goal attainment. Marketing communications is also difficult. One way to measure this is to subjectively assess the quality of your marcom pieces; you could also measure whether you have the total complement of marcom pieces you require. Or, measure whether prospects respond to your marcom efforts. Most likely you will combine all three to get one measure. A final example is measuring your efforts in the area of your Board of Directors / Board of Advisors. Measures include: do you have one? Are all the board seats filled? Is the board effective for your intended purpose? Measuring the Board factor would likely blend each of these.
Step 3: Setting the baseline
Once you've established a measurement structure for a factor, the next step is setting a baseline. Each factor should be set against a normalizing scale ranging from 1 to 10. Subjectively this can translate into non-performing(1), poor (2-3) , mediocre (4-5), good (6-7), great (8-9), and outstanding (10).
Step 4: Set new goals
Next, create a "gap" between where you are - your baseline - and your target for that factor. You already have a sales plan, so your gap exists between your current revenue and your budgeted revenue. You may consider your baseline a 5, and your target an 8. Implicit in this 1- 10 scale are judgements about your intentions: will reaching your budgeted revenue put you at 8 (almost great) or 10 (outstanding)? Where do you want to peg your efforts? If you've assessed your employee training at a 4 (mediocre), are you shooting for a 7 (good) or a 9 (great)? You can see from this how your measurement structure and goal system will impact how you allocate your company's resources and energy.
Step 5: Closing the gap
You now have a baseline and a target for each factor. Between them they define a factor gap - your challenge is to close it. Each gap becomes the focus of a meditation which asks the question: What will close the gap between our current level of this factor and our desired level? What possible actions will raise that measurement? You may have intuitive responses to these questions, and when appropriate, trust your gut. If need be, back that gut response with research - but only when cost effective. (Sometimes the most cost effective research is implementation, particularly in simple matters.)
Use any idea generation process you are comfortable with. Develop several possible initiatives to raise the level of that factor. With luck your ideas will work together and harmonize in terms of impact or implementation requirements. If you create competing ideas, select the best alternatives. Choose based on return on investment, required resources, scheduling conflicts, time to impact, total cost, and likelihood of success versus risk of failure. Depending on the specific factor, and the size of the gap, you may plan to close it in stages or shoot the gap all at once. You can launch one initiative at a time, or implement several initiatives in parallel. You may find my GamePlan!" methods useful in designing your gap-closing programs. Once you launch your gap-closing initiatives, continually measure your results. Report your progress to participants and stakeholders, and post it publicly.
Step 6: The Ben Franklin Rotation Program
As a young adult, Ben Franklin identified thirteen virtues he aspired to. In order to implement these virtues in his life he devised a "Plan for Self Examination", a program whereby he focused his attention, one virtue at a time, for one week at a time, rotating through the entire list four times a year. He kept a detailed log of the actions he took to develop the virtues in himself, along with his personal results. The article I've read adapted Franklin's concept and called it the Ben Franklin Rotation Program. At any point in time, you will have in place a program for improving every one of your critical factors. But in any given week, your primary attention will be on only one factor.
Using Franklin's principles, at the beginning of each week, focus your mind - or collective mind of your management team - on improving that week's factor. What new actions can you take, what new attitudes can you adopt, what new or renewed approaches are available - which will enhance your performance in that one specific area? Do that "thing" wholeheartedly for the entire week. Franklin also shows us how to track your progress in this venture. Create a score sheet detailing your Critical Success Factors. This sheet should detail each factor, its measurements, your current 1-10 rating and your target rating, along with your next action steps for improving that rating. Each factor also gets a weight, which enables you to develop an overall score. Each week, re-rate all the factors on the score sheet, and graph your progress. You may also graph the overall score. Publish the score sheet and the graphs. You can establish a reward system based on individual progress, or, using the factor weights, you can develop a bonus structure which incentivizes total progress.
This simple system will focus your attention on improving each one of your critical success factors. With carefully selected factors, you insure both rapid performance increases and balance in your company.
Critical Success Factors therefore produces results that express the needs of the enterprise clearly and (hopefully) completely. In addition it also allows us to measure success and prioritize goals in a sensible way. CSFs when used together with traditional usage scenarios, ensures that the needs of both the user and the enterprise are being met.
Critical Success Factor
A key area where satisfactory performance is required for the organization to achieve its goals A means of identifying the tasks and requirements needed for success At the lowest level, CSFs become concrete requirements A means to prioritize requirementsCritical Success Factors are the essential areas of activity that must be performed well to achieve the mission, objectives or goals for a business or project. By identifying the Critical Success Factors, it can create a common point of reference to help direct and measure the success of the business or project. As a common point of reference, Critical Success Factors help everyone in the team to know exactly what's the most important. And this helps people perform their own work in the right context and so pull together towards the same overall aims.
Executives and employees spend a fair amount of time doing things which don't really make the business more successful. When you stop to consider it, there are only generally a limited number of areas - like sales or product development - which make your business succeed. With insight and analysis you can select these things, the critical success factors. A business will succeed or fail depending on how you approach your unique set of critical success factors. Understanding these factors and paying 100% attention to them is a sure way to add power to your efforts and jump start towards a new level of performance.
Steps in Critical Success Factors Approach:
Step 1: Identify your critical success factors
Step 2: Establishing the measurements
Step 3: Setting the baseline
Step 4: Set new goals
Step 5: Closing the gap
Step 6: The Ben Franklin Rotation Program
Step 1: Identify your critical success factors
The first step is to identify the special set of CSFs. This may have already crossed peoples mind in the past, and answered it by instinct. The answers maybe correct answers, but they have to think deeper and broader. I have read from http://www.paullemberg.com/criticalfactors.html a list of factors believed to critical in an enterprise. The list below are only based on that site, this also depends on the business that you have. You may add factors to the list to describe the critical influences on a business' success.
| Distribution - this could be direct sales, telesales, third- party sales, etc. | Lead generation | Customer satisfaction |
| Referrals | Research | Product development |
| Production, including quality, costing, run-rates, etc. | Sufficient investment capital, sufficient working capital | Customer support / technical support |
| Quality assurance | Sales process / sales life cycle | Market research |
| Customer education | Sales compensation | Recruiting |
| Personnel retention programs | Expense management | Intellectual capital development |
| Training | Marketing communications | Logistics |
| Employee equity | Executive leadership | Training and development |
| Corporate goals / strategic objectives | Values and beliefs | Mission/purpose |
| Individual accountability | Productivity & effectiveness metrics | Internal communications |
| Strategic and tactical planning | Executive team | Board of directors/advisors |
It is a must to be specific when identifying the CSFs. Don't say "people" when the issue is recruiting, employee satisfaction, training or compensation. Don't say "marketing" or "sales" when the issue is lead generation. Test your assumptions by imagining a decline in a particular factor. You should be able to think of the pros and cons of each factors then come up with a solution for each cons.
In selecting factors, limit your list to no more than seven. Why seven? Cognitive theory suggests that human minds are efficient at juggling from five to nine separate trains of thought - the average and oft- quoted number is seven. Our plan is for you to keep your eye on the ball, you want to limit the balls to those you can keep your eye on.
Step 2: Establishing the measurements
Your next step is to establish a measurement scale for each critical factor. Some of these measures will be quantitative; some qualitative. Sales is an easy one: dollars of revenue measured against budget. Leads generated is also easy - how many? You can further break down sales by product and leads by sources, or you can stick to the consolidated numbers. Choose the measure which best reflects your understanding of how the issue affects your business.
Everything is measurable, you just need the right system. How can you measure your effectiveness in sales compensation? You could establish a compound metric which includes total compensation as a percentage of sales revenue, juxtaposed against goal attainment. Marketing communications is also difficult. One way to measure this is to subjectively assess the quality of your marcom pieces; you could also measure whether you have the total complement of marcom pieces you require. Or, measure whether prospects respond to your marcom efforts. Most likely you will combine all three to get one measure. A final example is measuring your efforts in the area of your Board of Directors / Board of Advisors. Measures include: do you have one? Are all the board seats filled? Is the board effective for your intended purpose? Measuring the Board factor would likely blend each of these.
Step 3: Setting the baseline
Once you've established a measurement structure for a factor, the next step is setting a baseline. Each factor should be set against a normalizing scale ranging from 1 to 10. Subjectively this can translate into non-performing(1), poor (2-3) , mediocre (4-5), good (6-7), great (8-9), and outstanding (10).
Step 4: Set new goals
Next, create a "gap" between where you are - your baseline - and your target for that factor. You already have a sales plan, so your gap exists between your current revenue and your budgeted revenue. You may consider your baseline a 5, and your target an 8. Implicit in this 1- 10 scale are judgements about your intentions: will reaching your budgeted revenue put you at 8 (almost great) or 10 (outstanding)? Where do you want to peg your efforts? If you've assessed your employee training at a 4 (mediocre), are you shooting for a 7 (good) or a 9 (great)? You can see from this how your measurement structure and goal system will impact how you allocate your company's resources and energy.
Step 5: Closing the gap
You now have a baseline and a target for each factor. Between them they define a factor gap - your challenge is to close it. Each gap becomes the focus of a meditation which asks the question: What will close the gap between our current level of this factor and our desired level? What possible actions will raise that measurement? You may have intuitive responses to these questions, and when appropriate, trust your gut. If need be, back that gut response with research - but only when cost effective. (Sometimes the most cost effective research is implementation, particularly in simple matters.)
Use any idea generation process you are comfortable with. Develop several possible initiatives to raise the level of that factor. With luck your ideas will work together and harmonize in terms of impact or implementation requirements. If you create competing ideas, select the best alternatives. Choose based on return on investment, required resources, scheduling conflicts, time to impact, total cost, and likelihood of success versus risk of failure. Depending on the specific factor, and the size of the gap, you may plan to close it in stages or shoot the gap all at once. You can launch one initiative at a time, or implement several initiatives in parallel. You may find my GamePlan!" methods useful in designing your gap-closing programs. Once you launch your gap-closing initiatives, continually measure your results. Report your progress to participants and stakeholders, and post it publicly.
Step 6: The Ben Franklin Rotation Program
As a young adult, Ben Franklin identified thirteen virtues he aspired to. In order to implement these virtues in his life he devised a "Plan for Self Examination", a program whereby he focused his attention, one virtue at a time, for one week at a time, rotating through the entire list four times a year. He kept a detailed log of the actions he took to develop the virtues in himself, along with his personal results. The article I've read adapted Franklin's concept and called it the Ben Franklin Rotation Program. At any point in time, you will have in place a program for improving every one of your critical factors. But in any given week, your primary attention will be on only one factor.
Using Franklin's principles, at the beginning of each week, focus your mind - or collective mind of your management team - on improving that week's factor. What new actions can you take, what new attitudes can you adopt, what new or renewed approaches are available - which will enhance your performance in that one specific area? Do that "thing" wholeheartedly for the entire week. Franklin also shows us how to track your progress in this venture. Create a score sheet detailing your Critical Success Factors. This sheet should detail each factor, its measurements, your current 1-10 rating and your target rating, along with your next action steps for improving that rating. Each factor also gets a weight, which enables you to develop an overall score. Each week, re-rate all the factors on the score sheet, and graph your progress. You may also graph the overall score. Publish the score sheet and the graphs. You can establish a reward system based on individual progress, or, using the factor weights, you can develop a bonus structure which incentivizes total progress.
This simple system will focus your attention on improving each one of your critical success factors. With carefully selected factors, you insure both rapid performance increases and balance in your company.
Critical Success Factors therefore produces results that express the needs of the enterprise clearly and (hopefully) completely. In addition it also allows us to measure success and prioritize goals in a sensible way. CSFs when used together with traditional usage scenarios, ensures that the needs of both the user and the enterprise are being met.
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