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Critical Success Factors

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The first person mentioned this concept " Critical Success Factors " CSFs " " was D. Ronald Daniel, but, nevertheless, it was Jack F. Rockart who developed it. Rockart defines it as:

" CSFs are, for any business, a limited number of areas in which the results, if they are satisfactory, will guarantee a successful competitive performance for the organization. These are main areas where things must go well for the business to flourish: if the results in these areas aren't adequate, the efforts of the organization, for that period, won't be defined and the management objectives can't be achieved. " - Jack F. Rockart

When contemplating the objective, a manager has to examine and study what factors will be of vital importance when fulfilling it. These indispensable factors form the CSFs. Some of the most common factors are price, sales promotion, inventory, etc. However, although there are recurring factors, in each case the CSFs vary depending on the objective, the type of industry, a specific time, etc.

The five main sources of the CSFs

Deciding which factors are important for studying the objective of a company is very difficult. However, Rockart developed in collaboration with Christine V. Bullen about five main factors for the CSFs. These five factors are:

- Industry: in each industry there is a set of critical success factors that are given by the characteristics of the same industry. For example, the hotel industry won't take into account the same factors as the book industry.
- Competitive strategy and position in the industry: each company has a unique and determined situation. Therefore, they won't have the same CSFs for an international company as for a start-up. Another element to consider is the geolocation of the company. This detail can also influence the critical factors. For example, a factor to reach the German public won't be as relevant as for the Spanish public.
- Environmental factors: are those areas over which the company has no control, such as the economy and national politics. That's why these factors have to be taken into account and try to achieve the business objective without being dragged by possible changes. For example, there are many companies in the United Kingdom concerned about the possible problems arising from Brexit.
- Temporary factors: those factors that are relevant only and exclusively for a period of time, but not in general circumstances.
- Management position: each management position has a different objective, and therefore, different critical success factors. For example, a marketing director won't consider the same factors as a production manager.

Apart from these five main sources, there are two other dimensions in which the CSFs can be classified: internal or external " the internal point of view from within the director's department or from a more distant point of view to the director "; and monitoring or building-adapting. The translation of this second dimension would be something like monitored or adapted to the construction. Monitoring means that the current situation is examined, and building-adapting that studies how a future improvement can be implemented in the company.

What is the difference between KPIs and CSFs?

The key performance indicators " KPIs " and the critical success factors " CSFs " are interrelated, however, they aren't the same. The CSFs are the critical areas of a company and the KPIs are the tools for measuring the performance of a company. In fact, the CSFs uses KPIs to be able to know what they are successful at and what they need to improve on.

- KPIs are quantitative data, but are subject to some dependence on other data.
- The CSFs are more qualitative reference data, since what you want to know is the aspects to improve within the company. These data are more independent, so they are considered a source of trust.
- KPIs are measured from time to time and may only change when the company has a new goal.
- CSFs constantly change cyclically depending on the needs that arise.

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