Critical Success Factor in an Organization or a Project

For the success of an organization or a project there are certain critical success factors. This article discusses about such factors and success.

As the name suggests the critical success factors are those issues which are highly important for the present and future of an organization. Critical success factor (CSF) is the term for an element that is necessary for an organization or project to achieve its mission. It is a critical factor or activity required for ensuring the success of a company or an organization.

Earlier the term was used in the world of data analysis and business analysis. CSF is one of those few things that must be achieved for the successful existence of an organization. The concept of CSF was first coined by D.Ronald Daniel of McKinsey & company in 1961. The process was refined by John F. Rockart in 1981.

Critical success factors are those elements that are essential for a strategy to be successful. These factors drive the strategy forward. CRF defines the success of the strategy, hence referred to as “critical”. Factors that are necessary for achievement of vision, mission and objective of an organization are called CSF. Critical success factors define few areas of performance that are essential for the organization to accomplish its mission. It is critical for the existence of an organization to identify critical factors and communicate it to the employee. CSF tells what is more important for the organization and where to focus.

CSFs are closely related to the mission and vision of a business. The scope and aim of the mission and vision is to define what is to be achieved. CSF concentrates on most crucial factors and decides what is to be achieved and how it is to be achieved.

Types of Critical Success Factor

There are four basic types of CSF’s. They are:

  1. Industry CSF’s
  2. Strategy CSF’s
  3. Environmental CSF’s
  4. Temporal CSF’s.

Five key sources of Critical Success Factors

  1. The industry
  2. Competitive strategy and industry position,
  3. Environmental factors
  4. Temporary factors,
  5. Managerial position

Understanding the critical success factors is highly important as it drives the future planning and strategy for any company. CSF plays a crucial role in strategic planning and it helps in focusing and validating important activities, initiatives and projects that could play a crucial role in organization’s prospect. Critical success factors are a useful concept in explicating the things that people at best knew intuitively and sometimes accidentally to direct their efforts towards staying competitive and realizing the vision.

CSF helps in collecting and validating the available data and information. Critical success factors work more as a filter to check the relevance of information. Through the process of strategic planning an organization:

  • Identifies the factors essential for the industry
  • Assesses factors critical specifically to the growth of the  organization
  • Identifies the goals which help it in fulfilling the industry wide critical success factors
  • Identify the critical success factors to achieve the goals set by it

No matter how well an organization analyzes and infers available information and creates the best plan with excellent strategy, but if it is not executed in a right way all the preparatory work will go in vain.  Planning as well as successful execution of a plan is very critical for the CSF.

Before working for achieving CSF it is a must to identify the CSF for an organization. The process of identifying CSFs, of an organization starts with:

  • Vision and mission
  • Developing strategic objectives
  • Communicating the objectives

If we do all these things, will we be successful?

Once this can be answered positively with a degree of confidence the goals and the success factors should then be communicated to all who need to know, so that as they work through the actions, they know the things that are really important – and focus on achieving those things.

CSF’s are essential factors that play a significant role in the success of an organization.  These CSF factors vary from industry to industry. Critical success factors should be periodically evaluated and adjusted.