Critical success factor

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Critical Success Factor (CSF) 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. A company may use the critical success factor method as a means for identifying the important elements of their success.

The concept of "success factors" was developed by D. Ronald Daniel of McKinsey and Company, "Management Information Crisis," Harvard Business Review, Sept.-Oct., 1961. The process was refined by Jack F. Rockart in, "A Primer on Critical Success Factors" published in, The Rise of Managerial Computing: The Best of the Center for Information Systems Research, edited with Christine V. Bullen, Homewood, IL: Dow Jones-Irwin, 1986. It was later applied to many sector settings, including health care, by James A. Johnson and Michael Friesen and published in their book: "The Success Paradigm" New York: Quorum, 1995.

A plan should be implemented that considers a platform for growth and profits as well as take into consideration the following critical success factors [1]:

Money factors: positive cash flow, revenue growth, and profit margins.
Acquiring new customers and/or distributors -- your future.
Customer satisfaction -- how happy are they?
Quality -- how good is your product and service?
Product / service development -- what's new that will increase business with existing customers and attract new ones?
Intellectual capital -- increasing what you know that's profitable.
Strategic relationships -- new sources of business, products and outside revenue.
Employee attraction and retention -- your ability to do extend your reach.
Sustainability -- your personal ability to keep it all going

A critical success factor is not a key performance indicator or KPI. Critical Success Factors are elements that are vital for a strategy to be successful. KPIs are measures that quantify objectives and enable the measurement of strategic performance.

For example: KPI = number of new customers CSF = installation of a call centre for providing quotations