Goal-setting is a lot like building a pyramid: It all relies on a strong base. You can’t set the very top pieces without a steady foundation—but building that foundation from scratch can be tough.
That’s where critical success factors (CSFs) come in. CSFs are a list of the key success factors your team needs to hit in order to achieve your goals. Critical success factors, combined with a three- to five-year strategic plan, help you create a strong goal-setting base. Then, build specific project deliverables and project goals off of that steady foundation to hit your goals on time, every time.
If you’ve never set critical success factors before, or if you aren’t even sure where to start when it comes to strategic planning, here’s everything you need to know to get started.
Critical success factors (CSFs) are high-level goals that your organization must meet in order to achieve your strategic objectives. You can implement CSFs at the project, program, or organizational level, though they’re most frequently used by entire departments or organizations because of their close connection to an organization’s business strategy. Hitting your critical success factors usually results in meaningful value and positive income for your organization.
Notably, CSFs are high-level strategic goals—they don’t necessarily include execution details. For example, imagine you set a critical success factor to increase brand awareness. This is a lofty goal—and one that drives significant value and market share for your organization. To actually achieve this CSF, dedicated projects and teams work on a variety of initiatives and set quantitative key performance indicators (KPIs) to get a clear picture of exactly what your teams want to achieve by when.Tetapkan dan raih gol bersama Asana
A critical success factor can be anything. These lofty goals help you orient your team towards where you need to go. Then, project managers use CSFs to guide their own initiatives and ensure they’re ready for success.
The critical success factors you set depend on your organization’s overall strategic goals. Here are a few CSFs you might create, depending on the plans your organization has for the next three- to five-years of growth:
Updated marketing playbook
New product features
Performance management reviews
Building a robust sales team to acquire new customers
The concept of a success factor was first developed in 1961 by D. Ronald Daniel, a consultant for McKinsey & Company. Later, John F. Rockart published an article in the Harvard Business Review codifying and naming the critical success factor method. In that 1979 article, Rockart defines CSFs as:
When it comes to goal-setting, there are a lot of acronyms to juggle and keep track of. Each goal-setting methodology is slightly different—but don’t let the acronyms overwhelm you. To understand what each acronym stands for, and how they stack up, let’s take a look at a typical strategic planning process.
Strategic planning is the parent of any goal-setting process. Before you set goals, you first need to establish your strategy. A strategic plan helps you define where your organization wants to go and what actions you need to take to achieve those goals.Baca: Belum pernah mencoba perencanaan strategis? Mulai di sini.
KPAs, otherwise known as key performance areas, are the areas of your business that are critical to your success. For example, if you work at a software company, one key performance area might be your software being online and bug-free. Alternatively, if you work at a manufacturing company, a relevant KPA might be your facilities being up and fully functional.
It’s important to understand your key performance areas in order to identify areas that you want to home in on when you begin setting goals. To go back to our example of a software company, if your software is frequently experiencing bugs or downtime, a good goal is to improve or reduce that downtime.
KRAs stand for key result areas—these are focus areas you identified in your strategic plan. KRAs are broader than goals. For example, a key result area for your business might be “profitability” or “efficiency.” Then, when you set goals, describe exactly what you need to improve in those areas.
Once you have your strategic plan, it’s time to implement a goal-setting methodology. The two main goal-setting methodologies are OKRs and CSFs (in combination with KPIs). In practice, only plan to use one of the two goal-setting methodologies, since they’re very similar.
OKR stands for Objectives and Key Results. If you’ve never set goals before, OKRs are a good place to start because they follow a simple framework:
I will [objective] as measured by [key result].
The Objective is the goal you want to achieve—increase brand awareness, create the lowest carbon footprint in your industry, that sort of thing.
The Key Result is the metric by which you measure your progress towards your objective—drive one million web visitors, ensure one-quarter of your product’s material is compostable, and so on.Baca: Apa itu tujuan dan hasil utama (OKR)?
CSFs—critical success factors—function similarly to the O in OKRs. These are the main objectives your organization is working towards in order to hit your three- to five-year strategic plan.
To make CSFs actionable, pair them with key performance indicators (KPIs). KPIs are quantitative metrics of how your team or organization is progressing towards important business objectives. A good KPI gives you a sense of whether you’re on track to achieve your critical success factors and, as a result, your strategic goals.Baca: Apa itu indikator kinerja utama (IKU)?
Traditionally, critical success factors are broken out into five different types. Understanding the types of CSFs helps you make sure you aren’t missing any critical success factors as you plan for the coming goal period.
Sometimes, there are certain critical success factors that your organization must keep up with in order to remain competitive. In order to track industry-related CSFs, your team needs to proactively track and predict industry trends.
Innovation to stay ahead of competitor’s inventions
Sustainability in packaging or manufacturing to meet customer expectations
Customer service that goes above and beyond the industry average
These critical success factors are impacted by what your competitors are doing, and how their success or failure impact your organization. This isn’t a 1:1 comparison to what your competitors are doing—rather, these CSFs are influenced and impacted by how your customers see your business in relation to your competitors.
Being considered a “luxury” brand
Appealing to a certain customer demographic
As the name suggests, temporal factors aren’t going to permanently affect your company. Rather, these critical success factors are temporary, limited factors that favorably or unfavorably impact your business. Identifying and overcoming these factors—if applicable—supports continued business growth.
Unexpected but temporary changes to your business model
Reduced staffing capacity due to a specific, temporary issue
Hiring talent to support the opening of a new office or region
These critical success factors are things your organization has no direct control over—though that doesn’t make them any less valuable. Proactively labeling and tracking environmental factors is a great way to get ahead of any potential problems in the future and prevent unnecessary risk.
A downturn in the economy
A change in policy that impacts your business
Unlike the four main types of CSFs, management position critical success factors are unique to a specific person and position—rather than to an entire organization. If you are in a management position, consider setting a CSF to improve your management and leadership skills.
Implementing team-wide project risk management processes
Critical success factors are a great way to set and track success criteria. If you’re ready to get started, follow these five steps for success.
Create a strategic plan. CSFs build on your organization’s three- to five-year strategic plan, so start by creating that if you haven’t already. Because a strategic plan identifies your high-level objectives for multiple years, it’s a key building block for CSFs further down the road.
Review the strategic plan with executive stakeholders. Once you’ve created your strategic plan, assemble your strategic management project team—the key stakeholders who create your critical success factors. Go through the strategic plan and identify business processes and key result areas (KRAs) that are critical, make-or-break-it areas for the organization. For example, imagine you identify customer satisfaction as a KRA for the coming goal period.
Identify your critical success factors and share them with your broader organization. Once you’ve identified your KRA(s), attach related critical success factors to help you achieve your goals. For example, if your KRA is customer satisfaction, an associated CSF is to improve customer relationships through dedicated customer service teams. Once you identify CSFs, share them out with your broader team for feedback.
Connect CSFs to KPIs to make them actionable. To transform your CSFs into action, connect them to quantifiable key performance indicators (KPIs). For example, if your CSF is to improve customer relationships through a dedicated customer service team, create a KPI to build a customer success team with at least 10 team members before the end of the quarter and a second KPI to hit a 12 hour customer service response time by the end of the fiscal year.
Monitor and measure. Once your CSFs and KPIs are created, all that’s left is to monitor them for success. If you haven’t already, set up a goal-tracking system to track and manage your organization’s top level goals—as well as the projects and initiatives that feed into those goals.
Good critical success factors help your team home in on the most important parts of your strategic plan in order to hit your goals. If you’ve never tracked CSFs before, make sure you’re doing so in a goal management tool, like Asana Goals. That way, every team member has clarity on your exact CSFs, the KPIs to help you get there, and the progress of each initiative.