Critical success factors have been a very popular means of planning, implementing and reviewing strategy ever since the concept was introduced in the early 1960s. Kenichi Ohmae, in his classic – The mind of the strategist, the art of Japanese business, states that all of industry leaders started by deployment of strategy based on critical success factors. In other words, the promising companies which could not make it to the top or those leading companies that fumbled when faced with real competition, had their failures rooted in their inability to identify the factors critical for their environment or lacked the understanding and will to exploit those factors through concentration of resources and efforts to the scale required.

The predicament
It is common place for companies today to list out items which they call by various names like critical success factors, strategic thrust areas or strategic challenges. And then very little happens towards the listed priorities of the company. Question is – are the listed priorities really critical for the company to achieve its goals? Quite some times the answer may be “do not know” or simply an emphatic “no”. And even when the answer is an overwhelming “yes”, there appears very little evidence of the company really making any progress in these areas and as a result misses out on the opportunity to gain competitive advantage on the all important “competitive edge factors” in the industry.

The elucidation
The solution to the problem lies in adopting a structured process for identifying critical success factors. It does not end there, in fact, it starts here. The companies must deploy the identified critical success factors and constantly monitor performance against them.

Process for identification of critical success factors
Customer segmentation offers an excellent starting point in competitive environment, identifying their preferences and distinguishing gaps both with respect to their expectations and competitor’s performance.

An alternate approach could be to compare the company’s performance on each aspect of value chain of the industry with that of the competitors in terms of cost, quality, and cycle times etc. and zero down on few critical areas, which can provide quantum leap in the performance of the company.

Deliberations among top management team regarding the importance of the factors identified and their impact analysis on the desired results, may bring out the real critical success factors to the fore front. Also deliberations regarding obstacles that can be foreseen in the way of accomplishing the business objectives of the company, may provide insights into the understanding of critical success factors.

Deploying strategy through critical success factors
Once the key areas are identified, the next step is to ensure sufficient resources to the cause to put the company in a higher competitive plane. It is common sense for companies to first concentrate resources early on a single strategically significant aspect and become most competitive at it and then consolidate their position with respect to other factors also. In the long run, effective and persistent execution in these critical areas may prove to be the only differentiating factor between successful and also-ran companies. In order to create an intense focus around the critical success factors, the company must not only establish clear metrics but also design fool-proof measurement systems for these factors. Review of performance against the set norms will help maintain the focus on the critical issues.