Deriving key success factors

Key success factors, or KSFs, are the limited capabilities and conditions a business must get right to satisfy its customer purchasing criteria, or CPCs, and compete sustainably.

When to use it

Always.

Origins

McKinsey consultant D. Ronald Daniel introduced the managerial idea of success factors in his Harvard Business Review article “Management Information Crisis,” published in nineteen sixty-one. He argued that management information should concentrate on the small number of areas that determine competitive success. John F. Rockart of MIT later developed the critical-success-factor method, emphasising the activity areas in which satisfactory performance is essential to an organisation or manager. The approach here applies that logic to industry competition and customer purchasing criteria.

What it is

“Knowledge comes, but wisdom stays,” wrote Alfred, Lord Tennyson. KSF analysis asks what practical wisdom a firm needs in order to succeed in its industry.

Common KSFs include product or service quality, consistency, availability, range and development capability. Service-related factors may include distribution, sales and marketing effectiveness, customer service and post-sale technical support. Cost-related factors can include location, scale, efficient equipment and disciplined operational processes. The right list is specific to a segment and short enough to guide investment.

How to use it