This Slideshare presentation is a partial preview of the full business document. To view and download the full document, please go here: http://flevy.com/browse/business-document/key-success-factors-210 Key Success Factors (KSF), also known as Critical Success Factors (CSF), is the term for elements necessary for an organization or project to achieve its mission. This methodology is commonly used in data analysis and business analysis.

1. Business Framework
Key Success Factors
Key Success Factors, also known as Critical
Success Factors, is the term for elements
necessary for an organization or project to
achieve its mission. This methodology is
commonly used in data analysis and
business analysis.
Relative Importance for
Effective Distribution
Strong Brand
National
Marketer
5
Regional
Marketer
4
5 3
Innovative Product
Tiered Pricing
2 3
2 3
Multiple Segmentation
Low Cost Manufacturing
4 1
1 3
High R&D spend
Total
2 1
21 18
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2. 3
Key success factors and index of key success factors – how to apply them
Key Success Factors Index of Key Success Factors
 Determining KSFs requires a thorough understanding of a
business or segment, and therefore draws on several of
other analytics in the toolkit.
 Relevant issues in understanding the business or
segment are:
– How customers buy, and what’s important to them in
the purchase decision:
• See key purchase criteria
– Who’s successful in the business or analytic segment,
and why. See:
• Company analysis
• Financial analysis
– Trends within the business or segment
 Other sources of insights into key success factors are:
– Client’s executives/staff
– Industry analysts or commentators
 Determining KSFs is an iterative process: initial research,
developing draft hypotheses, testing and, refining these
hypotheses
 The purpose of developing an index of KSFs is to
understand:
– Which ones are most important
– How competitors perform relative to each key success
factor
 Ranking KSFs, and scoring competitors, requires a good
understanding of the business or segments
 Key steps in the process for ranking and weighting KSFs:
– Identify KSFs (see box, left)
– Give each KSFs a weighting reflecting its relative
importance (this is a non-trivial task):
• How would you allocate investment resources for a
competitor?
– Score each competitor against each key success
factor:
• Document the rationale for each score
– Add up the total scores for each competitor
– Convert the total for each competitor into a percentage
(i.e. what proportion of the perfect score it achieved?)
 The resulting percentages indicate the relative
performance of each competitor

3. 5
Key success factors & index of key success factors – guidelines
Key Success Factors – Identification Techniques
I
II
III
IV
Technique Focus
Environmental analysis
(e.g. PEST)
Macro
Analysis of industry
structure (e.g. Porter,
Value Chain)
Industry
Macro
Industry/business
experts
Industry
Micro
Analysis of competition
(focus is limited to the
competitive environment,
how firms compete)
Industry
Micro
Sources Advantages Disadvantages
• Environment scanning
(Corp. Staff)
• Econometric models
• Socio-political consulting
services
• Future orientation
• Macro orientation: analysis goes
beyond industry-firm focus
• Can be linked to threats/ opportunity
evaluation
• More difficult to operationalise
into specific industry or firm KSFs
• Results may not lend themselves
to incorporate usage in current
timeframe (today’s KSFs)
• A variety of industry
structure frameworks
• Specific focus is on industry
• Frameworks allow user to
understand interrelationships
between industry structural
components
• Can force more macro level focus
(beyond industry boundaries)
• While excellent source for
industry-wide KSFs not so useful
in determining firm-specific KSFs
• Industry association
executives
• Financial analysts
specialising in industry
• Outsider familiar with firms
in industry
• Knowledgeable insiders who
work in industry
• Means of soliciting ―conventional
wisdom‖ about industry and firms
• Subjective information often not
discovered with more objective,
formal and analytical approaches
• Lack of objectivity often leads to
questions in verifying/justifying
• Staff specialities
• Line managers
• Internal consultants
• External consultants
• Narrowness of focus, offers,
advantage of detailed, specific data
• Depth of analysis leads to better
means of justification
• Narrowness of focus – KSF
development limited to
competitive arena (as opposed to
industry structure approach)
Note ―CSFs‖ = Critical Success Factors.
Source: Leidecker and Bruno, Identifying and using Critical Success Factors, 1984.

4. 7
Key success factors and index of key success factors – top tips
Potential Insights
Hints
 Determining key success factors, based on a thorough understanding of a
business or segment, can highlight areas on which clients should focus:
– Strengthen capabilities
– Defend capabilities
 Helps determine which competitors are well positioned to compete
successfully, and estimate the relative performance of competitors
Do:
 Focus on drawing up the right key success factors
 Choose a simple scale for weighting criteria
 Recognize that the index largely involves quantifying judgments:
– Where possible, try to obtain quantitative data on each competitors
performance against each key success factor