What Are Success Factors (Guide)

There is no single right way to be successful. There are many different tactics for becoming successful in life, but the strategy that works best for you may depend on your view of success itself. However, for hundreds of years, there are some principles of success which has applied and still do today. 

A success factor is any knowledge, skill, trait, motive, attitude, value or other personal characteristic that is essential to perform the job or role and that differentiates solid from superior performance. Your individual definition of what success is may vary, but many might define it as being fulfilled, happy, safe, healthy and loved. 

It is the ability to reach your goals in life, whatever those goals may be. 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 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.

There Are Two Types Of Success Factors:

Behavioral: These are the personal characteristics (i.e., skills, traits, motives or attitudes and values which relate to self-image) that describe how you perform the job or role, and are what differentiates achiever from average performance. They describe what high performers think or do more often, in more situations, and with better results than average performers.

Technical: These are the technical knowledge and skill you need to perform a job or role; they describe what you need to know in order to be able to do or perform a task, and are essential to effective performance.

Why Use Success Factors?

Success factors help people identify more clearly what behaviors they need to demonstrate to be successful (i.e., commit to a personal development plan). Using a competency-based approach and developing behavioral success factors are the keys to defining, assessing and linking such qualities to job performance.

The relationship between technical and behavioral success factors is an interactive one. That is, overall performance is the result of having both the needed knowledge and the ability to apply that knowledge effectively to fulfill the expectations of the your task. One of the easiest ways to show the relationship of the components of success factors is to picture an iceberg. 

Above the waterline is the technical knowledge a person has about something. Closer to the waterline is skill, i.e., the ability to perform a physical or technical task such as financial analysis, or a cognitive task such as problem solving. It is relatively easy to see people performing the physical tasks, and, consequently, to assess them. Those skills closer to, or just below, the waterline are more difficult to assess. 

 For example, with problem solving you can see the solution, but you cannot necessarily see the thought process.When it comes to starting a business for instance, you are most likely to succeed or fail depending on how you approach your unique key success factors. That is why it is vital to understand them, so that you can pay a 100% attention to your business critical key success factors.

Your business key success factors (KSF) also known as Critical Success Factors (CSF) refers to the most important elements or factors that contributes to the highest result, impact or outcome, in achieving a business goal and objectives. The key to success in business or in any thing you put your mind on is about focusing on producing greater results. 

It’s about identifying, improving and taking full advantage of all the overlooked, hidden and underperforming opportunities that is available to you right now. It is also about getting substantially more for less, optimizing and multiplying the results with minimum effort, expenses and risk.
"Great success and mastery in any field always go to those who are “brilliant on the basics” - Brian Tracy
Therefore, real success factors for growing your business, is your ability to manage the performance of simple but very important drivers in your business by focusing on improving critical areas by a small percentage each week, month and year. Small differences in any of these key areas can make a huge difference in success, growth, profit, and income. 

Sometimes by focusing on one particular success factor can double or even triple business almost overnight. There are many key success factors and for every business it's different. But they can all be clustered under key basic groups.

The Top Key Success Drivers In Any Business Are:
  • Process and Systems
  • Product and Service
  • People
  • Money
  • Management
  • Marketing and Sales

Management (Owner): Your business can only grow to the extent that you grow. It's not what your business can do for you, but what you can do for your business. The more valuable you become to your business, the more valuable the business will become to you. Your key to success in business will depend on developing the right mindset, skills, vision, and mission to focus on.

To become a successful business owner, you have to be responsible for the direction of your own business. You must be in charge of creating and managing your business plan, developing marketing campaigns, and coming up with ways to keep the business competitive and profitable. Research and planning are also essential skills you need to become a successful business owner.

Money: Financial management is one of the most important responsibilities of owners. Poor financial management, planning, anticipation and foresight is the main reason for business failure. To be successful you must consider the potential consequences of your management decisions on profits, cash flow and on the financial condition of your business.

Using the right financial information will help you to making the right daily decisions and eliminate the money mistakes – some business owners make. The activities of every aspect of a business have an impact on its financial performance and must be evaluated and controlled by the business owner.

Marketing and Sales: The success of a business depends on the ability to market products and services effectively. This is about creating an edge in the market by consistently, testing and measuring your results. Researching opportunities, identifying your target market, developing a unique proposition, and choosing your channels are all important steps in marketing your business. 

Not every strategy you try will work for you. That is why you have to understand the fundamental marketing principles in business and keep testing different things. So, consistently improve the outcome until you have a tested, proven and predictable outcome.

Maintaining and developing a successful, sustainable business depends on your customers’ perception and experience of your product or service. That's where marketing and branding can help. Spreading the word about your business and attracting customers is important for any successful business.

Product and Service: When it comes to products and services it is all about the customer, what they want - quality, price, packaging, display, design, distribution, production and service. Help them to get what they want, and they will help you to get what you want.

People: Building the winning team means getting people to work well together. The right people doing the right things at the right time in the right way for the right reasons. It’s about Relationships, Trust, Attitude, Contribution, Accountability and Execution.

Process and Systems: This is key for growing, scaling and expanding your business. To develop a simple repeatable and proven formula, to do just that.

Of all the 30.2 million small businesses in the U.S.—which account for 99.9% of all businesses in the country, 98% of them earned less than a million a year in gross income. That’s 29,6 million businesses, many of which won’t be around in five years. Many of which have trouble keeping the doors open, let alone growing their business by 100%, 300%, 500% or 1000% would be a huge stretch.

Every year the accounting firm Deloitte & Touché publishes the Fast 500 – a list of the 500 fastest growing companies over the previous five years. On the fast 500, the top 30 companies all hundred folded their annual sales in five years. Most of these companies you may have never heard of. The top three on the list had annual revenue increases of 30-fold to 60-fold – that’s 3,000% to 6,000% In just one year.

The point is that every one of these companies, have been able to build on The Top Key Success Drivers in any business, but the most important and foundational factors will be Sales and Marketing. (Not taking in account the driving force of the owners' mythology).

Certain success factors have a greater impact depending on where the business is in the business growth cycle. For instance a new start up the critical success factors for growing business will be Sales, Marketing and Product development. As the business grows and becomes bigger, the other factors like developing , Team and Systems also becomes very important. 

Although every one of them is just as important as the other, the most important critical success factors for growing business will always be Sales, Marketing and Product. It is interesting to note that, the success factor concept was first developed in 1961 by D. Ronald Daniel, a consultant for McKinsey & Company. In that 1979 article, Rockart defines CSFs as:
"[Critical success factors are] the limited number of areas in which results, if they are satisfactory, will ensure successful competitive performance for the organization. They are the few key areas where ‘things must go right’ for the business to flourish. If results in these areas are not adequate, the organization’s efforts for the period will be less than desired." - John F. Rockart 

Now let's take a look at the relationship between strategic goals, CSFs, KPIs, KPAs, KRAs and OKRs.

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.

To actually achieve this CSF, you must set quantitative Key Performance Indicators (KPIs) to get a clear picture of exactly what you want to achieve by when.

Start With Your Strategic Plan

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.

Identify Your KPAs And KRAs

KPAs, otherwise known as Key Performance Areas, are the areas of your business that are critical to your success. For example, if your business is into software, 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 essential 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 business, 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— They are general metrics or parameters which the organisation has fixed for a specific role. These are focus areas you identified in your strategic plan. KRAs are broader than goals. 

They are specific, measurable goals that a company or individual sets to track progress and success. 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.

How To Build Key Result Areas

The best way to build Key Result Areas (KRAs) will vary depending on the specific business and the individual roles within it. However, some tips on how to build KRAs include:

Start by thinking about the goals of the business. What are the overall objectives that need to be achieved? What are the key areas that need to be focused on in order to achieve these objectives?

Once you have identified the key goals and areas of focus, think about what specific outcomes need to be achieved in order to meet these goals. What must you be responsible for? What do you want to achieve?

You can start by creating specific KRAs for each role in the business,once you have identified the outcomes that need to be achieved,  Think about what specific tasks and activities need to be carried out in order to achieve the desired outcomes.

After you have identified the KRAs for each role, it is important to make sure that they are aligned with the overall goals of the business. The KRAs should be measurable and achievable, and they should be reviewed and updated on a regular basis to ensure that they are still relevant and effective.

Choose Your Goal-Setting Methodology

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.

Use OKRs for a simple but flexible framework.

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, etc.

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.

Aside business, you can use this goal-setting methodology for personal development such as studying a particular course on your own to improve your skill set or setting special goals to stay fit and healthy. Success factors help individuals and businesses identify specific tasks and steps to take in order to be successful. This is important because they help you to measure and track progress towards specific goals.

CSFs, OKRs, etc. allows you to identify and focus on the most important tasks that need to be completed in order to achieve your goals and contribute to individual and business success.

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