Why defining Critical Success Factors (CSFs) are the first step to creating great KPIs - Part 1

The concept of CSFs is not new – developed by a research team at MIT’s Sloan School of Management, early references to its use go back to 1979 (1)

What are CSFs and how best can you define them?

Critical Success Factors are the key areas or elements that an organisation must excel in to achieve its mission and strategic goals. These factors are essential for the success of a business and require special attention to ensure high performance.

Critical Success Factors reviewed

1. Definition: CSFs are the limited number of areas in which satisfactory results will ensure successful competitive performance for the organisation. They are the few key areas where "we must execute on" for the business to flourish and for the manager's goals to be attained.

1. Purpose: CSFs help organisations focus their efforts on building their capabilities to meet these key areas. They guide resource allocation, provide direction for strategy development, and serve as a basis for performance measurement.
2. Characteristics: CSFs are typically:
3. Types: CSFs can be industry-specific, strategy-specific, environmental, or temporal (related to internal organisational needs).
4. Identification: CSFs are usually identified through a process of analysis involving interviews with key executives, surveys, and industry analysis.
5. Causality: One of the strengths of CSFs is the ability to integrate them with a Balanced Scorecard framework (2,3).? It should be possible to link each CSF with several (if not all) of the Balanced Scorecard framework perspectives below;

An example of a great CSF and why?

It illustrates how a seemingly simple CSF can have far-reaching implications for an entire company's business model. This CSF impacts nearly every aspect of an airline operations. It requires coordination across multiple departments & functions, and it influences strategic decisions (e.g., fleet management, route planning)

This CSF also has a strong impact on the Company's Balanced Scorecard framework, as seen below;

1. Improves Customer Satisfaction: On-time performance directly impacts customer experience and loyalty.
2. Drives Operational Efficiency: Delays can cascade, affecting multiple flights and routes.
3. Impacts Cost Management: Delays lead to increased costs (e.g., fuel, crew overtime, compensation to passengers).
4. Provides Competitive Advantage: Airlines with better on-time performance can attract more customers.
5. Ensures Regulatory Compliance: Many countries have regulations and penalties related to flight delays.

Measurements and Line of Sight (Root Cause Analysis)

A concise and comparable KPI can be created, measured and reported - in this case % On Time Performance (OTP) as illustrated below

It has the benefit of also being able to be used for comparative performance on multiple dimensions

• Geographically (Globally, regionally down to an individual Airport)
• By Route
• vs Competitors
• Over time (trend)

?

It allows for roll up and root cause analysis (deep dive)

• Variance & trend analysis (Geography, Plane type, Route, Pilot, Competitors, time of day...)
• Causes of delays (Technical, weather, air traffic control....)

What is an example of a great CSF for a Commercial Pharma Rep?

?

While rather more wordy than the airline example, the CSF outlined above has many of the elements considered critical to driving performance (and how we might consider measuring that).

?Breaking this CSF Statement down forces you to consider each element

What do we mean by;

• Planning
• Execution
• High Quality interactions
• Impactful Content
• Channels
• HCP Segment & Persona
• HCP accessibility & channel preference(s)

Additionally, while this CSF does not talk about individual Customer frequency of engagement, that could also be added to the CSF as follows;

Who has seen/ is using this KPI?

While this is one of the most commonly used KPIs across industry (often referred to as Coverage@Frequency), it falls short on several levels!

Through better definition of the CSF, as outlined above, this KPI can be significantly improved.

In my next article I will pick up from here and discuss recommendations to improve the Cov@Freq metric as well introducing other innovative metrics & KPIs that better correlate to sales performance outcomes.

David Ledger

Founder & Managing Director @ Varese Group | Transforming complex data into actionable insights with AI that speaks your language

1 Rockart, J. F. (1979). Chief executives define their own data needs. Harvard Business Review, 57(2), 81-93.

2 Kaplan, R. S., & Norton, D. P. (1992). The Balanced Scorecard—Measures that Drive Performance. Harvard Business Review, 70(1), 71-79.

3?Kaplan, R. S., & Norton, D. P. (1996). The Balanced Scorecard: Translating Strategy into Action. Harvard Business School Press.