|How Your Management Team
Develops Your Key Success Factors
On the first morning of your strategy sessions, ask
planning team an important question. On a flip-chart easel pad, write...
For our organization to be successful, we must be
especially good at the following activities...
Then challenge your team to
provide two or three answers (but no more) to that question.
Ask everyone in the room to
first spend a few moments thinking about the question and writing their
individual answers. Then have each person read their own answers aloud.
Next discuss any differences of opinion, and finally arrive at a
consensus. Record your team's final answers on a flipchart easel and
entitle the list "Key Success Factors," or simply "KSFs."
See what you've done? You've
developed a short list of "activities at which we've got to be
especially good." And that's important. For you'll next conduct your
Situation Analysis." And when itemizing your internal strengths and
internal weaknesses, you’ll want to keep your lists short and well
focused. You’ll want to include only those strengths and weaknesses
which relate to your key success factors. Thus your key success factors
will serve an a guide in determining which few potential strengths, and
which few potential weaknesses you actually include in your lists.
It's important to limit your
list of Key Success Factors to two, or at most three. Here's why...
In creating a list of
"activities at which we've got to be especially good," management teams
frequently include six or eight activities. Typically, they'll list,
"understanding the customer," "producing a low-cost product," "managing
expenses," "hiring good people," and "developing innovative marketing
The lists are certainly
complete. Too complete! They're so all-inclusive, they're not much more
than "apple pie and motherhood." And they certainly don't imply focus.
But focus is exactly what's
required for success. Focus on a few activities – on those most
important activities – on those two or three (no more) key success
factors. In any business, there are two or three activities which
are the primary determinants of success. If your company is especially
good at those activities and just mediocre at everything else, your
company will be successful. Yes, you read it right, mediocre
at everything else.
Examples of Key Success
In the real estate development industry,
acquiring land and maintaining liquidity are the two key success
factors. If every other factor concerning the business of the
development company is just average, but the land is well located and
the firm maintains adequate liquidity, the company will do well. Not
that the developer shouldn't attempt to deliver a well-constructed
product with good financing. He should. But nothing is a greater
determinant of success than having, or not having, the right piece of
land, and remaining in a liquid position.
Knowing the importance of land
acquisition to his company's success, the Chairman of one of our real
estate development clients instructed his managers, "Before you commit
to the purchase of any piece of land, I want to walk on it."
In the computer software market, the key
success factors are establishing efficient channels of distribution and
providing after-sales support. Too much concern about writing "efficient
code" may be a technical nicety, but from a competitive point of view,
it's a waste of resources.
In the strategy consulting business, the
key success factors are communicating with executive decision makers and
helping managers think more deeply about their enterprise than they ever
have before. Time spent on controlling expenses should be kept to a
Be sure you're aware of the key success
factors in your business. Then make sure you're very good at those
specific activities. And don't spend a bunch of resources getting too
good at a lot of things that aren't as important.
Article adapted from Bill
Birnbaum's new book, Strategic Thinking: A Four Piece Puzzle