On the first morning of your strategy sessions, ask your 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...
1. ____________________________________
2. ____________________________________
3. ____________________________________

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.

Maintaining Focus

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 programs."

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 Factors

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 minimum.

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