A PRIMER ON CRITICAL SUCCESS FACTORS

Christine V. Bullen John F. Rockart

V

June 1981

CISR No. 69 Sloan WP No. 1220-81

Center for Information Systems Research Sloan School of Management Massachusetts Institute of Technology

TABLE OF CONTENTS ' . II. Introduction Definitions and Concepts Data Analysis Technique

III.
IV.

Interview Procedure and Analysis of Data

4; I

III

I.

INTRODUCTION Faced with an increasingly complex world, managers today they need access to their particular the information which

are deciding is pertinent One method needed is

that to

roles and

responsibilities. is most

of determining the in a "critical Harvard Define

precisely what success Business Their Own in

information (CSF)

factors" Review

method. entitled the CSF of

Introduced

article (1),

"Chief Executives method is now

Data Needs" a growing to

being This

utilized paper

number

organizations. background as a

is written

provide

additional is written

on the method. for those

Most particularly, it who would like to

primer

carry out CSF

interviews. Critical activity in success factors are the few key areas of

which favorable to

results are absolutely necessary reach his goals. the manager him to well Because these

for a particular manager areas of activity

are critical, allow

should have the whether The

appropriate events are CSF

information to proceeding is be

determine

sufficiently designed used by to an

in each area. a

interview method can

provide

structured to assist and

technique which managers to zero to determine the in order

interviewer success

in on

their

critical

factors --

resulting

information needs. understanding the reader of the CSF be

to gain a complete its application,

technique

and

should

thoroughly familiar with the article. This primer

original such

Harvard Business Review a familiarity. Where

assumes

appropriate, the

material

presented ideas. four

here

references

that

article rather than repeating This document first section contains

substantive

parts.

The

provides general background

information on the details

critical success factor concept. the interview procedure. It

The second section emphasizes

appropriate interviewees section

techniques for the interviewer to use in helping to think about and identify their CSFs. The

final

concerns methods of analyzing the data. The interview we procedure section contains those the two

techniques which

have found, in three years of using in drawing out CSFs. in successful CSF The

method, to be most successful most important ingredients

interviews,

however, are the preparation and skills which the interviewer brings to the interview thoroughly prepared. He itself. must The have interviewer must be

as deep as possible an the In or

understanding of the industry, the specific company, and job being performed by the manager being (through interviewed. training

addition, the

interviewer

should

experience) have a command of basic interviewing skills. The CSF interview involves a lively exchange The interviewer must be of ideas.

comfortable in her preparation and In sum, the interviewer must

energetic in her participation.

have all the attributes and preparation of a good consultant. The mnore consulting better the skills that one brings to the will be. Given this task, the

interview

requisite to be

preparation, the interviewer will find the CSF method

4 _Iln _

readily enjoyable.

acceptable,

interesting,

thought-provoking

and

One of the important strengths of tne CSF method is that it provides the interviewer with a logical way of relating to and understanding the managers who are interviewed. As a Managers result,

think in the terms used in the CSF interview. the CSF method allows the

interviewer to comfortably extract Most important, it enables

the manager's view of the world.

the manager to easily identify those few matters which demand continuing scrutiny by him. The process, therefore, of (and

ultimately provides the interviewer with an understanding what information will really be perceived as useful

actually used) by each manager. The CSF method is also of direct and the interviewed manager. immediate use to

t assists her to explicitly focus important. they them method CSFs more to All good managers

attention on what is really have implicit subconsciously, careers. The CSFs to which help

have been using, most often manage helps are throughout their

interview

maKe

these critical managerial improved time, can

factors explicit. priorities' can

Once the be set

explicit, and

knowledgeably

allocation of the manager's resources, especially be made.

This result from a CSF interview is useful and can systems

be accomplished far before the requisite information can be built. The words "critical success factors" take their place with are

beginning

to

other basic terms concerned with the

management of an organization. CSFs appear at various

Like

goals

and

objectives,

levels in the management hierarchy. the CSFs in

The next section therefore is aimed at placing

P

their managerial context. we have tried to

Since this is written as a primer, Some the

err on the side of over-simplicity.

readers may wish to hurry through the next section where material is very basic. as "strategy," "goals,"

CSFs and other managerial terms such and "objectives," will be defined, will be explored

compar:d and contrasted. from many viewpoints.

The CSF concept Finally,

the hierarchical nature of

CSFs will be illustrated through a set of examples.

6 __I1I _m

II.

DEFINITIONS AND CONCEPTS The first part of this section defines critical success terms then

factors and

places them within the

the perspective of basic We

concerned with go on,

management of the organization.

in Part B,

to provide additional success factors.

conceptual background

concerning A.

critical

Definitions 1. Critical Success Factors limited results number will of areas (CSFs) in which CSFs are the

satisfactory competitive department areas or

ensure for the

successful individual, few key

performance organization. "things and

CSFs are the

where

must go right"

for the business

to flourish

for the manager's goals to be attained. the and pattern of missions, resource to define be in) A the

2. Strategy - Strategy is objectives, policies, stated

significant

utilization plans what business and the complete kind

in such a way as is in it (or is is or will to

the company of company of

is to be. define

statement the

strategy

product line,

markets and market segments for to be designed, will the channels

which products are through which

these

markets

be reached, the financed, the organization,

means by which the operation is to be profit objectives, and the the size of the

"image" which it will project to employees, and customers.

suppliers

3. Objectives -

Objectives

are

general

statements

about the directions in which a firm intends to go, without stating specific targets to be reached at

particular points in time. 4. Goals Goals are specific targets which are A

intended to be reached at a given point in time. goal is thus

an operational transformation of one

or more objectives. 5. Measures - Measures are allow the calibration factor, specific of standards for which each

performance goal, or

critical success Measures can be

objective.,

either "soft,"

that is subjective objective and

and qualitative, or "hard," that is quantitative. 6. Problems - Problems are specific importance as a result of

tasks

rising

to

unsatisfactory Problems can

performance or environmental changes.

affect the achievement of goals or performance in a CSF area. Figure 1 summarizes the above definitions and uses an airline company example to illustrate the relationship among the terms. six

Figure 2 notes, although in an overly simplistic way, of of relationships an strategy of each of these terms from line manager. at (The

the hierarchy the viewpoint interlinking of level is

individual and

objectives them in the

the corporate box. The

shown by

including

same

remainder of the concepts fall hierarchically.)

III

FIGURE 1 Comparison of Basic Terms in Airline Company Context Term Strategy

Brief Definition

Brief Examples
Regional airline transportation Develop profitable route structure

Basic decision of "what business are we in?" General directional statements

Objectives

Change over to more fuel efficient fleet Goals Specific targets for a period of time Eliminate all routes with less than "N"% average seat usage By year-end replace all "X" planes with "Y" lanes Provide stockholders with 10% ROI in 1981 CSFs Key areas where things must go right in order to successfully achieve objectives and goals Obtain certification for higher-density routes Develop bank financing for new equipment Average % seat capacity used % of cash requirements under written equipment loan agreements with banks Problems Tasks resulting from unsatisfactory performance or the environment Increasing price of fuel Future competition from video conferencing

Measures

Calibrations of performance

FIGURE 2

Hierarchy of Management Concepts and Terms

..

...

_ .

CORPORATE

STRATEGY
+l BJCIV

EF3
--

IN

DIV MANAGER

I DUAL

L'
CSFs I

~PROBLEMS

MEASURES

^I------------------

-----

B.

General Background 'on CSFs This section is aimed at providing a fuller

understanding for in the management

the reader of what CSFs are and their role process. Building on the definitions

provided in the preceding section, this section will explore:

(1) - The nature of CSFs

(2) -

The

uses

of

the
its

CSF
key

concept
purpose --

with

special

attention to

information

systems planning (1) The Nature of CSFs. have a long Terms like goals and strateqy --

and hlonored tradition in management literature. are relatively precise today and the

Their definitions concepts are What is or

well understood. is n ot a

The same is not true of CSFs. success factor for any

critical

particular manager after some thought

is a subjective judgement arrived at only There is no clear algorithm which will

aid an interviewer to assist a manager to find his CSFs. Yet managers success factors. isolating interviewer process. their can can, For CSFs, assist section possible and those a do, who determine have some their critical

difficulty in knowledgeable

well-prepared, in the to

greatly is

CSF-determination provide as much

This

designed

background as

for potential CSF interviewers as to dealing. Its

the "nature of the beast" with which they are aim is to supplement

the material concerning the nature of Review article.

CSFs found in the original Harvard Business We include material concerning:

11

- the importance of CSFs

- the need to "tailor" CSFs and information requirements to each individual manager's uniquely different situation
- the sources of CSFs - a useful classification of CSFs - the hierarchical nature of CSFs - examples of CSFs

Let us look at each of these in turn. (a) The importance of CSFs. Critical success factors are the relatively small number of truly important matters on

which a manager should focus her attention. the term "critical success "factors" manager

For this reason, They the

factors" is aptly chosen. which are "critical" There to

represent the few "success" of the

concerned.

are, in every which her

manager's life, an incredible number of things to attention can be diverted. The key to

success for most

managers is to focus their most limited resource (their time) on those things which success and failure. In general, there are, for limited number of critical any manager, factors. only a very really make the difference between

success

Examples are will be For far

given in the original article. found in the

Additional examples

final part of this section of this paper. factors is

most managers this limited set of important from a mystery. Most

managers spend considerable time and leisure hours thinking

energy both on the job and in their about these few areas of

activity which are "close to the

12

III

bone."

Much in

time each

is of

spent these

considering areas.

ways

to

improve

performance process

The value of the CSF

is to make these areas explicit, not merely implicit. (as will be discussed more fully later) planning firm's process, management, to and enhance to aid

They then can be used to aid in the

company's among the

communication information

systems development. --

It is important for a manager to determine his goals which are managerial the lore. a targets It is he will equally shoot for. important,

That is common however, to

determine, in

conscious

explicit

manner, what the basic his success

structural variables are which will most affect or failure in the pursuit of these goals.

These are the

critical success factors. Critical that these success factors are areas of sufficient importance

key

of activities should receive constant The current status of measured and

and careful attention from management.

performance in each area should be continually status information should be made accessible use. (b) Different managers information. CSFs are different to This CSFs

for management's

different of a be

related

the means

specifics they

particular manager's situation. tailored to the industry, the

must

company, and the individual from place often manager in the will

being interviewed. to manager

CSFs will certainly differ to the In individual's addition, they

according

organization's hierarchy.

13

change

as

the

industry's within or an

environment industry

changes, changes,

as or

the as

company's position particular problems manager.

opportunities arise for a particular

In this light, it is important to understand are not. called "key divisions of

what

CSFs

They are not a standard set of measures, sometimes indicators," a company. which They can are be applied to all

not limited to factors historical, contrary, aggregated, the a critical manager's

which can be reported on by accounting information.

solely On the

success factor method looks at the current operating viewpoint.

world

from

CSFs are the particular areas particular

of major importance to a particular manager, in a division, at a particular point in time.

They therefore many of

demand specific and diverse which must

situational

measures,

be evaluated through soft, subjective information an explicit formal way by the

not currently gathered in manager's organization. "key indicators" can

No standard set of organization-wide provide the necessary operating

information. (c) Five prime sources of CSFs. major sources which CSFs arise from five

should be researched by a potential CSF the preparation for a series of

interviewer during interviews.

The sources of CSFs are: Each industry has a set that are determined of critical by the

(1) The Industry. success

factors

characteristics of the industry itself.

Each company

14

III

in the industry must pay attention to these For example, from the four Harvard CSFs for Business the

factors. Review

article, there are industry. The

supermarket

manager of each and every supermarket four. They are The in

firm must be concerned about these product mix,

inventory, sales promotion, price. this industry set can be found

rationale behind

the referenced article. (2) Competitive Strategy and company within an Industry is in Position. an and Each

industry by its The

individual current resulting CSFs. For

situation determined competitive

history

strategy.

company's some

position in the industry example, a small

dictates

company in an industry must almost its particular

always be concerned about protecting industry niche. Similarly

in an industry dominated others and is

by a single major firm, a CSF for all the understanding the In leader's like company strategies manner, the

their

probable impacts. positioning of the

geographic

can also generate CSFs. rural a CSF areas while may have

For example, retail firms in transporation management as

for more

urban companies this is less critical. (3) Environmental Factors. those areas control. mission The while over which Environmental an factors are

organization has little must tides accomplish of its

organization riding the

environmental

15

change. are the politics.

Two obvious environmental fluctuations of the

sources

of

CSFs

economy

and national

Some companies are sensitive to additional

factors such as population trends, regulatory trends, and energy sources. (4) Temporal Factors. within an These are areas of activity

organization

which

become critical for a something out of

particular period of time because the ordinary has taken place.

Normally these areas such

would not generate CSFs. as the loss of a

For example, a crisis

large number of executives in an CSF of

airplane crash would generate the short term "rebuilding the executive group."

Similarly, while appear on the

inventory control would not normally

list of CSFs for a CEO, it could become a CSF for him under extreme circumstances of over or understocking. (5) Managerial Position. position has it. a gneric Each functional managerial

set of CSFs associated with manufacturing managers

For example, almost all

are concerned with product quality, inventory control and cash control. (d) A useful classification of CSFs. looking at CSFs is illustrated three major One useful way of

in Figure 3. dimensions. (2) the

Each CSF can be These are (1)

classified along internal versus

external, (3) all

monitoring five sources

versus discussed

building-adapting, and just above. All

three

dimensions are ways of categorizing

16

CSFs.

The pattern of a also

CSFs

which world

emerge view.

provides But as a

good

insight into pattern can questions.

manager's serve an

the resulting source of

interviewer

The two dimensions not yet discussed are:

have

(1) Internal versus external -- Every manager will

internal CSFs she manages. including such

relating These can

to the department and people run things a very as wide gamut, resource primary

diverse inventory

human The

development and characteristic of with issues sphere of and

control. CSFs is

internal situations and

that they deal the manager's CSFs under

within control.

influence

External less

however, pertain to situations generally the manager's control.

For example the availability an

or price of a particular critical raw material is external CSF.

(2) Monitoring versus building/adapting -- Managers

who

are oriented

toward

emphasizing near term operating in tracking and

results invest considerable effort

guiding their organization's performance. CSFs involve the continued scrutiny of

Monitoring existing

situations. CSFs. such as current

Almost all managers have some monitoring CSFs the

Often these include financially oriented actual status performance of versus budget cost. or

product might

Another

monitoring-oriented CSF rates.

be personnel turnover

17

Managers who are either in

reasonable

control

of

day-to-day operations, or who are insulated from fire fighting concerns, adapting) mode. planners whose spend These more people time in building are (or

future-oriented

primary purpose is to implement major

change programs aimed at adapting the organization to a perceived new environment. area include hiring and the Typical CSFs in this

successful implementation of major efforts or new product

training

development programs. In general, managers will have a mix of both and building/adapting CSFs. However, there is monitoring usually a of

strong tendency toward one of these quite different types CSFs. This three dimensional classification visualize the clustering of can be used

to

a particular manager's CSFs by

combining the characteristics as shown in the illustration in Figure 3. For example, "Company Acquisitions" is an

external, building

CSF whose source is competitive strategy.

"New Skills Acquisition" is an internal, building CSF arising from competitive strategy. monitoring CSF, problem area. probably "Interest "Employee Morale" is an temporal, Rate internal

coming out of a current is an external,

Levels"

monitoring CSF, generated by the environment. We will note later in the section on "The CSF Interview" that an interviewer can use this classification process good effect in evaluating the with

results obtained from a CSF

18

FIGURE 3 MAJOR DIMENSIONS OF CRITICAL SUCCESS FACTORS

SOURCES '

- industry - strategy - environmental - temporal - position

EXTERNAL

INTERNAL

interview. (e) The hierarchical nature of CSFs. From an individual which

manager's viewpoint, there is a set of his own CSFs on the manager must primarily focus.

From a company viewpoint, hierarchical of which levels be

however, one can discern four different of critical success These are: factors, each

must

considered.

- industry CSFs - corporate CSFs - sub-organization CSFs - individual CSFs

As Figure organization in

suggests, an industry

industry in the

CSFs

affect of

each its

development

strategy, objectives, and goals. to develop a strategy which

No organization can does not provide

afford adequate in

attention to the principal factors which underlie success the industry. In turn, the strategy, objectives, and by a company goals

developed

lead to the development of a particular set of factors for the and corporation (corporate

critical success CSFs). Given its

strategy

objectives, as well as the

other factors in its specific environment (see the automotive and computer industry and company examples in section), each the following

corporation will develop a set of CSFs unique

to its own circumstances. In turn, corporate CSFs become an input into CSF determination process for a similar

each sub-organization in the

19

111

FIGURE 4 FROM A CORPORATE VIEWPOINT

CORPORATE INDUSTRY CSFs STRATEGY OBJECTIVES GOALS CORPORATE CSFs ENVIRONMENTAL FACTORS TEMPORAL FACTORS

SUB-INDUSTRY CSFs or FUNCTIONAL CSFs/

SUB-ORGANIZATIONAL STRATEGY OBJECTIVES GOALS ENVIRONMENTAL FACTORS

SUB-ORGANIZATIONAL CSFs

INDIVIDUAL MGR GOALS INDIVIDUAL CSFs ENVIRONMENTAL FACTORS TEMPORAL FACTORS

corporation. appropriate),

The

analysis

of

sub-industry objectives,

CSFs

(where and

corporate

strategy,

goals,

CSFs, and its own strategy, objectives, and goals, as well as environmental and temporal for factors each lead to a set in of the of each will be

sub-organizational CSFs company.

sub-organization

The process can be continued for as many levels hierarchy as exist. Note that

organizational

sub-organization, whether a division or a function, affected in its development particular

of strategy, objectives, goals environmental and temporal

and CSFs by its own factors as

well as by the strategy, etc. Divisions will be

of the next higher affected by their

organizational level. sub-industry CSFs,

functions

by their functional role CSFs. have

Managers at each of the organizational levels will an individual set of CSFs

which depend heavily upon their and less heavily

particular roles and on temporal factors, upon the section). industry and the environment. sets

(See examples next of CSFs must be

Each of these individual the light

determined in

of all the higher level managerial objectives, goals and/or

developments concerning strategy, CSFs.

From the viewpoint of CSFs alone, the hierarchy shown as illustrated in Figure 5.

can

be

Conceptually, industry In

CSFs (at the top) heavily influence each company's CSFs. turn, the company CSFs will play a significant

role in at

determining the CSFs of the CEO and all other the corporate level. Each executive,

executives

however,

will have

20

FIGURE 5 THE CSF HIERARCHY

CORPORATE MANAGEMENT INDIVIDUAL CSFs

EXEC

EXEC
A

lo

LLJ

lu

~~CEO

EXEC

EXEC

LL

LL,

individual CSFs, responsibilities.

depending This

on

his

particular

role

and

top-down

influence

pattern is then

repeated at each sub-organizational level. In theory, top-down. the development of CSFs should be from

However,

where corporate or sub-organization CSFs developed, they can be inferred

have not been explicitly upward from stated CSFs. a

careful analysis of each individual manager's (We will return to this in section III.) of are CSFs. Several examples of critical This to

(f) Examples success factors

provided in the original article.

section is aimed at providing further structured examples develop a fuller understanding of industry

CSFs,

organizational CSFs, and individual CSFs. 1. Industry CSFs In this section we will industry, and the computer discuss industry. the U.S. automotive

These two industries

are useful vehicles for illustrating industry CSFs since they clearly point out the two prime characteristics CSFs. These two characteristics are: - Industry CSFs are determined by the competitive structure the industry's environment. - As these factors change, the industry's change. a. U.S. Automotive Industry. defined two CSFs will of the technical and of industry

industry as well as and social

economic,

political

The automotive industry's CSFs, originally

21
----------"r113iaolr-i-_-_ _

decades ago, have seen at least two significant changes since that time. We look here at an original definition and the

two subsequent changes. Original CSFs - 1961. the U.S. automotive The first discussion of in 1961 factors. CSFs (2). in At

industry was by Daniel critical success

that time he noted three were:

- Styling

These

- Quality Dealer System - Cost Control Americans had always been styling. highly The influenced major U.S. in their car automakers Can anyone clear that

purchase choices by battled each

model year to out-style each other. great tail-fin era? It was

ever forget the styling was a

critical success factor in the early 60's for

every company in the automobile industry. A second CSF noted system. The in 1961 was the quality of the dealer direct representative with the

automakers'

consumer is the car dealer. heavily on the dealer's is a

Not only do initial sales depend quality, but follow-up contact of the

through servicing relationship. purchases. Good

constant

reinforcement leads to

reinforcement

future new car

Cost control was the third because profit per is automobile heavily

industry CSF noted by (and therefore total influenced by cost

Daniel earnings control.

for each company) Since pricing

is dictated primarily by competition, the more

22

efficient the production and assembly line, the profit. A change in industry CSFs - 1976/7. When

greater

the

we

initially

updated this discussion of CSFs in the U.S. 1977, we included these three

auto industry in

CSFs, but added a fourth --

meeting energy standards. become a CSF in the

At that time, energy standards had due to government-imposed

industry

pollution control

standards.

This was then an example of an Increasingly today this CSF

environmentally generated CSF. has gained additional

status as car buyers have added a new supplies were limitless" and

dimension to it. inexpensive, fuel demand fuel

When fuel

economy was not an issue. in the ago. same Thus, In

Consumers today way that they

economy, however, twenty doubly years

demanded styling standards is today

meeting energy then, the

critical.

1977,

industry CSFs were seen to be:

- Styling

- Quality Dealer System - Cost Control - Meeting Energy Standards Yet another change - 1978. only by the Throughout 1977, disturbed

initial oil crisis in 1973/4, Americans continued When in 1976 General Motors introduced car on sale in the country, the that it was

to demand large cars. the most

fuel-efficient

Chevette, that car did so poorly in the market being called "the Edsel of the 70s." to close

In 1976 and 1977, the plants while

big three automakers had

small-car

23

_ ---

III

their big-car

plants were on double-shifts trying to keep up

with the demand. The second oil price surge made a difference with the in North 1978, however, finally His own

American consumer. of his

image of the automobile as a stylish projection personality changed, a means of

for most people, to a view of the car as transportation. (For the few who can lingers

efficient

afford it, however, one suspects the old image still on. But the new view predominates.) Thus, the industry CSFs have changed once

more.

It

makes sense to remove "styling" with "image" where the image

from the list, and replace it must be essentially one of to are image car an

quality and fuel have finally

efficiency. caught on to

The U.S. these

automakers appear new CSFs. on They an

attempting to lure formerly attributed

buyers to

through foreign past

improving automakers. decade by

Foreign creating

dealers have succeeded in the image of U.S. efficiency and

reliability

tinged

with romance.

automakers are now attempting

to "one-up" this consumer 80's combining comfort and

perception by projecting a new image for the efficiency, reliability, patriotism. ease of

maintenance,

Thus in 1980, we have a different set of industry They are now:

- Image

CSFs.

- Quality Dealer System - Cost Control

24

- Meeting Energy Standards

This evolution

in

automobile industry CSFs illustrates sometimes in

well the point that industry CSFs will change, major ways, with shifts As in the environment political,

in which the social or

industry exists.

economic,

competitive conditions change, the industry CSFs will change. To understand must closely the current all set of CSFs for an industry, one these factors, with particular

analyze

attention to the changes that are taking place. b. Computer Industry

In this dynamic, growth industry there are five industry CSFs at the present time:
- Choice of Market Niche - Technological Leadership - Orderly Product Development - Service and Stability

- Attraction and Retention of Quality Personnel As a result of its youth and growth, extremely complex. In years to come this industry is

it may devolve into point, with

several different industries. the industry considered as

However, at this

a whole, it is imperative for a

company to have a basic strategy, which answers the question, "What business are we in?" of the industry allowed as For many years, the sheer almost any has company become to growth prosper.

However, recently

competition

increasingly

severe, companies are beginning to fail because they have not clearly defined the market niche appropriate to their

25

III

particular skills, size, etc. the business, an organization

Without a clear definition cannot create

of

well-defined

strategies, objectives and goals, and therefore most probably cannot succeed in the 80s. Most successful new entrants into the computer concentrate on adaptation of leadership a new industry

technology or a particularly creative technology. niche) ground. makes This technological

existing its the

(within

it possible for a new technological

company to get off

Maintaining

leadership will help to ensure success. Once the strategic decision has been made to the basic business niche, the must orderly be with respect

development of As the

products for that market sector industry's available upgrade its offerings. must be lead technology

planned.

improves, each company must base

In turn, the company's customer

smoothly through succesive transitions to each Orderly product things as development thus must be

new technology. based on such

technological advances, growth in needs, markets. financing Another is

existing customer sophistication, changes in customer and the need for the company to expand its

Coordinating the availability of new products with and market managing demand is a key issue in this CSF.

the growth of the business. industry, because

A major CSF for all companies in the

of the past history of growth and instability, is the ability to provide ongoing high quality service. Data processing is operations of

increasingly intertwined with the most

vital

26

the firm. into some

Networks for major companies extend world-wide and very remote locations. and Customers are concerned whether their investment factor The

about the vendor's stability will be

supported with service. this has

There is yet another of service" CSF.

which has generated industry leader,

"quality always

IBM,

maintained It has

an excellent set a

reputation for service, worldwide.

therefore

high standard in this area for companies in the The final industry CSF is attraction quality personnel. Competition for good and

industry. retention of the

people among

companies in the industry is has been a shortage a

fierce.

Traditionally,

there

of qualified people. average tenure of

This has lead to position, and

high mobility,

short

escalating salaries. an industry based on

Quality personnel are the foundation of technology. Therefore the ability to market, and

attract and retain the skills needed to create, service the products is an important CSF. 2. Organizational CSFs

As Figure 4 suggests, industry CSFs are one input -a very large one -into each the CSFs for

and

particular has which other also

organizations.

However,

corporation

environmental, strategic and temporal conditions drive its CSFs. only estimate Working the

externally from the company, one can of all these factors on the

effect

company's CSFs.

This, however, is what this section attempts of in four the companies computer in the automotive This last

given our knowledge industry and one

industry.

27

~~~~~ ~~~~~~~_

computer-industry company provide the reader with

is an

analyzed

in

some

depth

to of

extensive

description

"organization" CSFs at the corporate level. We deal primarily section. CSFs for with the corporate level in this own

sub-organizations strategic

(with and

their

sub-industry,

environmental, be described

temporal

conditions) could

in exactly the same manner.

The analytical process is the same. a. Automotive Industry

As Figure 6 shows, each of the four companies noted must include the industry CSFs as part of their CSF however, has an additional CSF which list. from Each, its

arises

particular approach to, or position in, the industry. Within the industry, individual automakers have

differing CSFs competition.

based on market niche, temporal problems, and AMC, through its JEEP division has the largest

share in the four-wheel drive market. heavy share of AMC's profits.

This market provides a

Maintaining the lead in this

market niche is therefore one of AMC's CSFs. Chrysler has a serious cash flow problem. immediate, temporal (they hope!) CSF They have an

of obtaining enough Ford and GM head lines have

cash to keep the production lines rolling. chosen to meet the out foreign with competition new product

on, and are of small,

currently coming

economical, front-wheel-drive CSF is to successfully compete

cars.

Their common additional

in this small-car market. company will

Any critical success factors list for any

28

show the CSFs list. will have

industry

CSFs

reflected in the individual company however, that each company

It will also show, some individual

CSFs

which exist apart from the

industry-wide ones. b. Computer Industry of

Recently we were asked to put ourselves in the shoes

the president of a major computer company (which we will call "The Computer Company" and to describe the CSFs we would see Since the philosophy of CSFs requires that the

for that company.

they are based on the current strategy being followed by

company, the major objectives being pursued, and the personal world view of the top corporate officers, the following can an outsider's noted view are, at of all an of these.

only represent Therefore, the

CSFs

best,

outsider's as

evaluation of what that company's top officers might list CSFs for provide the an company extensive at the current time. of one

But they do company's

illustration

"organizational CSFs". (1) Market Understanding. The company deals in a rather significantly. processing of to an for (or

complex marketplace and one which is shifting The emphasis is clearly on changing large from central the

accounting transactions increased emphasis operations, and to on

machines

on-line we

transaction term decision

processing support

what for

information support) and even clerks.

line managers, staff professionals and message processing

Office processing

are becoming increasingly important.

Software development is

29
"s '------------------------------.

>-4O-

c m

i"
O DXOXE QzC FF0

I II~~~~~~~

I
I .

(A C
W

A
U

CU 0 u

10

U)

W)
H 2 n 4

H W

z
W

W 0
z C.

uU :: t0
C

II

!
;9

O C O
C/ : E-4

ZNE<S Z O 3

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Ci
3: C u

Cii
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4 O 1=

C)=

E-4~j

,-EE-4

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Z PA

changing from the use of

an

emphasis

on

build your own" to "buy" and in its several forms.

multiple-use important, to

software

Perhaps most

the need is clear in the 1980's for provide good networking capability

computer companies (both hardware

and software) in a market place which will be

increasingly communication-oriented. Given the above complexity and change, an of the real understanding

needs of the marketplace by the company is most to

critical. produce the

Available, but limited resources must be spent products for the this past which large to are most needed. company.

Resources are it has

limited even attempted in

Although

span have

much of the market with at market understanding to

least some presence, it must

select the major key market segments appropriate to it. (2) Insightful/Competitive Analysis. One way to

understand the market is through the analysis of competitors. This analysis provides some input in CSF into the market segment #1. More critical,

selection process however, is

one obviously

discussed

analysis
is

of competitive threats.
-which has

The major new

muscle

Japan

significant

(through both

private

resources

and government assistance) the company and the

and appears to be a growing threat to other major companies in of the

industry in the next decade. intentions are necessary and the

Proper understanding development of

Japanese

counter-strategies

- for the over

computer industry is perhaps the major Japanese the next decade.

target

30

III

(3) Technological

"Leadership".

Market

understanding

without the development of the appropriate technology is less than useful. Moreover as computers increasingly become a (or at

"commodity," the maintenance of a technological edge the very least parity) with the competition

becomes

increasingly necessary.

It is also important for purposes of

CSF #4 which follows immediately. (4) Developing an Image. clear image in the computer The company has industry. At yet At never times times had a

it has it has

provided product leadership.

other

focused on particular industries. seen as

At other times it has been

an "alternative source" to the industry leader, IBM. a less

In the marketplace this changing purpose has lead to than robust image in the past.

Internally, it has provided A decision on its

the potential, at least, for low morale. market segment (CSF #2)

and therefore its image (this CSF)

appears critical at this increasingly competitive time in the industry. (5) Developing Staff. The company a More Effective to Corporate Marketing

appears

have decided to be a major a "lean

factor in the market place. and thin" manner. To gain

Yet it has operated in better

market and competitive develop marketing

understanding, it is very important to establish and a significantly larger and upgraded corporate

staff. (6) Quality People. successful company. The This is the driving force in Computer every

Company has done well in

31

the market place employees. The

by need

attracting for

and

keeping

high

quality in the

increasing

productivity

industry makes this even more important today. (7) Service and Stability. which is an industry must". This is an industry CSF

As explained in the industry

discussion above, it is increasingly critical today. Figure 7 company CSF discussed. CSFs. CSF shows how each company-specific computer

relates to the computer industry CSFs previously CSFs 1,2,3,6, and #4 "Developing an 7 tie Image" directly is a to industry CSF the

temporal

specific to

the company and therefore does not appear on

industry list. Marketing Staff"

CSF #5 "Developing a More Effective Corporate is another company specific CSF whose source

is corporate strategy. It should be clear from this example some individual company critical In success addition how one can fit

factors into the some CSFs are

context of industry wide CSFs.

generated from the sources discussed previously. 3. Individual Manager CSFs there are

Just as there exist individual company CSFs, CSFs

for each sub-organization within a company, that is each group, etc. And at every level of the each of whom have

division, department,

organization there are a set of people, individual CSFs. As Figure affected by 4 noted, "individual

manager"

CSFs

are on

several

factors.

Heavy

influences

individual's CSFs include role-related and temporal

factors.

32

FIGURE 7 COMPANY CSFs AND INDUSTRY CSFs

THE COMPUTER COMPANY CSFs

INDUSTRY CSFs OR SOURCES

1.

Market Understanding and Creation

Market Niche

2.

Insightful Competitive Analysis

Market Niche

3.

Technological Leadership

Technological Leadership

4.

Developing an Image

Temporal CSF

5.

Developing a More Effective Corporate Marketing Staff

Temporal CSF from Company Strategy

6.

Quality People

Attraction and Retention of Quality People

7. Service and Stability

Service

Role-oriented CSFs integral part regardless of of

cut the

across job

all industries. and by

They are an persist For

itself

therefore other

pressures

produced managers as

factors. list

example, manufacturing control and cost

invariably CSFs.

quality

control

Presidents always have In to

"Corporate Performance" in one form or another as a CSF. performing a CSF study, it is important, therefore,

closely examine each individual's role. Temporal factors for each manager are usually related to the current problems and opportunities which the facing. manager is

This area is therefore an important source for CSFs. the president all of a large commercial bank would loans to developing countries. today in many loans to

For example not normally However, the

review dynamic

political

environments of

such countries may cause the become a president. should look problem, and

portfolio

these a the

therefore, the CSF and

generate study,

CSF for the interviewer facing a

In performing at the

problems

opportunities

manager, and how she is dealing with them. Other factors managers include which strategy, generate CSFs for individual

objectives, goals, and CSFs from them in the corporate

organizations and individuals above hierarchy.

If, for example, a VP Marketing has set a goal of sales by 25% in the coming year, the

increasing overall

marketing managers for each product line will have both goals and CSFs related to achieving that goal. Individuals are also affected by the organization's

33
_ _____1_1111_1__111_

III

environment and

industry,

but

to

lesser

degree.

For

example, whereas the overall corporate CSFs can be enormously influenced by new competition more of a particular product conditions line in the industry,

manager's CSFs will be than by the

generated by the resulting corporate strategy, competition itself. To

return to the computer industry, we can look the financial

at

the

example of

vice presidents of three dynamic, Apple. The managers

growing companies like DEC, Prime and all have at

least one CSF in common -All three are managing

financing for growth

and expansion.

in organizations which doing so

have grown rapidly during their lifetimes, and are in a tight money economy.

This CSF is role-oriented, arises and each is temporal because of the his for

from corporate strategy, current economy. How

vice-president

solves (Apple,

particular problem will no doubt be different. example, went public in

December 1980 to increase

its cash

available for growth.) Figure 8 completes the hierarchy of CSFs for one company from the auto industry CSFs, individual CSFs. below the industry example, Chrysler, by reproducing the

organizational CSFs, and adding three sets of The emphasis on role and temporal CSFs

level of President

(where CSFs are about identical

with those of the corporation) should be noted. 2. Uses of the CSF Concept. placed it in Having discussed the CSF

concept and

relationship to other managerial

concepts, we now turn to a discussion of the three major uses

34

of the concept.

These are: information

- To help an individual manager determine his needs

- To aid an organization in its general planning process -for strategic, long range and annual planning purposes. - To aid an organization in its information systems

planning process. Attention will be concentrated in this paper on the last of these uses. original Harvard The first is discussed in d epth in the

Business Review article. in it should

The reader who is that article

specifically interested

review

after reading the next section. general corporate planning)

The second use

(as an aid in

is not the focus o f this primer Thus

which is targeted toward the information systems field. the general" planning use of CSFs will also be

treated

relatively lightly.

We will concentrate on the third use -today the primary

information systems planning -- which is

use of the CSF concept from our perspective. a. Needs As Figure 9 suggests, an individual manager lives within the context of a corporation and her own sub-organization. Determining an Individual Manager's
-

Information
-

Where strategies, objectives and goals exist at higher levels (and in most major organizations they do today), the

individual manager must pay attention to these in determining her own goals. These goals, in turn, are of the factors which the are backdrop critical for in

the determination

35

III

FIGURE 8 THE RELATIONSHIP OF COMPANY AND INDIVIDUAL CSFs

(
- IMAGE

INDUSTRY CSFs

- QUALITY DEALER SYSTEMS - COST CONTROL - MEETING ENERGY STANDARDS - CASH

1
CHRYSLER - IMAGE - QUALITY DEALER SYSTEMS - COST CONTROL - MEETING ENERGY STANDARDS - CASH

z .1
MARKETING MANAGER
- IMMEDIATE HIGH

ffi J4
.

e
INFORMATION SYSTEMS MANAGER
- SERVICE (ROLE) - COMMUNICATION WITH

MANUFACTURING MANAGER

i
- COST (CORPORATE CSF) - QUALITY (ROLE) - INVENTORY POSITION (ROLE) - M (TEMPORAL) - N (TEMPORAL)

SALES (FROM CORPORATE CSF NEED FOR CASH)

- LOCAL IMAGE (ROLE) - PERSONNEL (ROLE) - A (TEMPORAL)
I

TOP LINE (ROLE)

- PERSONNEL (ROLE) - ADAPTATION TO NEW

II

ENVIRONMENT (ROLE)
- Y (TEMPORAL)

- B (TEMPORAL) - C(ENVIRONMENTAL)
_ _

-9

FIGURE 9 THE CSF PROCESS USED IN DETERMINING INDIVIDUAL MANAGERIAL INFORMATION NEEDS

MANAGER'SS BUSINESS
rVVTV0MMVWilT

CORPORATE . STRATEGY, OBJECTIVES, GOALS

(INCLUDING PROBLEMS, OPPORTUNITIES)

1\

SUB ORGANIZATION . STRATEGY, OBJECTIVES, GOALS, CSFs

INDIVIDUAL MANAGER

GOALS

CSFs|

N OF
I MEASURES
W

REPORTS

DATA BASES

II

obtaining these determination of

goals. the

Measures status of

which each will

will CSF

allow must the then

the be

determined and the reports value of each measure

which

display

latest

must be designed.

Finally, the data

bases from which the reports can be drawn are developed. This is a rather straightforward, top-down process. manager starts by thinking about while paying requisite his business to of the his The

environment, strategies, organization.

attention levels

objectives and goals of upper (The higher is bounded others.) He the by

manager is in the organization, the less he the strategies, by proceeding a business objectives and goals of

then,

through the steps noted in focus to an information

Figure 9, moves from systems focus

in a series of clear steps which end up in the

definition of data elements needed. During the past two years, we have found this useful conceptual path. to be a

It has helped many top managers to However, it takes bases.

clearly visualize their information needs.

time, dollars, and energy to build the requisite data

By the time these are built, some of the appropriate measures and reports will have changed. Therefore, from a pragmatic the most

viewpoint, the CSF concept is today being used for part as described

an aid in information systems planning in the manner in Section c. below. It is on this that we will

concentrate this discussion. b. CSFs As An Aid in General Corporate Planning noted four different

Figures 4 and 5 in Section II.e.

36

levels of individual.

CSFs:

industry, corporate, sub-organization, and reason to make use of these

There is every

various levels of CSFs in the corporate planning process, and this is being done by several organizations. Since CSFs

designate the areas in which good results must be obtained to ensure success at any level of sense for an organization pertinent the CSFs or so the organization, to it makes

individual that to

consciously can be

determine the allocated in

resources ensure

planning

process

successful

efforts in each CSF area. There are multiple possible uses of For example, corporate industry strategy. CSFs can CSFs in planning.

be utilized in determining corporate and

Similarly, should be

sub-organization CSFs

significant

inputs to the should be

short-term planning process, and individual used by each manager in

CSFs

developing her action plans for a paragraphs briefly discuss

particular year.

The following

the first and last of these uses. Industry CSFs, as noted in Figure 5, are a necessary process. input into the corporate logical and

strategic

planning an

Corporate strategy should be heavily based upon

in-depth understanding of industry CSFs. significant literature concerning the

In fact, there is a use of CSFs in the

development of corporate strategy.

Many consulting firms who CSF concept

specialize in strategic planning use either the directly or a concept similar to it.

They tend to preach

that, for an organization to be successful, its strategy must

37
_ _1_ _1__1_1^__ _______

be developed to allow it to excel in those areas

where

high

performance is critical -- or the organization must move into an industry niche in which, in effect, different CSFs exist. useful

At the individual manager's level, CSFs are also in planning.

After the manager's goals have been determined, of the relevant CSFs will lead to improved key programs

the determination

insight into the "best" resource allocation to and activities

to ensure that critical areas are emphasized.

Figure 10 illustrates this individual planning sequence. c. The Use of CSFs in Information Systems Planning primarily planning. Nolan's as a

Currently the CSF method is being used technique to aid in information systems and

It is

another tool like IBM's BSP or Gibson which can

"Stages"

be used as a planning method.

In this section, we

will discuss the CSF procedure as it is used for I/S planning purposes, the concept of "information data bases" the primary output which are

of using the CSF process in this manner,

and the reasons underlying the growing use of the CSF process in this manner. (1) Procedure. procedure as follows: (a) In corporation or the top 10-20 a the chosen organization, most often a it Figure 11 diagrams the CSF

is used for I/S planning.

The steps are as

major

suborganization such as a division, are interviewed in are the final using the CSF

managers

interview process paper.

discussed CSFs

section of this (Where time

Each manager's

determined.

38

allows, the

measures

used for each CSF are also determined,

but this is not a necessary part of this routine.) (b) Analysis of the results of the interviews is performed. individual CSF

The individual manager's CSFs are CSFs and which which,

charted, as shown in Figure 12, to determine the have been identified by multiple managers

therefore, provide a good approximation of the organization's

CSFs. Although each top manager's job is different -and

his CSFs

are

therefore

different

in

some

ways

from his top

colleagues -- we have found that the intersection of all manager's CSFs is the set of

CSFs for that organization.

These resulting CSFs are then checked with the organization's management. (c) The organization's CSFs, as charted in step 2,

in every case will indicate one or more key "information data bases" or "data processing systems" which should receive For a

priority in the information systems development process. example, the CSFs shown in Figure 12 indicate the need for Human Resources information data base and a

Corporate to

Strategy information data base. the development

Priority should be given

of these data bases since they represent the people in

means to satisfy the information needs of the key

the organization -top management.

(d) The information concerning the perspective on information

top

management

systems needs developed in steps regular information systems

1-3 above is then fed into the planning process. Priorities

are developed for information

lll____IXI____III_____

39

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systems development. (2) Information data bases -As step 3 in the the primary output:

procedure above indicates, there are two

major types of systems needs which are developed through this CSF procedure. The first is the -need for particular data

processing systems

such as an on-line order entry system. In fact,

This type of system needs no further explanation. an indicated need for these operational data

processing since

systems is not often a direct output of a CSF process, top management contained is not usually interested in a

in the information operational

solely

single

transaction-processing system. Most often the key "systems" needs indicated by the procedure are data bases." the 'op development managers areas of of CSF

one or more "information often need information

most the be

spanning various

business. supplied Rather an

In general, the by a single

required information operational system's base" must be built.

cannot

data base.

"information data

Many examples of information data bases are given in the "Executive Information Support Systems" full discussion of information data paper bases (3). and For a

relevant

examples, the reader

is referred to that paper. information data bases are quite

Briefly, however,

unlike the traditional transaction processing data bases such as those developed for accounts receivable, manufacturing bases

control, etc.

Those more traditional operational data

40
_ _ _ _II

~~~~~~ __ ~~~

I_

~ ~ ~~__ -- --

III

store files which is the

of

data which are used to process the paperwork mainstay These of the day-to-day life of an

organization. and complete.

data bases must be up-to-date, accurate

They must have well-designed sequences of data

storage, optimized as far as possible to facilitate efficient processing of the thousands of daily transactions which occur in major organizations. Information support data bases, on the other very different (See Figure 13.) paperwork. make in purpose and the hand, are

type of data they use.

They have no role in day-to-day operational to

They are built primarily as data repositories

information available for recall and analysis. part,

They are

fed in

but only in part, by data from the operational Moreover, much significant and "soft" internal information data from

data bases.

customer surveys,

market

sampling,

planning support

processes are often also data bases. So is

included in the

"externally purchased" data from any of thousand machine processable data

the approximately three

bases which can be bought from information vendors today. In technical structure, information support are also different from the conventional data bases

data bases used information

primarily for support data

transaction bases are

processing.

Most

designed with very inefficient, yet Primarily they

simple and easily understood file structures. exist as a "set of tables."

This makes them inefficient with easy for a user to

regard to computing machine usage but understand, simple to

access, and very responsive to change

41

and evolution. (3) Reasons for the use of the CSF method as an Information Systems Planning. aid to

The use of the CSF method for several

information systems planning is occurring because of factors concerning both the

data processing environment of These are: of information their systems

the 1980s and the CSF method itself. - In 1980, executives are a growing number of

well

aware

operational creating

paperwork-processing systems needs. and working with these systems

They have been for and

the past 20-25 years. therefore process, need are to the data

What they understand far less well, place emphasis on in the

planning

information needs of top management and the information bases which must be built to support these needs.

The CSF

method provides a technique to do this. - The CSF method to aid information systems planning a "rifle-shot" technique aimed at understanding is top

management's information needs.

It attempts to do only this. each a manager's time. of

Therefore, it takes only 1-3 hours of It can effort. be completed in

approximately

person-month

It is, therefore, inexpensive as a planning tool. to its yield provides for an information systems

- In addition planning, the CSF

method

additional, perhaps This benefit which each

equally important, benefit for the interviewer. is a relatively deep understanding of the way in senior manager interviewed spend views the world. the interview

In effect, the time discussing

interviewed managers

42
_*____

III

Figure 13

A COMPARISON OF TRADITIONAL AND INFORMATION SUPPORT DATA BASES

Traditional Transaction Data Base

Information Support Data Base * data repository

I

----Purpose and use

e support transaction
I

processing systems * * up-to-date accurate consistent complete

II
. _

----r
Data attribut

Storage method Ability to change the data base

-I I I I I I I I I I I I I

* timeliness not critical * "hard" and "soft" data c consistent * completeness not always possible
- -- - _- - - - --

I I
I

* optimized for efficienc Y: e tables of data des igned of computer resources for easy access & change II
-

* difficult * only after much consideration of "downstream" effects

-- -

II *

easy to accomplish I data base designed for change and evolution

FIGURE 10 SEQUENCE OF CSFs USED IN INDIVIDUAL PLANNING I~~

RESOURCE ALLOCATION TO KEY PROGRAMS AND ACTIVITIES

-- -------

III

FIGURE 11 CSF PROCEDURE FOR I/S PLANNING

MGR A DETERMINE INDIVIDUAL CSFs

MGR B DETERMINE INDIVIDUAL CSFs

MGR "N" DETERMINE INDIVIDUAL CSFs

``\

e,

ANALYZE INDIVIDUAL CSFs TO DETERMINE ORGANIZATION'S CSFs

NI

DETERMINE PRIORITY INFO DATA BASES & KEY SYSTEMS

I/S PLANNING (PRIORITIZE INFO SYSTEMS DEVELOPMENT)

Az

*:

their jobs as they see them, and the areas which they believe are most critical to them. the Interviewers who have used the top person in information

CSF process

(in many cases

systems) have

almost unanimously reported that this "insight its view of the business" has been,

into top management and

by itself, of significant value to the I/S department. - Perhaps equally important, the CSF procedure top management with a In vehicle far little too time for many to thinking provides their top

about

information needs. management has given

organizations, pondering

their own

information needs.

Rather, they have been concerned with the etc.

traditional areas of marketing, manufacturing, finance, In many organizations, top

management has not yet made the

shift to the realization that, with today's technology, it is not only feasible, but desirable (and necessary) for information them to spend The and time some would say even

thinking through their CSF method is a

requirements.

business-based, logical,

time-sparing

entree into this

new endeavor for line management. - Finally, the CSF method, used as an aid for

information systems

planning,

focuses

on the definition of to support

those information data bases which are necessary the information number) of top needs of all It (or is at

least a significant to build an

managers.

expensive

information data base for only a single executive (even if he is the President). However, where it can be shown, as in data base will

this use of the method, that an information

43 ~~~~~~_^
.. . . -------

III

serve the information needs of many of the organization's top executives, the justification of the development of such a

system is more straightforward.

44

III.

INTERVIEW PROCEDURE AND TECHNIQUES This section is written for the person who is about to

undertake his

first

CSF

interview.

Here,

we

attempt to as In

communicate all those things which appear we look back on three years of CSF

to be important interviewing.

addition, this section reflects the knowledge gained from our discussions with others who have used the CSF method. major areas They are: - Objectives of the interview - Pre-interview preparation - Interview procedure A. Objectives of the Interview A CSF interviewer has a unique opportunity. managerial time Given the of interview procedure and Three

technique follow.

and attention which has been made available, Just coming out with the

she should capitalize on it fully. manager's CSFs is not enough. seek to accomplish all of the 1. To understand the mission the and

Rather, the

interviewer should

following four objectives: interviewee's organization and

role

(the

"world

view") of the organization

interviewee within the context of his as the interviewee perceives them. 2. To understand interviewee. 3. 4. To elicit CSFs and measures from To assist the manager in better own information needs. the the goals and

objectives

of

the

interviewee. her

comprehending

This may be the first time

45

II__

___

III

that the manager has confronted needs in a structured way. presents the

these

information

The CSF interview often interact with the support that

initial occasion to

manager on the types of might be data" useful to her.

information

In the haste to "collect the reverse,

on CSFs and

information needs, should

educational opportunity B. Pre-interview Preparation As noted earlier important. also with in It the steps

not be overlooked.

this

guide, one

pre-interview not only with knowledge major useful to

preparation is knowledge, but brings. The

provides confidence

that the most

following

represent to be

pre-interview actions we have found

people desiring to conduct CSF interviews: 1. Read and be throughly familiar with the articles, (1),

"Chief Executives Define Their Own Data Needs" "Executive Information Support Systems" All

(3), and in

earlier sections of this guide. addition to the

provide,

conceptual aspects and procedures which can

of the CSF method, some useful examples be used when needed

to explain the rationale for

CSFs to an interviewee. 2. Be thoroughly familiar with the industry.

Understand the industry competitive forces, trends, and environment. and news makers. in Know the current problems, issues This is important CSFs and during the in fully

interview both

eliciting

46

understanding the importance of each CSF. 3. Study the company or companies to Use publicly available sources be such interviewed. as annual

reports, internally-available and organization charts.

company

histories,

External sources such as

articles in the Wall Street Journal, Business Week, Forbes, and Fortune, are often are available thought. with the the study. strategy, in greater highly useful and

volume than is commonly one should spend time

Most important, people

in the company who are sponsoring the company, problems Internal its and company

Their insights into environment, current

opportunities are political issues with these important. for

invaluable.

should be probed, where possible, contacts since these are

company

All of this background is highly useful each interview smoothly and

conducting

intelligently. 4. Initiate the transmission of a letter from the top

management of the company to all interviewees prior to the interview. The letter should explain the top

purpose of the undertaking and explicitly show management support for it. include background

This letter should also to It is prepare desirable the to

material

interviewee for the session. include a copy of

"Chief Executives Define Their request that it be read

Own Data Needs" with a

47

III

prior to outline of enclosed. 5.

the the

interview. interview

In

addition, process

brief be

should

Plan to start interviews at management to be

the

lowest and

level

of This for the of the more

interviewed

work up.

provides the ability to review, in preparation interviews with higher-level from the levels. become CSF In managers, interviews this way

knowledge gained managers interviewer comfortable in at

lower can

increasingly

discussing the company and industry or

issues before being confronted with the top two three managers in the organization. 6. Plan to have, and enlist, a key company to accompany There the are the pros manager from on to

the the this

interviewer and cons

interviews. method. On

plus side, one has the benefit of discussing someone the interview who can during

an insider's insight in afterwards. There is

available

help clarify company-related obscure points the interview. In addition,

the person from the implementation if

company has a stronger stake in he has been

part of the process.

However, on the be as honest

minus side, the interviewee may not and frank is present. during

the interview because an insider

There is no available objective evidence as to

48

whether the pros outweigh the con Suffice it to say, that for

on

this

issue.

all three positive to have a

reasons noted above, we generally want

key manager with us during the interviews. 7. Prior to the interview, assume the role of the

interviewee and

list, from all acquired knowledge, measures.

her probable objectives, goals, CSFs and

This can be an enormous aid during the interview in eliciting a complete set of CSFs is on is and an measures aid in

quickly and easily. getting the track. The

This technique thinking this

interviewer's danger try in to

the right that the

doing

interviewer may interviewee. this. 8. Brush up on

force his own CSFs on the guard against

Care must be taken to

interviewing

skills.

There

are

approaches and techniques for conducting in an interpersonal

interviews

setting which, used well, can

enhance the success of a CSF interview. C. Interview Procedure With the necessary preparation out of the way, of the first interview arrives. This the day

section provides a

step-by-step outline of the several parts of a CSF interview. These are Description (1) of Opening Mission the and Interview, Role, CSFs, (2) (3) (5) Interviewee's Discussion of

Interviewee's Goals, CSFs, and

(4) Developing

Prioritizing

(6) Determining Measures.

49
-

III

1.

Open the statement

interview. of how

Give the CSF

brief method

introductory is used to

determine managerial information

needs.

Although

the interviewee has h ad preparatory material, a few remarks to place. help to refresh his memory these are remarks never out of will also

The response to determine h is

degree of understanding of that the

the CSF concept. interviewee has

If it becomes apparent

not read the material provided, it more

is necessary for the interviewer to provide a in-depth introduction to the

CSF concept and the

purpose of the interview. a. Example of brief introductory you know we are from using a statement. 'As

the material you have received, new method for assisting

managers in looking at the way they manage and, as a second ste p, for determining their on

information needs. identifying those

This technique factors in a in

focuses

manager's order for and success

environment which m ust go right the manager to achieve her

goals

objectives.

These are called critical

factors or CSFs." b. Example of lengthy introductory statement. the past, analysts have occasional success, needs of managers. to For attempted, with "In only

define the information the most part this

50

failure has vocabulary, a business on inability of information

been

due

to the lack of a common understanding of of the

poor the the needs part

the analyst, and an to relate of many his his so were served an

manager to the As a

demands result,

day-to-day operations. called "management designed and management. built We

information which are in

systems' no way using

currently

interview method which appears to have overcome many of the shortcomings of previous methods.

This new technique focuses on identifying those factors in a manager's environment which are good results

the most important and for which must be obtained in

order for the manager to objectives. factors" systems on These are

achieve his goals and called "critical In the designed past,

success

or "CSFs". have levels been of

information to

primarily

report

achievement toward managerial goals. CSF method we can design information

Using the systems

which report on the results in areas underlying eventual success or failure in the achieving of goals. CSFs answer the basic question of

'Where should you place managerial attention?'. Once that question has been answered an

information system can be designed to report on

_ ___

____

51

III1

the current attention. "In

status of areas which require most

this interview we are going

to

start

by describing your mission and role, move on to your objectives and goals, and then discuss the critical success If the clarify her examples from article or factors that support these." needs examples to

interviewee understanding the

of the concept, use Business Review

Harvard guide.

this

Choose examples which

are appropriate to the interviewee, the company and the industry. 2. Ask the interviewee to role. This initial describe question easy his serves way and to that job. his to mission two get start which and major the him he

purposes.

First, it is an the

interviewee into talking.

process to

He is asked his the

discuss and his

knows best, however, as almost always the world."

company manager

Second, job, he

discusses clues

provides

as to how he "views Does he induce he out by a the past

Is he strategically oriented? which is set or up is to

view his job as one change into the in

organization, the job been to

"caretaker" put routines managers? to him which

carry

have

developed are this

Many of the things which come to light during

important exposition

52

including, often, a few critical The interviewer should take

success

factors.

careful notes during It should provide a later since the

this section of the interview. cross-check on manager's CSFs what should is said

consistently

relate to his

role as it is perceived. 3. Discuss the manager's goals. often necessary in this ask Some definitions of you are

part "Do

the interview. mean goals or

Managers will often objectives? on goals

Short-term or long-term?". (see definition pages

We zero in since very

6-7)

objectives, as defined meaningful with regard

in this guide, are not to CSFs.

As to the time asked to that a

horizon for goals, the manager should be respond with the time horizon

(short or long)

is most meaningful for him. one-year horizon; term goals.

Most managers

pick

some provide both long and short

The choice of the time-span and nature is meaningful in itself since insight into the way the

of the goals selected it provides further

manager views his job. A fair number of managers, given this

question, will reach into a drawer and pull out the set of goals, often determined by an MBO process,

on which they are being measured during the current year. Seeing this writing list, our response -in

addition to

them down -- most often is to

53

III

ask, "All right, this is the set of goals on you are to be measured,

which

but managers often have Some of these

other less forma lly stated goals. informal goals

aire often as important, if n ot more Do y ou have m anagers For

important, than tthe agreed-upon goals. any goals which f it this category?" sometimes expose

Here

significant, unspoken goal s.

example, a manage!r in one company had, as a primary goal, the elevati on of his sub-organization in the Since a company good to pa rt give of higher

it (and him) more power. some to managers' these

goals,

c ritical

success factors
very important --

relate

unstated -- yet
it is highly

informal

useful where surface. 4. Develop the

possible

to bring these goals to the

manager's

CSFs.

The

process

of

determining the

manager's CSFs can be quite simple If the manager has done the

or rather difficult. prerequisite reading

and has given some thought to

his CSFs he may even have a written list to present to the interviewer explanation of together with an appropriate

each CSF.

Alternatively, a manager about to his job and its

who has not thought much responsibilities may

prove

be a poor subject. at (We

Fortunately, the latter case is not often found the top of reasonably-sized organizations.

note ways of working with "difficult"

interviewees

54

later in this section.) (a) Some questions No it matter that how are helpful smoothly in the

eliciting CSFs. interview goes,

is useful to triangulate in on of questions.

the manager's CSFs through a series The first, and obvious, question is:

"Will you please tell me, in whatever order they come to mind, those things that you see as critical success factors in your job at this time?" As the manager proceeds, the interviewer of a

should not hesitate to ask for clarification CSF where it is unclear.

At the end of the list, the manager to

however, we find it useful to get think about her CSFs

from two other perspectives at the The very two

which can elicit additional CSFs or, least, assist in prioritizing

CSFs.

additional questions are: "Let me ask the same question concerning critical success factors in another way. In what one, two or three areas would failure to perform well hurt you the most? In short, where would you most hate to see something go wrong?" and "Assume you are placed in a dark room with no access to the outside world, except for food and water, today. What would you most want to know about the business when you came out three months later?" As simple as these questions seem, turned out to be highly effective they have

in assisting areas

managers to zero in on the few most critical of their responsibility.

One must, of course, use

55
_lj_m__ _ 11

a manager with at least a slight sense of humor react well to it. tends to questions. develop

to

In general, each CSF interviewer his own set of "CSF-checking"

These are the ones we use, however, and

they can serve as a starting point. (b) Things to do while the manager is you his always in interview. while the CSFs. The skillful CSF mode telling

interviewer is during the

"multi-processing"

Among the things that are helpful to do manager is talking and you are writing in a few "dead" moments

down her CSFs (or even toward the end

of the interview if necessary) are

the following: (1) Using the CSF in Figure 3, mentally classifications check summarized

the list of CSFs to one

ensure the interviewee has not focused on only type of CSF. For

example, some managers tend to issues and overlook

think only of their internal the roles they play

externally.

The interviewer

should be aided in uncovering this oversight by the initial mission and role description given interviewee. which was In addition by the

the background research also help the

performed ask

should

interviewer to

about

relevant areas that the the For level,

interviewee has not mentioned, particularly in area of external and at environmental the CSFs.

example, especially

presidential

56

consider involving

CSFs

that

might

arise factors

out

of such

issues as

environmental

competition, new technology, and regulatory issues. (2) "Aggregate" CSFs to ensure that one CSF is not being discussed in multiple ways. area Some that

interviewees "get stuck" discussing one is of particular concern at the moment. CSFs talking in different new

They will ways CSFs. and The

often echo the same think they are

about

interviewer should be aware of this possibility and be ready to suggest that several one. Then CSFs are really

using techniques described earlier, try Of course, it is possible for

to draw out others. a manager to

have only one or two CSFs, therefore

the interviewer should not try to persuade him into more CSFs if it is not appropriate. (3) Check to ensure that all elicited, not hard data. talking about CSFs are being

only those that can be measured with Even though the CSF method avoids

computer-based

information systems,

some interviewees limit their thinking to what they believe to be Be appropriate sure to CSFs stress that for the needs

"computerization."

method is designed to elicit all information

--

soft as well as hard.

Use examples of soft CSFs

like

"relationship

with

the

boss,"

"supportive

spouse and family" to illustrate this point.

57

III

In sum, doing the interviews, the should check to be sure He about his

interviewer is

involvement be not

"helpful," not directive. when asking questions

should areas

careful covered

directly by the manager to not indicate a judgement on his part. His job is not to convince the Most the the

interviewee of his CSFs but to draw them out. managers will not be unduly be influenced sensitive by to

interviewer but one possibility.

should

On the other hand, as suggested by points 1-3 above, the interviewer should be sure that he has in his

"stretched" the manager as far as possible thinking during the interview. The

majority of with

interviewees have no difficulty in responding their CSFs. Some,

however, do not understand the (Where with to

concept and need a great deal of prompting. possible, the examples and interviewer anecdotes should past This is be ready

from

interviews a

assist in such a situation.) in which one must be

situation

extremely sensitive to the The interviewer

problem of "leading the witness." must walk

the narrow line of eliciting information

without creating the answers. 5. Prioritize CSFs. manager is often Some further insight into the

gained by having the interviewee Abosolute priorities

put CSFs in priority order.

58

are not essential: interviewee views

general as

indications of what the

most important will suffice. not prioritize CSFs,

In fact, many managers will and it

is not necessary to do so.

They are, after all of

all, a small high-priority set of things -which are critical 6. critical. Quite often no one

is more

than the others. Where time permits, for CSFs it and is to the the ways

Determine Measures. useful to determine

measures

identify the sources of these measures. CSFs have been determined and

After

prioritized,

interviews should proceed to discuss possible of measuring creativity. each. The This is an may area come

for great up with

interviewee

measurements which appear unusual. ways in which

are meaningful

to her but which indicating status wish the

The interviewee is she measures interviewer on her the may

of each to make

factor now.

The

suggestions based

initial

preparation or There is no may

subsequently acquired danger of "leading"

knowledge. here. The

interviewer

suggest a way of measuring that the interviewee did not think of but likes and will use. In general, measures, does this not final step, determining

need

to be carried out during It is certainly useful

the initial CSF interview. if one has extra time

at the end of the initial

59

III

interview. entire

However, it can wait CSF exercise

until described

after in

the this

initial

primer has been completed. information data bases

Then, when the

desired

have

been decided upon, a can be held.

more probing second-stage interview Here measures

should be defined in great detail to

zero in on the contents of the required information data bases.

60

IV.

ANALYSIS OF DATA There are two major steps in the analysis process. They

are described below: A. Reviewing CSFs. the Each interviewee's CSFs should be in all

reviewed against

classification and dimensions noted

Section III to check whether the interviewee has covered the major areas of his are job (e.g. if the CSFs

interviewee is a as quality,

manufacturing manager, costs, and inventory

"role"

such

control noted?).

In addition, one can

check interviewees

against" each other to see if each fits a to a common managerial

"pattern" of CSFs which appear due perception of current problems,

opportunities, and

industry structure, so forth. The

competitive

conditions,

interviewer has the background of his research, the interview and his own experience to assist him in this good review. "feel" If a

Primarily, however, the interviewer will have a for the there are company major after gaps, the this start should

of the interviewing. be brought up in

subsequent review meeting with the particular

interviewee. version of In step

It is highly desirable to prepare a written the CSFs to be reviewed and approved by the

interviewee. this

addition to ensuring that the facts are may elicit additional B. Aggregating As one information. CSFs From earlier, is the the the

correct,

Individual interviewing initial step

Manager several towards By then

Interviews. executives in determining the

noted company for

CSFs

company as a whole.

61

aggregating the CSFs

from

the

individual

interviews,

the

interviewer can discover exactly which information data bases are most necessary to support the managers. For example, interviewees list in CSFs several that instances, we have had In

deal with market analysis.

most of these cases, some of the information needed to progress with e.g., sales external in

track

regard to these CSFs was internally generated, "hit/miss" origin; reports. for Other information was

example,

competitors

actions, In sum, for a

customers response patterns, and market share data. however, the CSFs pointed directly to the need

marketing information data base. In another situation, improving chain, employee morale. were training the president Farther concerned for their down about named the a CSF of

management professional One was

executives and

development

employees.

interviewee mentioned that employee turnover in his area higher than desirable. theme.

Many other CSFs in this company hit The need for a human resources data

the "personnel"

base was easily identified. A CSF chart, such as the one shown on Figure 12, can very useful in this aggregating process. be

One can easily information data

circle the CSFs which point to bases.

particular

At this point, the CSF data should be in convenient form to feed process. into The the company's information data bases systems required planning for top

information

62

management should development. willing Not

be too

given

consideration

for

priority

surprisingly, top management is often resources for the development

to allocate additional

of these systems. Once a decision is made to go ahead information data base, with a particular

a second phase of interviews begins. from identifying for the CSFs, to

Here the emphasis switches determining each manager's

measures In this

his CSF's and the the base necessary can be

data needed for each measure. data structure for each

way, data

information

established.

63
__ _ _______

References

1. John F. Rockart, "Chief Executives Define Their Own Data Needs," Harvard Business Review March-April 1979, p. 81.
2. D. Ronald Daniel, "Management Information Harvard Business Review September-October 1961, p. Crisis," 111.

3. John F. Rockart and Michael E. Treacy, "Executive Information Support Systems," CISR Working Paper No. 65, November 1980 (Revised: April 1981)

64