Role of critical success factors in strategic planning

Critical success factors can be defined as those issues which are deemed important to the organization, with regard to its present and future performance, and also to its stakeholders. These few key factors are unique for achievement of its vision and might be specific to the industry in which it operates. Critical success factors define few areas of performance that are essential for the organization to accomplish its mission.

In other words these are the factors that are critical to the success of the organization and positive results with respect to these factors are absolutely necessary for an organization to achieve its vision, remain competitive and succeed in the industry.


Identification of Critical success factors unique to an industry can be done from general industry analysis, competitor analysis and macro environment analysis. These are the challenges that are inherent in an industry type at any given moment of time and the company inherits them as critical success factors to fulfill in view of its choice to compete in the industry.

Uniqueness of critical success factors

Also depending upon the location, technology, human capital, local markets, organization structure, and many more such attributes, each organization has a few critical success factors which are of utmost importance for it to excel in the marketplace and achieve its goals and vision.

Value of critical success factors

Understanding of the critical success factors is of utmost importance as they drive the strategy for any company. Critical success factors are considered as an important component of strategic planning and a means for organizations to focus and validate important activities, initiatives and projects. Critical success factors is a useful concept in explicating the things that people at best knew intuitively and sometimes accidentally to direct their efforts towards staying competitive and realizing the vision.

For strategic planners critical success factors provide a basis for collecting and validating the information. Where there is an overload of information, which is a possibility today, thanks to progress made in communication and information technology, critical success factors act as a filter to check the relevance of information.

Through the process of strategic planning an organization:

• Identifies the factors critical for the industry for the given timeframe
• Assesses factors critical specifically to the organization
• Decides on the trade-offs that can be made in other areas without compromising on the long term profitability of the company
• Finally identifies the goals which help it in fulfilling the industry wide critical success factors
• Further identify the critical success factors to achieve the goals set by it (this sets the focus for senior management team for monitoring and reviewing the progress)

And finally the most critical of all the success factors is to be able to implement the strategic choice made by the company, because however well the challenges in the competitive landscape might have been understood and however well they might have been analyzed, best options identified and action plans charted out by the senior management team and strategic planners, if they are not implemented in a structured way all the hard work done amounts to zero.

Critical success factors are all about creating focus while planning and as well as while implementing the strategy.