Bite Size thoughts by Dr. Constantine “Dino” Kiritsis, Founder, StudySmart
Arguably, every business has a small number (usually 3 – 4) of critical elements that it has to do well in, order to succeed. I do not mean ‘important’. I mean cri-ti-cal. Critical Success Factors may therefore be defined as those elements that a company must do well in order to succeed. The question is whether businesses are doing well in these areas and if they know what is critical. From my experience, it seems that SME’s (Small and Medium sized Enterprises) may have a problem in this area. For example, a coffee shop – arguably – or a restaurant, would need to focus on 3 – 4 CRITICAL elements to succeed such as hygiene (being clean), customer service and quality (among other) of food, coffee or whatever you are offering. Ok, quality is something subjective; but customer service and cleanliness are not.
When you think of the restaurants and the coffee shops you have visited, you would most probably agree that many of them have a filthy toilet or their customer service was bad. Come on, let’s be honest. Do you need a training course to actually realize how critical these things are in the industry you are in? You can get away with ‘bad lighting’ or less ‘parking space’, but you can’t get away with bad customer service. The critical elements always need to be measured through Key Performance Indicators (KPI’s), since ‘what is measured can be managed’ as the great Management guru Peter Drucker used to say.
Undoubtedly, there is a huge difference between important and critical. Critical is a must. Important is good to have and will certainly help your business overall. Let’s take another example from the professional training industry. What’s critical? The trainers and the passing rates in case candidates are taking an exam. What is important? The training room, the catering and the manuals (among other). It goes without saying that the trainer is more important than the catering. However, many owners of small training businesses fail to focus on what is CRITICAL for their business. They may actually focus on what they FEEL is critical, which actually may be important. What they feel as ‘critical’ may be a great training room, renting the best hotel and having great coffee or great slides or gaining a ‘certificate’ at the end. All are useful, but the critical issue is the delivery of knowledge, development of skill, understanding a theory and building soft skills with others, so it may be a good idea to work with the best educators and stop negotiating for less and less trainer fees as you are actually hurting your business.
The balanced scorecard by Kaplan and Norton (1991) was actually developed for this reason. The authors of the model suggest that when evaluating the performance of an organization, the critical areas for success for any business may source from 4 areas: Financial, Quality, People and Customer. Therefore, there is no need to look hard for them and quantify them in order to measure their performance. The point is to find them, check if you have capabilities in this area, ensure that you measure your business against your own (or industry) standards, and you have nothing to be afraid about. Lets start focusing on what really matters, so ask yourself: Are you focusing on important or critical things? There is a big difference…