KEY SUCCESS FACTORS
What are key success factors?
Key Success Factors (KSFs), also known as critical success factors, answer the question: What do we need to “get right” internally to achieve our strategy? Key success factors sit at the intersection of strategy insight and strategy execution. They are three to five high-level goals that provide a focus for execution. Key success factors are identified after you have defined the strategy. At Change Logic, we ask our clients to answer five strategic questions. The first two questions are addressed in ideation. The remaining four questions are the primary focus for incubation, and all six are essential for scaling a new venture into a sustainable revenue-generating business:
- Which customers will you serve?
- What is the high-value customer problem?
- What is your compelling value proposition?
- How will you capture value?
- How will ecosystem adoption occur?
- How will you achieve strategic control (i.e., competitive advantage)?
Once you and the leadership team have agreed on the answers to these questions, you next define the key success factors. You pivot attention to how you will execute. What will it take to get there? We recommend identifying the 3- 5 key success factors.
Why are identifying your key success factors important when embarking on a new business venture?
It is important to identify key success factors for new business ventures because it provides clarity about what is most important for the leadership team and the rest of the organization. This enables people to execute at speed and adapt based on new insights. The key success factors create organizational alignment. This is especially important for new ventures in established businesses. The organizational capabilities a new venture needs are rarely the same capabilities that exist in the core, where the formula for success is known. What it takes for a mature business to compete is fundamentally different from what it takes to ideate, incubate, and scale something new. There is more uncertainty.
- What skills do we need?
- What kind of culture are we creating?
- How will we organize, what are the reporting relationships?
- What are the most important integration points with the core? Technology, sales, channels, manufacturing, back office services.
- How will we manage the interfaces?
What are some examples of key success factors for new ventures in established organizations?
The key success factors for a new venture depend on the nature of the opportunity they are pursuing. There is no one size fits all approach. Design the organization to operate on the logic of the exploratory venture. For example: What do we need to get right internally?
- Operate as a separate unit that is independently managed
- Optimize for speed in decision making
- Hire hardware talent to supplement our expertise in software
- Develop a supportive relationship with corporate finance
- Launch a hybrid team to integrate with sales