Distinguishing Between CSFs and External Outcomes – DavidParmenter | My vision is to change how leading organizations, around the world, measure and manage performance ‑ by 2030

By David Parmenter

This is an extract from my “Finding your organisation’s critical success factors” implementation guide (whitepaper + e-templates)

Organisations have always worked with external outcomes. In fact, many performance measures have been designed to report on whether these outcomes have been achieved or not. These measures are frequently Key Result Indicators, certainly never KPIs. You can look at the KRIs for as long as you like but it will not improve performance, it will simply tell you how you have done.

Definition of external outcomes

External outcomes describe a result of the operational CSFs working, day in and day out, for a sustained period of time along with the successful implementation of strategic initiatives.

It thus follows if we want better external outcomes, we need better adherence to the organisation’s success factors.

External outcome such as “Developing and growing the new product x (or market y)” is a result of many different activities happening from alliance agreements being signed to obtain operational capacity in a new country to new operational capacity being organized in a new country. Once operational, the new plant in a new country will be guided by the operational CSFs already in existence elsewhere in the organization.

You need 5 to 8 external outcomes and 8 to 10 critical success factors

You need to work with both these lists.

Your board should be focused on the external picture: the external outcomes as they should be looking at the business from an outside-in perspective. Don’t give the Board your list of eight to ten CSFs as they are too internally focused.
Your staff need a list of eight to ten CSFs to help direct them to the important activities that need to be done well 24/7.

On one project we made the mistake of tabling the CSFs to the Board without fully educating them on this difference. A member of the Board rightly pointed out that the CSFs tabled were too internally focused. They wanted the CSFs expressed as external outcomes, the impacts they want to see. The board should agree on the external outcomes and the board dashboard should have 8 to 12 KRIs that report what has been achieved with regards to these desired outcomes.

The differing characteristics of critical success factors and external outcomes

To help further clarify I have separated out the characteristics of operational critical success and external outcomes in the Exhibit 1

Exhibit 1 Characteristics of critical success factors and external outcomes (extract from the CSFs implementation guide)

Characteristics of operational critical success	Characteristics of external outcomes
Are those factors that require a 24/7 focus by all staff in the organization.	A bimonthly/quarterly focus at Board meetings.
Success is a result of operational staff focusing on the CSFs 24/7.	Success is the combination of implementing successful strategic initiatives, and success with the new and existing business operations.
Worded to be pertinent to the activities staff should focus on in a specific area avoiding the use of “empty words” like optimization, maximization.	Worded to describe what success will look like for a broad area of the organization e.g., become an employer of first choice.
Described as an activity.	Described as an external result such as “growth in a new market.”
Will not be a surprise to management and staff as they will have talked about them as success factors.	Have been talked about in strategic documents and are often generic across the sector.
Are focused on the organization and thus should not be broken down into department CSFs.	Are focused on the organization.
Eight to ten CSFs are sufficient.	Five to eight outcomes are sufficient.
In the mapping process they will have a considerable positive influence on other success factors.	In the mapping process success factors link to them. There is no linkage the other way as they are a result of the CSF and SFs working for a sustained period of time.

I have realized recently the importance of distinguishing operational critical success factors from external outcomes. A member of the Board of a charity rightly pointed out that the CSFs tabled (the operational CSFs) were too internally focused. They wanted to see the external picture: the external outcomes. The Board was naturally looking from outside-in. The Board wanted to see the CSFs expressed as the outcomes and impacts they want to see. We want the organisation to “deliver this”, “deliver that” which will demonstrate that there has been a success implementation of the organisation’s strategy.

External outcomes are a result of the operational CSFs working, day in and day out, for a sustained period of time along with the successful implementation of strategic initiatives—e.g., alliance agreements being signed to obtain operational capacity in a new country. External outcome such as “Developing and growing the new product x (or market y)” is a result of many different activities happening from secret alliance agreements being successfully signed to new operational capacity being organized in a new country. Once operational, the new plant in a new country will be guided by the operational CSFs already in existence elsewhere in the organisation.

To help further clarify I have separated out the characteristics of operational critical success and external outcomes in the Exhibit 2.

EXHIBIT 2 Characteristics of Operational Critical Success Factors and External Outcomes (extract from the CSFs implementation guide)

Characteristics of operational critical success	Characteristics of external outcomes
Are those factors that require a 24/7 focus by all staff in the organisation.	Progress is only reported periodically e.g., bimonthly / quarterly focus based around the Board meetings.
Success is a result of operational staff focusing on the CSFs 24/7.	Success is the combination of implementing successful strategic initiatives and the new business opportunities being successfully supported by the existing CSFs.
Worded to be pertinent to the activities staff should focus on in a specific area avoiding the use of “empty words” like optimization, maximization.	Worded to describe what success will look like for a broad area of the organisation e.g., become an employer of first choice.
Describe an activity.	Described as an external result such as “growth in a new market.”
Will not be a surprise to management and the board / government official, as they will have talked about them as success factors.	Wording is generic across many sectors.
Are focused on the organisation and thus should not be broken down into department CSFs.	Likewise, will be focused on the organisation.
Are few in number; five to eight is sufficient.	Likewise, five to eight is a good number.
Have a considerable positive influence on other success factors.	Do not impact the CSF and SFs as they are a result of the CSF and SFs working for a sustained period of time.

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