What are industry key success factors?
Industry success factors are those underlying dimensions that you need to be successful at in order to succeed within the industry. Think of fast food – it needs to be tasty, cheap, and quick. These dimensions do not specify how to achieve the desired end – and it may be possible to develop a completely different way of meeting that end – but industry success factors are the most essential elements that no matter how you are competing, you need to be successful at delivering on.
Firms can meet the industry success factors in different ways
Good industry key success factors identify what is important, but not how it can be achieved. Even if every firm in the industry approaches the problem in a particular way, it is possible there may be an alternative configuration of activities that is better placed to meet the underlying success factor.
Example mass manufacturing vs just in time manufacturing
Cost-effective manufacturing is important in many industries – particularly where cost-conscious customers are purchasing on the basis of price. Achieving a low cost of production can be done in several ways. The traditional way was to mass-manufacture goods – relying on economies of scale to drive down production costs by producing in large batches. This was one approach to achieving the industry’s key success factor of low-cost production.
Just in time production is a different approach to achieving low-cost production. Rather than relying on mass production and economies of scale, just in time manufacturing relies on low wastage through production. By keeping resources held on hand low, companies employing just-in-time can more easily identify and resolve production issues, and capitalizing on the lower cost of holding the stock, achieve low-cost manufacturing in a different route.
Final thoughts: Consider developing a different approach to meet the industry success factors
Once you have identified the underlying dimensions that it is important to succeed upon, you can start to consider if there is an alternative way of meeting those ends. Convention wisdom is not necessarily the only way of achieving the goals, and if you are able to identify a superior approach, you may be able to pursue it much better than existing companies would be able to do so. Strategy requires a lot of consistent, reinforcing decisions, and if you are able to achieve the industry success factors in an alternative manner, other firms who have committed to a different way of operating may have a particularly hard time changing to your setup.
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