1. The term key success factors can be used in four different ways: a) as a necessary ingredient in a management information system, b) as a unique characteristic of a company, c) as a heuristic tool for managers to sharpen their thinking, d) as a description of the major skills and resources required to be successful in a given market. We adopt the last view.
2. The actual key success factors on a market, and those key success factors perceived by decision-makers in companies operating in the market, will be different. A number of psychological mechanisms result in misperceptions of the causes of success on a market. Both the actual key success factors on a market, and the way they are perceived by decision-makers, are amenable to scientific analysis. Such an analysis can improve performance of decisionmakers on that market.
3. The major immediate causes of success on any market are the value perceived by customers in a business's products, and the costs (relative to competitors) incurred in producing this value. How good a business is in creating customer value at low costs will depend on skills and resources of the company. We therefore define a key success factor as a skill or resource that a business can invest in, which, on the market the business is operating on, explains a major part of the observable differences in perceived value and/or relative costs.
4. Key success factors differ from core skills and resources, which are prerequisites for being on a