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For a finite group $G$ and an inverse-closed generating set $C$ of $G$, let $Aut(G;C)$ consist of those automorphisms of $G$ which leave $C$ invariant. We define an $Aut(G;C)$-invariant normal subgroup $\Phi(G;C)$ of $G$ which has the property that, for any $Aut(G;C)$-invariant normal set of generators for $G$, if we remove from it all the elements of $\Phi(G;C)$, then the remaining set is still an $Aut(G;C)$-invariant normal generating set for $G$. The subgroup $\Phi(G;C)$ contains the Frattini subgroup $\Phi(G)$ but the inclusion may be proper. The Cayley graph $Cay(G,C)$ is normal edge-transitive if $Aut(G;C)$ acts transitively on the pairs $\{c,c^{-1}\}$ from $C$. We show that, for a normal edge-transitive Cayley graph $Cay(G,C)$, its quotient modulo $\Phi(G;C)$ is the unique largest normal quotient which is isomorphic to a subdirect product of normal edge-transitive graphs of characteristically simple groups. In particular, we may therefore view normal edge-transitive Cayley graphs of characteristically simple groups as building blocks for normal edge-transitive Cayley graphs whenever the subgroup $\Phi(G;C)$ is trivial. We explore several questions which these results raise, some concerned with the set of all inverse-closed generating sets for groups in a given family. In particular we use this theory to classify all $4$-valent normal edge-transitive Cayley graphs for dihedral groups; this involves a new construction of an infinite family of examples, and disproves a conjecture of Talebi., Comment: 16 pages