gap-analysis

Gap Analysis In A Nutshell

Business / By / September 20, 2023

A gap analysis helps an organization assess its alignment with strategic objectives to determine whether the current execution aligns with the company’s mission and long-term vision. Gap analyses help reach a target performance by assisting organizations to use their resources better. A good gap analysis is a powerful tool for improving execution.

Perform a GAP Analysis

Gap analysis to structure an effective action plan

Gap analyses also help assess how in line the company’s organization is vs. the action plan defined in the planning stage.

Thus, helping reach target goals given the current state.

The gap between the target objectives and the current state needs to be broken down into steps, small enough to be executable and measurable.

Gap analysis to identify focus areas

Gap analyses also help to identify focus areas and simplify the execution strategy.

Indeed, while business planning tends to complicate things, a gap analysis is helpful to identify a few key areas of interest for the upcoming strategy initiatives.

Gap analysis and process improvement

Gap analyses also help with improvement in business processes.

Indeed, gap analyses can help identify organizational inefficiencies and thus identify quality management processes such as Lean, Scrum, Kaizen, or Six Sigma.

Gap analysis and KPIs

The gap analysis also starts by determining a future state the company is envisioning, which can follow several principles, and in general, that needs to be ambitious yet reachable, measurable, and breakable.

Gap analysis complemented by a SWOT analysis

swot-analysis

A SWOT analysis also helps identify the gap in the business in the market landscape.

Thus, the SWOT analysis is a type of gap which helps businesses understand their positioning in the marketplace and how to tackle it.

Thus, when doing a comprehensive Gap Analysis, there are several tools that can be used, and the SWOT is one of these tools.

Gap analysis complemented by a Root cause analysis

Getting to the root of a problem is one of the most challenging things in business.

And through a Gap Analysis, we want to assess where we want to be.

Thus, a root cause analysis is one of the frameworks to have within the Gap Analysis Toolbox.

root-cause-analysis
In essence, a root cause analysis involves the identification of problem root causes to devise the most effective solutions. Note that the root cause is an underlying factor that sets the problem in motion or causes a particular situation, such as non-conformance.

Gap analysis complemented by Benchmarking

Another framework to add to the Gap Analysis Toolbox to make it more comprehensive is benchmarking.

benchmarking
Benchmarking is a tool that businesses use to compare the performance of their processes and products against businesses considered to be the best in their industries. Benchmarking allows a business to refine their practices and thus increase its overall performance. Generally, benchmarking can be broken down in the process, performance, and strategic benchmarking.

Case Studies

Marketing Campaign Effectiveness Gap Analysis

  • Step 1: Define the purpose and scope of the gap analysis, such as evaluating the effectiveness of a recent marketing campaign.
  • Step 2: Identify KPIs, including website traffic, conversion rates, and ROI.
  • Step 3: Gather data on campaign performance, including ad spend, click-through rates, and sales data.
  • Step 4: Establish a baseline by calculating current performance metrics.
  • Step 5: Define the desired state, specifying target KPIs.
  • Step 6: Identify the gap by comparing current and desired performance.
  • Step 7: Analyze the gap by examining factors like ad targeting, messaging, and audience.
  • Step 8: Prioritize gaps based on their impact.
  • Step 9: Develop action plans to adjust ad targeting, refine messaging, and optimize the campaign.
  • Step 10: Implement solutions, making changes to the campaign strategy.
  • Step 11: Monitor progress by tracking KPIs over time.
  • Step 12: Review and adjust the campaign as needed.
  • Step 13: Communicate results to the marketing team and stakeholders.
  • Step 14: Repeat the gap analysis for future campaigns.

Employee Skills Gap Analysis

  • Step 1: Define the purpose and scope, such as assessing the skills of a software development team.
  • Step 2: Identify KPIs, including technical proficiency, project completion time, and error rates.
  • Step 3: Gather data through skills assessments, project performance evaluations, and peer reviews.
  • Step 4: Establish a baseline by measuring the current skills and performance levels.
  • Step 5: Define the desired state by specifying required skills and performance standards.
  • Step 6: Identify the gap by comparing current skills and performance to the desired state.
  • Step 7: Analyze the gap by identifying training needs and areas for skill development.
  • Step 8: Prioritize gaps based on their impact on project success.
  • Step 9: Develop action plans for training programs, workshops, or mentoring.
  • Step 10: Implement solutions by providing training and skill-building opportunities.
  • Step 11: Monitor progress through skills assessments and project performance evaluations.
  • Step 12: Review and adjust training programs based on feedback and results.
  • Step 13: Communicate results to the team and management.
  • Step 14: Repeat the gap analysis periodically to track skill improvement.

Environmental Sustainability Gap Analysis

  • Step 1: Define the purpose and scope, such as assessing the sustainability practices of a manufacturing facility.
  • Step 2: Identify KPIs, including energy consumption, waste reduction, and carbon emissions.
  • Step 3: Gather data on resource usage, waste generation, and emissions data.
  • Step 4: Establish a baseline by quantifying current resource use and environmental impact.
  • Step 5: Define the desired state by specifying sustainability goals.
  • Step 6: Identify the gap by comparing current practices to sustainability goals.
  • Step 7: Analyze the gap by identifying inefficiencies in processes and resource management.
  • Step 8: Prioritize gaps based on their environmental impact.
  • Step 9: Develop action plans to implement sustainable practices, such as energy-efficient technologies and waste reduction strategies.
  • Step 10: Implement solutions by making changes to operations and resource management.
  • Step 11: Monitor progress by tracking KPIs and environmental impact data.
  • Step 12: Review and adjust sustainability practices as needed.
  • Step 13: Communicate results to stakeholders and environmental regulators.
  • Step 14: Continuously assess and improve sustainability practices.

Key Highlights

  • Perform a GAP Analysis:
    • Helps organizations assess alignment with strategic objectives.
    • Determines if current execution aligns with the company’s mission and vision.
    • Aims to improve resource utilization and reach target performance.
    • A powerful tool for improving execution.
  • Structure an Effective Action Plan:
    • Assesses alignment with the action plan defined in the planning stage.
    • Breaks down the gap between target objectives and current state into executable and measurable steps.
  • Identify Focus Areas:
    • Simplifies the execution strategy by identifying key areas of interest for upcoming strategic initiatives.
    • Helps to avoid unnecessary complexity in business planning.
  • Process Improvement:
    • Helps identify organizational inefficiencies.
    • Guides the implementation of quality management processes like Lean, Scrum, Kaizen, or Six Sigma.
  • KPIs and Future State:
    • Starts by determining an ambitious yet reachable future state for the company.
    • Emphasizes the importance of measurable and achievable objectives.
  • Complemented by SWOT Analysis:
    • Utilizes SWOT analysis to understand the company’s positioning in the marketplace.
    • Helps businesses tackle market gaps and align strategies accordingly.
  • Complemented by Root Cause Analysis:
    • Aims to get to the root of a problem or non-conformance.
    • Identifies underlying factors causing specific situations.
  • Complemented by Benchmarking:
    • Compares process and product performance against industry-leading businesses.
    • Facilitates the refinement of practices and overall performance improvement.

Connected Analysis Frameworks

Failure Mode And Effects Analysis

failure-mode-and-effects-analysis
A failure mode and effects analysis (FMEA) is a structured approach to identifying design failures in a product or process. Developed in the 1950s, the failure mode and effects analysis is one the earliest methodologies of its kind. It enables organizations to anticipate a range of potential failures during the design stage.

Agile Business Analysis

agile-business-analysis
Agile Business Analysis (AgileBA) is certification in the form of guidance and training for business analysts seeking to work in agile environments. To support this shift, AgileBA also helps the business analyst relate Agile projects to a wider organizational mission or strategy. To ensure that analysts have the necessary skills and expertise, AgileBA certification was developed.

Business Valuation

valuation
Business valuations involve a formal analysis of the key operational aspects of a business. A business valuation is an analysis used to determine the economic value of a business or company unit. It’s important to note that valuations are one part science and one part art. Analysts use professional judgment to consider the financial performance of a business with respect to local, national, or global economic conditions. They will also consider the total value of assets and liabilities, in addition to patented or proprietary technology.

Paired Comparison Analysis

paired-comparison-analysis
A paired comparison analysis is used to rate or rank options where evaluation criteria are subjective by nature. The analysis is particularly useful when there is a lack of clear priorities or objective data to base decisions on. A paired comparison analysis evaluates a range of options by comparing them against each other.

Monte Carlo Analysis

monte-carlo-analysis
The Monte Carlo analysis is a quantitative risk management technique. The Monte Carlo analysis was developed by nuclear scientist Stanislaw Ulam in 1940 as work progressed on the atom bomb. The analysis first considers the impact of certain risks on project management such as time or budgetary constraints. Then, a computerized mathematical output gives businesses a range of possible outcomes and their probability of occurrence.

Cost-Benefit Analysis

cost-benefit-analysis
A cost-benefit analysis is a process a business can use to analyze decisions according to the costs associated with making that decision. For a cost analysis to be effective it’s important to articulate the project in the simplest terms possible, identify the costs, determine the benefits of project implementation, assess the alternatives.

CATWOE Analysis

catwoe-analysis
The CATWOE analysis is a problem-solving strategy that asks businesses to look at an issue from six different perspectives. The CATWOE analysis is an in-depth and holistic approach to problem-solving because it enables businesses to consider all perspectives. This often forces management out of habitual ways of thinking that would otherwise hinder growth and profitability. Most importantly, the CATWOE analysis allows businesses to combine multiple perspectives into a single, unifying solution.

VTDF Framework

competitor-analysis
It’s possible to identify the key players that overlap with a company’s business model with a competitor analysis. This overlapping can be analyzed in terms of key customers, technologies, distribution, and financial models. When all those elements are analyzed, it is possible to map all the facets of competition for a tech business model to understand better where a business stands in the marketplace and its possible future developments.

Pareto Analysis

pareto-principle-pareto-analysis
The Pareto Analysis is a statistical analysis used in business decision making that identifies a certain number of input factors that have the greatest impact on income. It is based on the similarly named Pareto Principle, which states that 80% of the effect of something can be attributed to just 20% of the drivers.

Comparable Analysis

comparable-company-analysis
A comparable company analysis is a process that enables the identification of similar organizations to be used as a comparison to understand the business and financial performance of the target company. To find comparables you can look at two key profiles: the business and financial profile. From the comparable company analysis it is possible to understand the competitive landscape of the target organization.

SWOT Analysis

swot-analysis
A SWOT Analysis is a framework used for evaluating the business’s Strengths, Weaknesses, Opportunities, and Threats. It can aid in identifying the problematic areas of your business so that you can maximize your opportunities. It will also alert you to the challenges your organization might face in the future.

PESTEL Analysis

pestel-analysis
The PESTEL analysis is a framework that can help marketers assess whether macro-economic factors are affecting an organization. This is a critical step that helps organizations identify potential threats and weaknesses that can be used in other frameworks such as SWOT or to gain a broader and better understanding of the overall marketing environment.

Business Analysis

business-analysis
Business analysis is a research discipline that helps driving change within an organization by identifying the key elements and processes that drive value. Business analysis can also be used in Identifying new business opportunities or how to take advantage of existing business opportunities to grow your business in the marketplace.

Financial Structure

financial-structure
In corporate finance, the financial structure is how corporations finance their assets (usually either through debt or equity). For the sake of reverse engineering businesses, we want to look at three critical elements to determine the model used to sustain its assets: cost structure, profitability, and cash flow generation.

Financial Modeling

financial-modeling
Financial modeling involves the analysis of accounting, finance, and business data to predict future financial performance. Financial modeling is often used in valuation, which consists of estimating the value in dollar terms of a company based on several parameters. Some of the most common financial models comprise discounted cash flows, the M&A model, and the CCA model.

Value Investing

value-investing
Value investing is an investment philosophy that looks at companies’ fundamentals, to discover those companies whose intrinsic value is higher than what the market is currently pricing, in short value investing tries to evaluate a business by starting by its fundamentals.

Buffet Indicator

buffet-indicator
The Buffet Indicator is a measure of the total value of all publicly-traded stocks in a country divided by that country’s GDP. It’s a measure and ratio to evaluate whether a market is undervalued or overvalued. It’s one of Warren Buffet’s favorite measures as a warning that financial markets might be overvalued and riskier.

Financial Analysis

financial-accounting
Financial accounting is a subdiscipline within accounting that helps organizations provide reporting related to three critical areas of a business: its assets and liabilities (balance sheet), its revenues and expenses (income statement), and its cash flows (cash flow statement). Together those areas can be used for internal and external purposes.

Post-Mortem Analysis

post-mortem-analysis
Post-mortem analyses review projects from start to finish to determine process improvements and ensure that inefficiencies are not repeated in the future. In the Project Management Book of Knowledge (PMBOK), this process is referred to as “lessons learned”.

Retrospective Analysis

retrospective-analysis
Retrospective analyses are held after a project to determine what worked well and what did not. They are also conducted at the end of an iteration in Agile project management. Agile practitioners call these meetings retrospectives or retros. They are an effective way to check the pulse of a project team, reflect on the work performed to date, and reach a consensus on how to tackle the next sprint cycle.

Root Cause Analysis

root-cause-analysis
In essence, a root cause analysis involves the identification of problem root causes to devise the most effective solutions. Note that the root cause is an underlying factor that sets the problem in motion or causes a particular situation such as non-conformance.

Blindspot Analysis

blindspot-analysis

Break-even Analysis

break-even-analysis
A break-even analysis is commonly used to determine the point at which a new product or service will become profitable. The analysis is a financial calculation that tells the business how many products it must sell to cover its production costs.  A break-even analysis is a small business accounting process that tells the business what it needs to do to break even or recoup its initial investment. 

Decision Analysis

decision-analysis
Stanford University Professor Ronald A. Howard first defined decision analysis as a profession in 1964. Over the ensuing decades, Howard has supervised many doctoral theses on the subject across topics including nuclear waste disposal, investment planning, hurricane seeding, and research strategy. Decision analysis (DA) is a systematic, visual, and quantitative decision-making approach where all aspects of a decision are evaluated before making an optimal choice.

DESTEP Analysis

destep-analysis
A DESTEP analysis is a framework used by businesses to understand their external environment and the issues which may impact them. The DESTEP analysis is an extension of the popular PEST analysis created by Harvard Business School professor Francis J. Aguilar. The DESTEP analysis groups external factors into six categories: demographic, economic, socio-cultural, technological, ecological, and political.

STEEP Analysis

steep-analysis
The STEEP analysis is a tool used to map the external factors that impact an organization. STEEP stands for the five key areas on which the analysis focuses: socio-cultural, technological, economic, environmental/ecological, and political. Usually, the STEEP analysis is complementary or alternative to other methods such as SWOT or PESTEL analyses.

STEEPLE Analysis

steeple-analysis
The STEEPLE analysis is a variation of the STEEP analysis. Where the step analysis comprises socio-cultural, technological, economic, environmental/ecological, and political factors as the base of the analysis. The STEEPLE analysis adds other two factors such as Legal and Ethical.

Activity-Based Management

activity-based-management-abm
Activity-based management (ABM) is a framework for determining the profitability of every aspect of a business. The end goal is to maximize organizational strengths while minimizing or eliminating weaknesses. Activity-based management can be described in the following steps: identification and analysis, evaluation and identification of areas of improvement.

PMESII-PT Analysis

pmesii-pt
PMESII-PT is a tool that helps users organize large amounts of operations information. PMESII-PT is an environmental scanning and monitoring technique, like the SWOT, PESTLE, and QUEST analysis. Developed by the United States Army, used as a way to execute a more complex strategy in foreign countries with a complex and uncertain context to map.

SPACE Analysis

space-analysis
The SPACE (Strategic Position and Action Evaluation) analysis was developed by strategy academics Alan Rowe, Richard Mason, Karl Dickel, Richard Mann, and Robert Mockler. The particular focus of this framework is strategy formation as it relates to the competitive position of an organization. The SPACE analysis is a technique used in strategic management and planning. 

Lotus Diagram

lotus-diagram
A lotus diagram is a creative tool for ideation and brainstorming. The diagram identifies the key concepts from a broad topic for simple analysis or prioritization.

Functional Decomposition

functional-decomposition
Functional decomposition is an analysis method where complex processes are examined by dividing them into their constituent parts. According to the Business Analysis Body of Knowledge (BABOK), functional decomposition “helps manage complexity and reduce uncertainty by breaking down processes, systems, functional areas, or deliverables into their simpler constituent parts and allowing each part to be analyzed independently.”

Multi-Criteria Analysis

multi-criteria-analysis
The multi-criteria analysis provides a systematic approach for ranking adaptation options against multiple decision criteria. These criteria are weighted to reflect their importance relative to other criteria. A multi-criteria analysis (MCA) is a decision-making framework suited to solving problems with many alternative courses of action.

Stakeholder Analysis

stakeholder-analysis
A stakeholder analysis is a process where the participation, interest, and influence level of key project stakeholders is identified. A stakeholder analysis is used to leverage the support of key personnel and purposefully align project teams with wider organizational goals. The analysis can also be used to resolve potential sources of conflict before project commencement.

Strategic Analysis

strategic-analysis
Strategic analysis is a process to understand the organization’s environment and competitive landscape to formulate informed business decisions, to plan for the organizational structure and long-term direction. Strategic planning is also useful to experiment with business model design and assess the fit with the long-term vision of the business.

Related Strategy Concepts: Go-To-Market Strategy, Marketing Strategy, Business Models, Tech Business Models, Jobs-To-Be Done, Design Thinking, Lean Startup Canvas, Value Chain, Value Proposition Canvas, Balanced Scorecard, Business Model Canvas, SWOT Analysis, Growth Hacking, Bundling, Unbundling, Bootstrapping, Venture Capital, Porter’s Five Forces, Porter’s Generic Strategies, Porter’s Five Forces, PESTEL Analysis, SWOT, Porter’s Diamond Model, Ansoff, Technology Adoption Curve, TOWS, SOAR, Balanced Scorecard, OKR, Agile Methodology, Value Proposition, VTDF Framework, BCG Matrix, GE McKinsey Matrix, Kotter’s 8-Step Change Model.

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About The Author

Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
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