Gap Analysis In A Nutshell

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.

Gap Analysis	Description	Analysis	Implications	Applications	Examples
1. Identify Goals (IG)	Gap Analysis begins with identifying specific goals or objectives that an organization aims to achieve.	– Clearly define the desired goals, outcomes, or performance targets. – Ensure that the goals are specific, measurable, achievable, relevant, and time-bound (SMART).	– Provides a clear direction and purpose for the analysis. – Helps in setting clear and quantifiable targets for improvement.	– Defining strategic objectives for a marketing campaign. – Establishing performance goals for a product development project.	Goals Example: Increasing quarterly sales revenue by 20% within the next fiscal year.
2. Current State Assessment (CA)	Current State Assessment involves evaluating the organization’s current state or existing performance level.	– Assess the current situation, performance metrics, and data relevant to the identified goals. – Identify strengths, weaknesses, and gaps in the current state compared to the desired goals.	– Provides a baseline understanding of the organization’s starting point. – Reveals areas of strength and areas where improvement is needed.	– Analyzing the current market share and customer satisfaction ratings. – Evaluating the existing process efficiency in a manufacturing plant.	Current State Example: Measuring current sales revenue, which is $1 million, against the goal of $1.5 million.
3. Determine the Gap (DG)	Determining the Gap involves quantifying the difference or “gap” between the current state and the desired goals.	– Calculate the numerical difference between the current performance metrics and the target goals. – Express the gap in terms of specific metrics, such as percentages, figures, or scores.	– Clearly quantifies the extent of misalignment or underperformance compared to the desired goals. – Helps prioritize areas requiring immediate attention or improvement.	– Identifying a revenue gap of $500,000 between the current and target sales figures. – Calculating a customer satisfaction gap of 10% below the desired benchmark.	Gap Calculation Example: The gap between the current sales revenue of $1 million and the target of $1.5 million is $500,000.
4. Analyze Causes (AC)	Analyzing Causes involves identifying the underlying reasons or factors contributing to the performance gap.	– Investigate the root causes, challenges, or obstacles that are preventing the organization from reaching its goals. – Consider both internal and external factors influencing the gap.	– Offers insights into the specific challenges that need to be addressed to close the gap effectively. – Supports the development of targeted strategies and action plans.	– Investigating factors like market competition, pricing, and product quality affecting the sales revenue gap. – Identifying operational inefficiencies leading to production delays in a manufacturing process.	Causes Analysis Example: Identifying that the revenue gap is primarily due to increased competition and pricing pressures.
5. Develop Action Plans (AP)	Developing Action Plans involves creating strategies and initiatives to address the identified causes and close the performance gap.	– Formulate action plans, tactics, or initiatives that are specific, measurable, achievable, relevant, and time-bound (SMART). – Allocate resources, responsibilities, and timelines for implementing the action plans.	– Guides the organization in taking concrete steps to bridge the performance gap effectively. – Helps prioritize actions based on their potential impact and feasibility.	– Creating a marketing strategy to increase market share and pricing competitiveness. – Implementing process improvements to reduce production delays.	Action Plan Example: Developing a marketing campaign to boost product sales and market share.
6. Monitor and Evaluate Progress (ME)	Monitoring and Evaluating Progress involves regularly tracking and assessing the implementation and impact of action plans.	– Set up monitoring mechanisms, key performance indicators (KPIs), or milestones to measure progress. – Continuously assess the effectiveness of action plans and make adjustments as needed.	– Ensures that progress is on track toward closing the performance gap. – Facilitates real-time adjustments to strategies based on emerging insights and results.	– Tracking the increase in market share and sales revenue as a result of the marketing campaign. – Monitoring the reduction in production delays and improvements in efficiency.	Progress Evaluation Example: Reviewing monthly sales reports and KPIs to assess the impact of marketing efforts on revenue.

Table of Contents

Key Components of Gap Analysis

Gap Analysis typically involves the following key components:

Current State: This represents the organization’s existing status, performance, or situation in a specific area or aspect. It serves as the baseline for comparison.
Desired State: The desired state defines the organization’s goals, objectives, or targets. It outlines what the organization aims to achieve.
Performance Metrics: Gap Analysis relies on specific performance metrics or key performance indicators (KPIs) to measure the current and desired states accurately.
Identification of Gaps: The core of Gap Analysis is identifying the gaps or differences between the current state and the desired state.
Action Plan: Once gaps are identified, organizations develop action plans to address these gaps and move closer to the desired state.

Significance of Gap Analysis

Gap Analysis offers several significant advantages and benefits:

1. Strategic Alignment:

It ensures that organizational objectives and activities are aligned with strategic goals.

2. Informed Decision-Making:

Gap Analysis provides data-driven insights, allowing organizations to make informed decisions.

3. Resource Allocation:

Organizations can allocate resources efficiently by focusing on areas with the greatest gaps.

4. Process Improvement:

Gap Analysis identifies areas in need of improvement, leading to enhanced processes and performance.

5. Performance Evaluation:

It facilitates the evaluation of organizational performance against set benchmarks.

6. Goal Achievement:

Gap Analysis helps organizations track progress toward achieving their goals and objectives.

Methodology of Gap Analysis

Gap Analysis follows a structured methodology to assess and address disparities. The typical steps in the Gap Analysis process include:

1. Define Objectives:

Clearly define the objectives, goals, or targets that the organization aims to achieve. These become the desired state.

2. Identify Key Performance Indicators (KPIs):

Select specific KPIs or performance metrics that will be used to measure progress and assess the current state.

3. Assess the Current State:

Gather data and information related to the selected KPIs to evaluate the current state accurately.

4. Determine the Desired State:

Establish clear benchmarks or targets for each KPI, defining what success looks like.

5. Conduct Gap Analysis:

Compare the current state data with the desired state benchmarks to identify gaps in performance, processes, or capabilities.

6. Prioritize Gaps:

Prioritize the identified gaps based on their significance and potential impact on organizational goals.

7. Develop Action Plans:

For each prioritized gap, create detailed action plans that outline the steps, resources, and timeline needed to bridge the gap.

8. Implement and Monitor:

Implement the action plans and closely monitor progress. Adjust strategies as needed to address emerging challenges.

9. Evaluate and Review:

Periodically review and evaluate the effectiveness of the action plans. Adjust goals and strategies as necessary to stay on course.

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

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.

Gap analysis complemented by Benchmarking

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

Marketing Campaign Effectiveness Gap Analysis

Purpose and Scope: Evaluate the effectiveness of a recent marketing campaign aimed at promoting a new product launch.
KPIs: Website traffic, conversion rates, sales revenue generated from the campaign.
Data Gathering: Collect data on ad spend, impressions, click-through rates, website analytics, and sales figures.
Baseline: Determine current performance metrics for the campaign, such as current conversion rates and ROI.
Desired State: Define target KPIs based on campaign objectives, such as increasing website traffic by 20% and achieving a 15% conversion rate.
Identify Gap: Compare current performance metrics to target KPIs to identify gaps in campaign effectiveness.
Analysis: Analyze factors contributing to the performance gap, including ad targeting, messaging, and audience segmentation.
Prioritize Gaps: Prioritize gaps based on their impact on campaign objectives and overall marketing goals.
Action Plans: Develop action plans to address identified gaps, such as refining ad targeting, adjusting messaging, and optimizing landing pages.
Implementation: Implement solutions by making changes to the campaign strategy and execution based on action plans.
Monitor Progress: Continuously monitor campaign performance metrics to track progress and effectiveness of implemented solutions.
Review and Adjust: Review campaign performance regularly and adjust strategies as needed to optimize effectiveness.
Communication: Communicate results and insights to the marketing team and stakeholders to ensure alignment and transparency.
Repeat Analysis: Conduct gap analysis for future marketing campaigns to continuously improve effectiveness and ROI.

Employee Skills Gap Analysis

Purpose and Scope: Assess the skills of a software development team to identify areas for improvement and training needs.
KPIs: Technical proficiency, project completion time, error rates, customer satisfaction ratings.
Data Gathering: Conduct skills assessments, review project performance metrics, and gather feedback from peers and managers.
Baseline: Determine current skill levels and performance metrics for each team member.
Desired State: Define required skills and performance standards based on project requirements and industry best practices.
Identify Gap: Compare current skills and performance to desired state to identify gaps in expertise and proficiency.
Analysis: Analyze gaps to identify training needs, skill deficiencies, and areas for improvement.
Prioritize Gaps: Prioritize skill gaps based on their impact on project success and team performance.
Action Plans: Develop action plans for training programs, workshops, or mentoring to address identified skill gaps.
Implementation: Implement training and skill-building programs to develop required competencies and improve performance.
Monitor Progress: Monitor progress through ongoing skills assessments, project evaluations, and customer feedback.
Review and Adjust: Review training programs regularly and adjust content and delivery methods based on feedback and results.
Communication: Communicate skill improvement initiatives and progress to the team and management to ensure support and alignment.
Repeat Analysis: Conduct periodic skills gap analysis to track improvement and identify emerging training needs.

Environmental Sustainability Gap Analysis

Purpose and Scope: Assess the sustainability practices of a manufacturing facility to identify opportunities for reducing environmental impact.
KPIs: Energy consumption, waste generation, carbon emissions, resource efficiency.
Data Gathering: Collect data on energy usage, waste generation, emissions, and resource utilization from the facility.
Baseline: Establish baseline measurements for current resource use and environmental impact.
Desired State: Define sustainability goals and targets based on industry standards and environmental regulations.
Identify Gap: Compare current practices and environmental impact to desired sustainability goals to identify gaps.
Analysis: Analyze gaps to identify inefficiencies in processes, resource management, and environmental practices.
Prioritize Gaps: Prioritize gaps based on their environmental impact and feasibility of implementation.
Action Plans: Develop action plans to implement sustainable practices, such as energy-efficient technologies, waste reduction strategies, and recycling programs.
Implementation: Implement solutions by making changes to operations, processes, and resource management practices.
Monitor Progress: Monitor progress by tracking KPIs and environmental impact data to ensure goals are being met.
Review and Adjust: Review sustainability practices regularly and adjust strategies as needed based on performance and changing environmental factors.
Communication: Communicate results and progress to stakeholders, employees, and environmental regulators to demonstrate commitment to sustainability and transparency.
Continuous Improvement: Continuously assess and improve sustainability practices through ongoing monitoring, evaluation, and adjustment.

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.

Related Framework	Description	When to Apply
SWOT Analysis	– SWOT Analysis evaluates an organization’s internal strengths and weaknesses, as well as external opportunities and threats. – By comparing internal capabilities with external factors, SWOT helps identify gaps between current performance and potential opportunities or threats.	– When assessing the strategic position of an organization and identifying areas for improvement or development. – To align internal capabilities with external market conditions and competitive dynamics.
Performance Gap Analysis	– Performance Gap Analysis measures the difference between actual performance and desired performance levels in key areas such as productivity, efficiency, quality, or customer satisfaction. – It helps organizations identify performance bottlenecks and prioritize improvement initiatives to bridge the gap.	– When evaluating performance metrics, benchmarks, or key performance indicators (KPIs) to assess organizational effectiveness. – To identify areas of underperformance and implement targeted interventions to improve efficiency, quality, or customer satisfaction.
Needs Assessment	– Needs Assessment identifies the gap between current skills, knowledge, or resources and those required to achieve organizational goals or meet stakeholder needs. – It helps prioritize training, development, or resource allocation efforts to address skill gaps and enhance organizational capacity.	– When evaluating employee skills, competencies, or training needs to align workforce capabilities with organizational objectives. – To assess organizational readiness and capacity for change or growth and identify areas requiring investment or development.
Market Gap Analysis	– Market Gap Analysis examines the discrepancy between existing product offerings or services and customer needs or market demand. – It identifies unmet customer needs, underserved market segments, or emerging opportunities for innovation and market expansion.	– When conducting market research to identify customer preferences, trends, or unmet needs. – To inform product development, marketing strategies, or business expansion initiatives by understanding gaps in the market and addressing areas of opportunity or competitive advantage.
Competitive Gap Analysis	– Competitive Gap Analysis compares an organization’s performance, capabilities, or offerings with those of competitors. – It helps identify areas where competitors outperform or have a competitive advantage and informs strategies to close the gap and gain a competitive edge.	– When assessing the competitive landscape and positioning of an organization relative to its rivals. – To benchmark performance against industry peers, identify competitive strengths and weaknesses, and develop strategies to differentiate products or services and capture market share.
Financial Gap Analysis	– Financial Gap Analysis evaluates the difference between projected financial targets or budgets and actual financial performance. – It helps organizations identify variances, financial risks, or revenue shortfalls and take corrective actions to achieve financial objectives.	– When monitoring financial performance, budget compliance, or revenue projections to ensure alignment with organizational goals. – To identify cost overruns, revenue shortfalls, or financial inefficiencies and implement cost-saving measures or revenue enhancement strategies to close the gap.
Risk Gap Analysis	– Risk Gap Analysis assesses the difference between current risk exposure and desired risk tolerance levels within an organization. – It helps identify gaps in risk management practices, vulnerabilities, or areas of exposure and prioritize risk mitigation efforts to minimize potential threats.	– When evaluating organizational risk management processes, controls, or mitigation strategies to identify gaps or weaknesses. – To align risk management practices with organizational objectives, regulatory requirements, or industry standards and enhance resilience to emerging risks or threats.
Technology Gap Analysis	– Technology Gap Analysis examines the disparity between current technological capabilities and future technology requirements or opportunities. – It helps organizations assess technological readiness, identify gaps in IT infrastructure or digital capabilities, and plan investments to leverage emerging technologies.	– When assessing IT systems, infrastructure, or digital transformation initiatives to support organizational objectives. – To align technology investments with business goals, address gaps in digital capabilities, and enhance competitiveness through innovation and technology adoption.
Process Gap Analysis	– Process Gap Analysis evaluates the difference between current business processes and desired process efficiency, effectiveness, or alignment with best practices. – It identifies process bottlenecks, inefficiencies, or deviations from standards and guides process improvement efforts to close the gap.	– When analyzing organizational workflows, procedures, or operational practices to optimize efficiency and quality. – To identify opportunities for process automation, standardization, or streamlining to improve productivity, reduce costs, or enhance customer satisfaction.
Environmental Gap Analysis	– Environmental Gap Analysis assesses the gap between current environmental performance and desired sustainability goals or regulatory compliance requirements. – It helps organizations identify environmental risks, impacts, or opportunities and develop strategies to minimize ecological footprints and enhance environmental stewardship.	– When evaluating environmental management practices, compliance with environmental regulations, or sustainability initiatives. – To identify areas for reducing environmental impact, conserving resources, or implementing sustainable practices to meet regulatory requirements and stakeholder expectations.