How To Conduct A Gap Analysis (Step-By-Step Guide)
A gap analysis can show you where you are, where you want to be, and what to do to breach the gap between the two. Here's how to conduct a gap analysis, step by step.
Learning how to conduct a gap analysis is vital to evaluate your company’s current state and help you ensure you’re going where you need to go.
That’s why, here, we’ll tell you everything you need to know about gap analyses, what they’re for, and how to conduct them step by step. We’ll also show you the tools and frameworks to get your gap analysis started.
Let’s dive right in.
What Is A Gap Analysis?
A gap analysis is an audit that allows you to assess the current performance of your business, and compare it to an ideal performance. If needed it can also show the goals needed to bridge the gap between both of them, getting your performance as efficient as possible.
A gap analysis is usually conducted by the heads of the departments involved, using different frameworks according to their industries, goals, and needs.
Why Are Gap Analyses Important?
Gap analyses are used for analyzing the current state of a business, so they work great at providing a view of the current state, and establishing a road towards achieving your business goals.
With a gap analysis, you can get an external view of your processes, finding and understanding the roadblocks on your way towards your goals and quotas. With them, it can be easy to prioritize urgent tasks, better understand your problems, and help you find the right solutions.
Finally, a gap analysis can not only show you how to reach your goals but anticipate the potential issues you may encounter down the line.
How To Conduct A Gap Analysis
Here’s how to conduct a gap analysis, step by step:
Step 1: Establish Your Current State
The first thing you need to do is to establish the current state of the business or process you’re analyzing.
The right way of determining your current state will depend on your measurements of success for each of your processes. You can, for example, establish the current state of your sales department as the average of both how much they sell per period and how often they hit their sales quota.
Your current state can also be the level of engagement you have on social media, or your growth percentage in a new sector.
Make sure to measure and establish a “current state” for all processes involved within the scope of your gap analysis.
Step 2: Define Your Ideal State
Now that you’ve defined where you are, it’s time to define where you want to be. If everything worked out perfectly, where would you want to be?
This is the part of the analysis where you get to be idealistic and imagine the ideal state of things, defining what you’re working towards. You can also define what you’d like to have or not have, the issues you’d like to have solved, and the numbers you’d like to be seeing.
Define it in detail, measuring the same way as you defined your current state.
Step 3: Find The Gaps
Now that you know where you are and you’ve defined where you want to be, we can define the gap in between to figure out how to bridge it.
Start by analyzing your current state, determining the obstacles preventing your ideal state from becoming a reality. Some of these may be obvious, like the lack of staff or the overhead costs. Some, like the lack of training or an issue in your sales funnel, may be a bit harder to decipher.
You can also set a goal defining when you’d like to achieve your ideal state, and break down the progress you’d need to make month to month and year to year. If the goals aren’t realistically achievable, check why. Is there a bigger obstacle on your way or is your timeline just too short?
Keep defining the goals you need to set to bridge the gaps between your ideal state and your current state until you have a realistic view of the issue.
Step 4: Develop A Plan To Close The Gap
Finally, once you have a better understanding of where your gap is and why it’s there, you can start developing a plan to bridge it.
This process will likely involve the heads of each department affected, ensuring everyone is working together towards bridging that gap. Make sure your plan is composed of achievable goals with clear measurements of success, so the plan is clear down to every team member.
Now, all that’s left is to implement it, and keep track of your goals every period to achieve your ideal state!
Best Gap Analysis Frameworks
Here are some common gap analysis frameworks to get you started:
SWOT is a great framework to use when figuring out where your business stands within the market.
This framework focuses on defining your Strengths, Weaknesses, Opportunities, and Threats. Since determining these accurately is vital for the success of the analysis, you may want to invite experts from all departments involved to help define them. This will make for a data-driven framework that can better define the strengths and weaknesses of your business.
The Nadler-Tushman model is a dynamic framework made around defining the relationships between processes and finding all gaps involved with their efficiency. The framework does this by looking at all processes from start, or “input”, to finish, or “output”. Then, the framework takes a look at the culture, structure, people, and work, to determine how they relate to each other within one process.
This holistic view makes it a great framework to use when trying to align all departments and components of your company to work together towards a single goal.
The McKinsey framework is made up of the 7 “S”s: Strategy, Structure, Systems, Shared values, Skills, Style, and Staff. The framework then divides those into two groups: the hard elements, composed of the first three “S”s, are tangible, measurable, and controllable elements. The soft elements, made up of the rest, are intangible and uncontrollable events.
This approach is especially useful when measuring the efficiency of your marketing efforts, and determining if a new route needs to be taken.
Finally, the fishbone diagram is a simple cause-and-effect diagram made to get to the root of an issue by exploring and categorizing potential candidates. The diagram starts with an issue, or “effect”, and works backward dividing issues into six different sources: Methods, Machines, People, Materials, Measurement, and Environment.
This diagram, also called the Ishikawa diagram, is highly useful in brainstorming environments, providing a simple framework to organize ideas and visualize potential causes of an issue.
As we can see, conducting a gap analysis can help you figure out where your company stands, where it wants to go, and how to get there.
Once you’re conducting one, don’t spend too long adding on details. Instead, use your gap analysis to make data-driven decisions and develop an action plan to bridge that gap!