If you are experiencing some difficulties while improving your business, it means there is a “gap” between where you are and where you want to be.
This gap needs to be closed to move forward and achieve your goals. You can handle that by doing gap analysis with right tools. In this article, you will learn gap analysis and how to conduct it properly using suitable tools.
What is GAP analysis?
Gap analysis is a process of comparing the current state with the desired state for an organization and creating solutions to meet their goal.
When gap refers to how far you are behind your target point; GAP analysis takes you to that point.
It is a method that examines all strategies and possible opportunities to provide an optimization. You can use it for a single process or the entire business; and apply in various areas such as sales, financial performance, employee satisfaction or productivity.
It could also be considered as strategic or operational which are both concrete. Operational approach focuses on daily work, while strategic one focuses on planning and future strategies.
How to Conduct GAP Analysis?
You can follow the essential steps for conducting your analysis and discover what needs to be done to reach your goal. Here are 5 steps.
Identify your current state
Before heading towards the goal, first you need be aware of your existing situation and your main focus.
You should direct your focus on whichever processes or features you want to improve.
For example, imagine you run a clothing company. You produce 1000 shirts per day but you want to increase your daily production. Your focus is your productivity. Your current state is 1000 shirts.
In a different scenario, let’s say you are working for a social media company aiming to create a brand image. Your current state in this case will be much different and measured with qualitative criteria.
So the situations may differ; but regardless of your department or work area, what you need to do in this phase is finding the root of the issue you are currently facing.
Identify your desired state
With the conscious of what your organization is doing, you can set your target point.
Having goals and pursuing them make you idealistic, yet knowing your strengths and weaknesses help you to be realistic at the same time. To determine reasonable goals, you must know what your organization is and isn’t capable of doing.
Be aware of your strong and weak sides then set your goals according to SMART: specific, measurable, achievable, relevant, and time bound. ,
Because goals should be realistic.
Go back to the current state and define the gap
Now you know where you stand as an organization and where you want to be.
It’s time to handle the gap in between.
Let’s go back to the clothing company example:
You are producing 1000 shirts per day and want to improve. Considering your capacity, possible opportunities or upgrades; you set your target as 1500 per day.
Now your desired state is 1500 shirts while your current state is 1000 shirts, and there is a 500-shirts gap to analyze. After determining the gap, you need to examine the reasons behind it.
You should find what caused this gap; how it came out and which factors or deficiencies played a role.
If you discovered why the gap occurs, you can take action to fix it.
Start with evaluating possible solutions and deciding which ones are applicable for the problem. You can consider the followings.
List the possible solutions
Which way is the best to close the gap? Consider all the suitable options and how you can benefit from them.
Compare with pro’s and con’s
You might need to re-consider your options with their pro’s and con’s. Bringing new solution for an existing issue may cause a potential problem or it may cost too much and cause loss.
Therefore, approaching solutions from different angles helps you to eliminate unprofitable solutions.
Overview the solutions
After comparing them, choose the most suitable solutions. Review them and make a plan about how you will implement it.
Bridge the gap
In this stage, you need to share your plan with your organization and present it to others.
In order to implement the changes you plan to make, approval of these people is needed. So you should be prepared to convince them.
You can have your action plan that leads you.
Gap Analysis Examples
We mentioned that gap analysis could be used in many different areas. Here are some examples:
Product launch: The organization can use this analysis to determine why sales of a new launched product didn’t meet the expectations.
Process optimization: A telecom company can use it, while trying to fix why some orders have been delivered to customers. It helps them to identify the causes in the current process and produce an optimized target.
Customer satisfaction: If an airline company is aiming to meet the customer satisfaction; they can perform this analysis to detect the current dissatisfaction and find the ways to serve them better.
Strategy planning: An e-commerce company trying to gain a place in the market needs a strategic plan. They can identify their strategic objectives and current deficiencies, then create their action plan.
Individual Assessment: A team leader may use it on evaluating and improving employees performance. Results can be used to draw out the best practices that everyone can adopt, and improve the overall performance.
Market Gap Analysis: When the demand is greater than supply in a market, to reach the opportunities this approach is used.
It is a proactive process and you can implement it internally or externally. If an organization wants to identify markets that are currently under-serviced, and take advantage of the sales opportunities; this analysis helps them to decide logically based on market facts.
Strategic Gap Analysis: It is a suitable analysis for bench-marking. While market analysis focuses on opportunities and how to advantage them, strategic analysis is more about determining company’s strategic superiority.
*TIP: With the market gap analysis, you find out what is going on in the market; what your competitor can or can't do. Then you perform a strategic gap analysis and see what capabilities you have; what you can do or what you need to improve.
There are some main frameworks that you can use while defining problems and creating solutions. You can visualize steps and document your report easily with these frameworks.
SWOT refers to Strengths, Weaknesses, Opportunities and Threats. It is very commonly used framework. You can scan the environment by inspecting both internal and external factors. You can create strategies according to your SWOT table and make a plan.
McKinsey 7Ss Framework
This framework has seven categories: strategy, structure, systems which are considered “hard” and shared values, skills, style, and staff which are considered “soft.” Hard elements are easier to identify, while soft ones are relatively harder and less tangible. You can work through shared values and 7S’s of your organization to start closing the gap.
This dynamic model is based on four elements: work, people, structure, and culture. The aim is to figure out how if they are congruent and how works in each element affects others. It consists of 3 parts:
- Input: Company culture, workforce, resources
- Transformation process: Systems, teams, processes
- Output: Final product or service
This is a cause-and-effect diagram and especially used for for identifying your current situation. It divides the problem into categories such as environment, machines, materials, measurements, methods and people. You can use it for concepts like the marketing mix or the 4S’s of service.
PEST analysis helps you to analyze threats through four factors: political, economic, social and technological. It is a clear framework to detect current problems.
There is a more in-depth version of PEST. PESTLE analysis is an acronym like PEST, stands for political, economic, social, technological, legal, and environmental.
Benefits of GAP Analysis
- Gives an overview about the company performance: By performing analysis, you can discover where you stand as an organization and how you currently operate.
- Helps to detect what need to be improved: Overviewing your situation helps you to understand the parts of your work need to be changed.
- Helps to solve the problems: Doing your analysis leads you to create solutions and improvements for your current state.
- Turns potential into performance: It makes you closer to your ideal performance by eliminating the obstacles that hold you back.
- Gives an insight about better usage of capability: After discovering how you can do a better work, you figure out the more efficient ways to perform. You can use them for the future.
- Highlights the changes: It puts forward all the changes you have done and the changes you are likely to do for other situations.
Tools for GAP Analysis
For performing a gap analysis, some useful tools exist. You can visualize steps and document your analysis easily with these tools. You can either prefer online platforms or use ready templates.
- upBOARD: This is an online gap identification tool which offers web templates and input forms. It includes progress dashboards, data integration, designs, and full access on desktop or mobile.
- Cacoo: This online tool comes with cloud-based sharing options and editable templates. You can get your input and collaborate with others easily. Each team member can share and edit diagrams at the same time, also share their feedbacks.
- SWOT: This is an online SWOT analysis tool that helps you to create your SWOT table with different layout options. You can customize your template and build your own. It has features as inviting team members to vote and narrowing your focus to fit to one page.
- iAuditor: This is a cloud-based template builder that streamlines your workflow. You can create a dashboard and see employee commitments, you can define a workflow that sends auto-generated gap analysis reports or schedule your analysis.
- Excel: You can use ready templates and perform your gap analysis on Excel. All you need to do is download such templates on, then you can start working on your analysis with your preferred customizations. You can update your data and use your template over again for different purposes.
How You Can Use Excel for Gap Analysis
By using provided templates; you can input your data, visualize your information with editable features and reach your improvement plan.
Gap analysis Excel template is designed as a dashboard with relevant columns to fill, including sections for visual charts, evaluation notes. This template allows you to:
- Type your objectives, current state and desired state.
- Select gap identification (as yes or no).
- Type gap description depending on the issue you want to improve.
- Type corrective actions about improvements.
- Choose priority (such as low, medium or high).
- Customize gap identification and priority status.
Once you input your data, charts automatically displays below. You can close them if you want. Another thing you can do with this template is to write your opinions into the notes part.
More specifically, you can use a SWOT analysis template as well. It comes with the informational notes and is very practical to use. It is easy to fill and ready to print.
Excel templates provides you a smooth experience in gap analysis; it doesn’t require installation and it works both on Mac and Windows. You can customize and re-use them.
Gap analysis is a crucial process for development. Document your process with right tools and steps; your performance will be enhanced.