Introduction

Businesses use gap analysis to decide what to expand, what to trim and how to change the business process as it goes to the next level. Teams do have their opinions recorded, although it is the gap analysis that provides concrete facts on where the business is, ought to be, going and how. 

In this article let us look at:

  1. What is a Gap Analysis?
  2. Steps to be Followed
  3. Tools

1. What is a gap analysis?

The process of gap analysis permits enterprises to decide the path to best achieve business strategies and goals by comparing the ideal state with the current state of business goals. This gap analysis template allows for basing decisions on facts to highlight the improvement opportunities and shortcomings, filling the gap analysis meaning.

2. Steps to be followed

To conduct a gap analysis, one needs to undertake the following steps.

  • Current State Analysis: The first step one needs to do in the gap analysis process is to identify and record the business area’s current state of focus. This means getting to all contributing factors, the root causes of all problems and where the business goals stand in terms of the business goals and plans. It is all these little bits that finally form the big picture in a gap analysis. With this information that is both qualitative and quantitative, the gap analysis performed could visually indicate which areas are the real issues, what could be done to improve it, and how far the goal set from its current state is. 
  • What is the future ideal state? This ideation state defines the ideal objective or business goal set and the path required to reach it based on its current situation. The future ideal state is the goal of what the business path should ideally achieve and depends on the process. A tool for gap analysis is deployed to check the current state and future ideal state difference. Techniques like mind maps, brainstorming etc., can be effectively used to define the ideal future state. It also bears the problems impeding the current state, which in the above example could be lack of appropriate training methods in the customer service line, how to reach the ideal KPI numbers etc. A gap analysis tool here would be a brainstorming board or a team mind-map.
  • Evaluate the solutions and gaps: This stage is all about the work needed to get to the ideal future state. One discovers the gaps through gap analysis tools and defines the shortcomings, both quantitatively and qualitatively. Once the gaps are identified, the best-route solution is also identified to determine the causes and address the gaps between potential and performance metrics. Several solutions based on several impeding factors may emerge. Hence the decision tree would be an ideal gap analysis tool to use here to calculate the benefits, conditional probability and costs of the resolution suggested. Business and team priorities matter most here.
  • Implement the best plan to bridge the gaps: Once the plan is decided on, it’s time to implement the strategies and plans formulated to help reach the ideal future state aligned with the business goal. A comprehensive plan including all teams, processes, gap analysis tools and people impacted should be charted out, and actionable objectives were drawn up.

3. Tools

Several gap analysis tools help its definition by helping identify the gaps, factors causing them and the best-path solutions. The top 5 gap analysis tool are-

SWOT analysis: The full form of SWOT analysis is a listing of Strengths, Weaknesses, Opportunities and Threats.  The analysis can be both qualitative and quantitative and helps identify both external and internal threats and opportunities in what is meant by gap analysis.

Fishbone diagram: The fishbone diagrams are also called the herringbone, cause-and-effect and Ishikawa diagrams for their distinctive shape while exploring the probable causes of a root/ primary problem. Especially of use in evaluating the current situation, the contributing investigative arms could be Materials, Measurements, People, Methods, Machines and Environment. For any category being examined, use the contributing factors to draw up the Fishbone chart.

McKinsey 7S framework: Another popular tool is the McKinsey 7S framework propounded by its consultancy firm. It helps define if expectations are being met and the shared values of the enterprise. It uses the seven S’s of the enterprise to see which of these values are forming the gaps and attempts to bridge the gap between the desired and present states bringing in immense benefits of gap analysis.

Nadler-Tushman Model: The dynamic Nadler-Tushman model examines the correlations and dependencies of each business process on the others while pinpointing the gaps crucial to efficiency. Thus one gets a high-level view of all processes that are operational, ending in output and beginning from the inputs. The model’s gap analysis algorithm divides processes into 3 parts, namely the 

  • Input: This comprises the workforce, company culture, operational environment, resources in service/products etc.
  • Transformation: This includes teams, systems, input and transformative processes and output processes etc.
  • Output: The final service/product.  

PEST analysis: This method is similar to the other methods of gap analysis but uses the 4 external primary factors of a business environment to do the analysis. The factors considered to identify opportunities and threats are Sociological, Political, Technological and Economic. It finds the current issues, opportunities for change and the actions required to minimize market risks. For in-depth market environment analysis, one can use the PESTLE analysis in place of the PEST analysis adding in the environmental and legal factors.

Conclusion

The article just expanded on what do you mean by gap analysis and how to do a gap analysis. Gap analysis is a crucial exercise for business processes to streamline operations and snags and reach the ideal state. 

If you are interested in making it big in the world of data and evolve as a Future Leader, you may consider our Business Analytics Course Online, a 10-month online program, in collaboration with IIM Indore!

ALSO READ

SHARE