When the time comes to move your business forward, you could make decisions in two different ways.
The first is to conduct guesswork from anecdotal data and opinions. And the second is to apply a structured, detailed examination that analyzes the current state of your company, providing you with facts instead of assumptions.
If you want to reach your full potential, the latter path is the right way to go. Facts provide a solid foundation to determine what you should reduce, fix, or increase to take your company to the next level. And conducting a gap analysis will fill in the blanks between where you are now and where you want to be.
What is a gap analysis?
A gap analysis is a process that compares the present state of your company to the goals you want to hit. It considers factors such as resources, spending, and labor force to determine whether or not you’re meeting expectations, and it uses that data to identify organizational areas of improvement.
If you have a web development business and plenty of websites to create, but four employees have nothing to do because they don’t have the right skills, that's the gap. Help them develop the skills they need or assign them to another project and your operations will improve. This is a rudimentary example, and the gaps in your business will be more intricate — which is why you'll need a gap analysis.
A gap analysis also comes in handy when comparing current performance to target performance. It lets you identify resources you aren't using correctly, such as tech and capital, or tasks on the table that don’t have much impact. And once you identify a gap, you can devise an action plan to fill it in and move forward.
When to use a gap analysis
If you’re running a successful business, you’re always performing some sort of micro-gap analysis. You analyze and plan almost constantly. But regardless of your attention to the day-to-day operations, there are always going to be some situations that call for an in-depth gap analysis. Here’s when you should explore one:
- Project management: The occasional gap analysis keeps long-term projects from stagnating. External factors can affect a project and its resources over time, and analyzing your progress ensures you have enough of those resources, and the knowledge base and skills, to complete a project.
- Strategic planning: Strategic planning itself generally exposes possible risks, especially concerning business expansion. Conducting a gap analysis identifies the resources that you'll need to corral that risk and move forward into new regions, markets, or opportunities.
- External marketing: If you’re a private company looking to create transparency with your investors, a gap analysis could help you communicate potential shortfalls and better explain how you’re working to improve. This is something that potential investors may ask for — especially for startups during seeding rounds.
How to conduct a gap analysis: A step-by-step guide
The gap analysis process is usually a four-step procedure. Here’s a basic guide:
1. Identify your current state of affairs
To begin, decide what you’d like to analyze. You likely have a few different departments working on dozens of projects, and it’s overwhelming to assess your business holistically. It’s possible to perform an analysis on every activity, so make sure you focus on one department or issue before moving to the next.
Say your marketing department is growing its social media platforms by only 2% every month, but you want that number to be 5%. That first percentage is your current state, and it’s the basis for the rest of your analysis.
2. Identify where you want to end up
The desired state, target, or stretch goal is where you want to end up. Create a reasonable plan that generally aligns with company goals and your current position.
At this stage, create a set of targets. Maybe you want social media accounts to reach 3% monthly growth in 90 days, then 5% by the end of the year. Variable goal setting gives you a set of possible targets instead of a complex number that may end up being too far out of range.
3. Identify the gaps
Now that you know where you are and where you want to be, you can more precisely identify the gap. In this case, it's a 3% gap in monthly growth — from 2% to 5%. To close it, you'll have to ask yourself a few questions about why it exists in the first place. Try using the “5 Whys” of project management, asking the question until you reach a final answer:
- Problem: Our social media platforms aren’t growing fast enough
- Why? We aren’t gaining more followers
- Why? We aren’t reaching enough people online
- Why? Our accounts aren’t enticing or optimized enough
- Why? Our staff doesn’t have enough time to put in more work
- Why? There aren’t enough people working on the social media team
Instead of spinning your wheels wondering why your marketing efforts are failing, you've identified that a lack of personnel is stunting your growth.
4. Define improvements to close the gaps
Now that you've figured out the gap in your process, it's time to implement a change to address it. Any efforts should directly reflect the conclusion you came to above.
In this example, your best option is to hire another social media manager and make sure the whole team has enough time and resources to optimize your accounts. Along the way, you'll consider financial and organizational costs and whether any additional charges create a financial gap.
Gap analysis next steps
The work doesn’t stop when you identify your gap. The analysis has revealed possible solutions, but you still need to fully implement any ideas from your research.
1. Map a plan
Using a template or other tool, create a document that outlines your gap analysis to share with your team, stakeholders, and management. This framework will include your goals, measurements to validate them, and action plans. It gives everyone the chance to get on the same page and identify errors or inconsistencies.
2. Put your plan into action
Once management has approved your action plan, it's time to implement it and track progress.
Maybe you have a hard time finding the right person to add to your social media team. Maybe you onboarded an expert and everything is running smoothly. Or maybe you brought on an intern to help out without spending too much money. This process varies and is hard to predict.
3. Rinse and repeat
You won’t always reach your goals the first time around. Maybe your social media team hits 4% monthly growth by the end of the year, but not 5%. That doesn’t mean your plan is failing; it’s just taking more time than you expected. If this is your outcome, take your efforts up a notch or adjust your goals to match what’s achievable.
Gap analysis tools
Your gap analysis might be more complicated than the example above, especially if it considers financial processes and high-level business activities. There are plenty of tools within the project management toolbox that can assist:
- SWOT analysis: A SWOT (strengths, weaknesses, opportunities, threats) analysis considers internal and external factors in building strategic planning initiatives and future potential.
- PESTLE analysis: This is a diagnostic tool that stands for political, economic, social, technological, legal, and environmental, outlining the factors that could determine the viability of your business.
- Fishbone diagram: Imagine the wide bones of a fish skeleton in your mind. Now imagine that each one is a possible cause for a problem within your company — that’s a fishbone diagram. This visualization helps you discover problems and point you to their potential causes.
- McKinsey 7-S: The McKinsey 7-S framework looks at strategy, skills, structure, style, staff, systems, and shared values. These could all affect your future success.
- Nadler-Tushman Model: This congruence model examines the different parts of your business — work, people, structure, and culture — and how they work together to affect your practices.
Find areas of improvement with Roadmunk by Tempo
Since your gap analysis is all about gathering ideas to solve problems, you need tools to store those ideas.
Roadmunk by Tempo helps you create audience-friendly roadmaps to prioritize the right paths. And at the same time, Timesheets by Tempo provides the time-tracking tools you need to ensure your next gap analysis isn't concerned with how much time you spend on this one.
