Gap Analysis (Part 2)
Your current business performance may be solid, but there's still a gap between where you are and where you strive to be. Use this Gap Analysis (Part 2) deck to find what's missing from your current state and improve accordingly. Evaluate, understand the cause, and plan meaningful actions for better results.
Follow the Gap Analysis Procedure to identify what stands between your current and desired states. Investigate the causes, implement corrective actions, then standardize and improve. (Slide 3)
A Fit Gap Analysis chart analyzes how you measure up across areas like analytical problem solving, strategic vision, and commercial awareness. (Slide 17)
Additional tools like the Fishbone Diagram can root out systemic issues that contribute to the gaps and hold your organization back. (Slide 21)
To stay afloat in a rapidly transforming market, many businesses have been forced into dramatic changes between where they were and where they need to go.
For instance, maybe you need to assess your company's needs around remote work. Or determine the cost to upskill employees around machine learning. Or you might need to create an action plan to implement new digital channels into sales and marketing. Gap analysis is the best tool to bridge the divide and achieve your goals.
We begin with an overview of gap analysis basics. The "gap" is the distance between the current state and the desired state. For instance, maybe your current state is a SaaS business that offers decent features that your current customer base appreciates. But your desired state is to be recognized across the industry for being the most innovative SaaS platform out there. (Slide 2)
To get there, follow the gap analysis procedure across six steps. First, formalize a plan. Identify the gap, investigate the causes for that gap, and select actions to fix it. In our example scenario, you are missing innovative product features that make your brand stick out. Your previous offering provided a useful service but it's not attractive enough to dominate today's market. So, you need to hire new talent to revamp your product design and development strategies. Then, implement the selected actions, study the results, then standardize the system to continuously improve. (Slide 3)
Questions to ask
Here are some key questions to ask yourself to help identify the gap. Survey your entire team to get a wide sample of answers. In addition to asking what the gap is and who is responsible, ask for potential solutions and costs to eliminate the gap. Once all the possible reasons have been collected and studied, a root cause should present itself. In the case of a Saas business that is no longer seen as innovative, the root cause could be the development team is too swamped with incremental improvements for the existing core product. As a result, they don't have the bandwidth to work on anything new. (Slide 6)
Milestone and timeline
Draft key milestones for each time period on an editable timeline. Each milestone should correlate with an incremental step towards your larger goal. In the case of the creation of a more innovative SaaS business, by Q1 you should have hired new talents, and by Q2 you should have made progress on one or more "innovative" new products in development. By Q3 and Q4, you could expect to release said products for testing and gather data to measure the initial market response. (Slide 5)
In order to determine which resources and activities should be implemented to reach your desired state, you need to have a strong awareness of your current state. To do this, evaluate where your organization stands now. For instance, your current mission could be all about equitable access to revolutionary products at the lowest price point. While your SaaS business is very affordable, it's no longer providing the revolutionary products that are core to your central mission. (Slide 8)
Additionally, your current market share could reveal you might be a leader in brand image and legacy, but you have fallen behind in new product development and customer acquisition. (Slide 10)
And your current revenues could point to a gap between your actual revenue and target revenue that could be aided by the development of new products. In this table, you also have the option to compare revenue performance between different product lines. The product that generates the least revenue could be reexamined for its ROI. (Slide 12)
There are a few different ways you can present a gap analysis across your organization. For instance, you can use a gap analysis template to fill in your current business requirements, existing situation, and identified gap. For our example, you would start with your requirement to build an innovative new product, then add a desire to double your profit margin, dominate your industry's market share, and create a revenue-generating business partnership. With each gap identified, you can then determine the capabilities needed to reduce the gap, and the issues and risks the gap presents. For your company's main goal, the capabilities you'll need are new C-level hires on the technology team and the risks you'll have to overcome is a lack of promised upward mobility and low morale. (Slide 15)
Another tool to hone in on a specific type of gap is a market gap analysis. A market gap analysis helps you self-evaluate where your organization stands in relation to the rest of the market. Consider multiple areas of concerns, such as excess production capacity, costs of supplies, new technologies, or excess demand. (Slide 16)
You can also conduct a fit gap analysis to deduce how well your current team fits your processes and goals using a score from poor to excellent. For example, a team with a "good" technological orientation could still have a gap that would benefit from experience working alongside strong engineering talent. (Slide 17)
You can enlist additional frameworks to conduct a gap analysis. For instance, the Ansoff Matrix hones in on the strategies you need to employ across four sets of circumstances. Use market development strategies to expand into a new market with an existing product, Use a market penetration strategy to increase market share with an existing product in an existing market. To develop a new product into a new market, utilize diversification strategies. When you want to develop a new product in an existing market, use product development strategies. (Slide 19)
The McKinsey 7-S framework enables deeper analyses across key organizational areas including staff, skills, systems, strategy, structure, style, and shared values. Include the barriers to change that prevent you from reaching your future state. Perhaps the current state of your skills is proficient, but to develop the products you want to make, you need to reach a future state of stronger technological prowess. The key barrier to change could be an issue of time management as your current team is overworked without the time to improve.
You can then identify change activities to overcome said barriers and close the gap. In our example, that would be hiring new employees and empowering your current team to upskill through new educational opportunities and working with more experienced partners. (Slide 22)
For additional Gap Analysis tools, check out our previous Gap Analysis deck.