Gap analysis blog image
May 2, 2022

How Gap Analysis Guides You Toward Your Goals

Diagrams for Businesses
Leadership

What is Gap Analysis? 

Gap analysis is the process of comparing the current state of a team, department, or organization to its ideal future state and identifying opportunities to close the gap between those states.

It asks three important questions for any business leader to consider: 

  • Where are we now?
  • Where do we want to be?
  • How can we get there? 

Gap analysis can be used by teams and organizations in many different ways. Its most common form is performance gap analysis, which compares employee and company performance to expected or desired performance. The goal of this type of analysis is to improve internal processes to reach business goals. 

There are three other types of gap analysis you may use to evaluate different aspects of a business.

Product or market gap analysis helps you identify areas where supply is lower than demand, meaning there is an opportunity to enter that market.

HR gap analysis is used to examine a workforce and determine if there are enough employees for the work that needs to be done.

Finally, profit gap analysis takes a financial approach by comparing actual and target profit. 

Why is Gap Analysis Important?

Whether it's part of the strategic planning process or another organizational goal-setting activity, analyzing business activities to make goal-oriented changes is a big project with significant implications. You don’t want to go into this process blindly and guess at what changes might have the biggest impact toward meeting your goals. 

Gap analysis allows you to make these important decisions based on real information about your team or organization. It also provides a setting for you to think about all the contributing factors that could be affecting your business performance. 

Whether you are trying to determine for yourself what needs to be done or communicating the necessary changes to organizational leadership, gap analysis is the process that will help you establish a clear vision of where you can go and how you can get there.

How to Perform a Gap Analysis

Gap analysis requires a lot of time and information, and you will likely need to work with others within your organization to gather some of this information. If you’re ready to get started on this process now and simply want a convenient template to organize your thoughts and share them with your team, you can launch ours online now

Otherwise, keep reading to learn more about each step of the process, along with a summary of visual frameworks and diagrams that can help you each step of the way. 

Step 1: Analyze the Current State

If you are doing an analysis specific to a department or aspect of a business, you can be more specific in your analysis of the current state. If you’re working at an organizational level, however, there are many angles you’ll want to investigate. Just a few of these include your position in the market, the positions of your competitors, and documentation of your business processes. 

You will also look at indicators of performance such as financial data, customer comments, or feedback from your support team. Consider anything that could affect the way your organization fulfills its business objectives. The goal of this step is to lay out all the contributing factors so you can understand the root of any problems you want to solve. 

There are several diagrams and business tools that can help you gather and visualize all of this important information: 

  • Balanced scorecard: Measure performance of a business based on several key metrics.
  • SWOT analysis: Identify internal and external positives and negatives.
  • PEST analysis: Identify external forces that may influence the business.
  • Customer journey map: Visually represent a customer’s experience with the company.
  • Empathy map: Consider the perspectives of users and how they perceive your product or your organization as a whole.
  • Process flow diagram: Illustrate workflows and relationships between different steps of a process.
  • McKinsey 7-S model: Examine 7 internal factors of an organization to determine whether it has the structural support to be successful. 
  • Org chart: Visualize the structure of a business and identify the individuals involved in business processes.

Step 2: Define the Ideal State

Now that you know where you are, where do you want to go from here? Do you want to be known as the brand with the best customer support in the industry? Do you want to be known as the lowest cost option for customers on a budget? Do you want to be perceived as an innovative thought leader in your industry? 

Try to define the ideal state by using SMART goals—goals that are specific, measurable, achievable, relevant, and time-bound. To get started, consider having a brainstorming session with your team—either in person or virtually—so you can all get together and contribute to setting these goals.

Step 3: Identify the Gaps and Potential Solutions 

Now, it’s time to get to the main idea of this exercise, which is comparing the present and ideal states to identify gaps. For example, maybe you want to be known for great customer service, but you’re having customers complain about slow or poor service. Or maybe you want to be known for lower prices, but there’s a very costly element of your supply chain. 

Don’t be afraid to get into the details and thoroughly investigate the issue to determine its cause, then explore various ways you can solve the problem. Come up with as many potential solutions as you can. The one you choose will ultimately depend on the limitations and priorities of your team or organization.

Here are a couple examples of tools that can help you identify gaps and their causes:

  • Fishbone diagram: Create one of these as part of a root cause analysis.
  • 5 Whys: Identify the root cause of an issue by exploring cause-and-effect relationships. 
  • Nadler-Tushman model: Visualize how business processes work together as a system to transform inputs into outputs and identify gaps in that system.

And others that can help you identify and evaluate potential solutions:

  • Brainstorming tools: Work with your team to come up with potential solutions.
  • Value chain analysis: Find opportunities to increase value by examining business activities and processes.
  • Decision tree diagram: Evaluate conflicting solutions based on various criteria in order to choose one to implement.

Step 4: Create a Plan of Action 

Now that you know where you are and where you want to go, and you have identified a way to get there that aligns with your priorities, it’s time to implement changes. The plan you make should be detailed and specific so everyone knows how and why they should be contributing.

There are several diagrams and frameworks that can help you get started on an action plan and communicate project needs to stakeholders:

  • Brainstorming tools: Use brainstorming methods that are helpful when starting new projects, such as starbursting.
  • Stakeholder map: Identify all the stakeholders involved in a certain project.
  • Gantt & RACI Charts: Plan out the timeline of project tasks and assign tasks to individuals.

Collaborate With Your Team Using a Gap Analysis Template 

As you’ve just seen, there is a lot of information that goes into a gap analysis, and keeping it all organized can be a challenge, especially if you are analyzing at an organizational level. 

Because of that, you might find it helpful to create a visual summary of your results. You and your team can refer to it later, and you can present it to stakeholders or use it for future projects. 

Our online template for gap analysis is easy to use and ready to launch. Just add your own insights to each column:

  • Current State: Summarize your findings of the current state as they relate to your goals.
  • Ideal State: Summarize your goals.
  • Gap: Describe the gaps and their root causes.
  • Solution: List all solutions that can be implemented, including time frame.
Gap Analysis Template

Click here to launch template >> 

After completing a gap analysis, you’ll be ready to face the future with a plan in place to become better than ever, and Gliffy is with you every step of the way—to organize your thoughts as you complete the analysis, and also for all the visual needs you might have along the way. Start free in Confluence or online, and take the first step to closing your gaps. 

TRY FREE ONLINE  TRY FREE IN CONFLUENCE