Gap Analysis– Bridging Sustainable, Indefensible, Outcomes: Margins that Separate Winners, Losers…

So why do you think your organization’s strategy is so good, when its performance is so bad? Variations on this question appears time and time again as organizations maneuver through challenging transformations to improve performance and sustain growth… A fundamental characteristic of a superior-performing organization is its recognition that a successful formulation, execution of a coherent organizational strategy is intrinsically linked to leadership…

 It’s the ability for leaders to recognize when organization strategy is not in full alignment with performance expectations, in other words, there is a ‘gap’. It’s leader responsibility to not only acknowledge and understand the existence of a ‘gap’, but also to develop and implement a comprehensive ‘action plan’ to bridge or mend the ‘gap’…

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Gap Analysis is the difference between the ‘current state’ and the ‘alignment state’ of an organization, or individual functionalities within an organization. These are issues that revolve around two basic questions: Where are you now? Where do you want to be? According to Aniket S. Sharma; Gap Analysis provides a foundation for detailed study of the difference between the organization’s ‘future’ condition or state, which is known as the– ‘To-Be’ (desired outcome); and the organization’s ‘current’ condition or state, which is the– ‘As-Is’ ( current outcome). Simple formula for GAP Analysis is: GAP Analysis = ‘To-Be’ – ‘As-Is’.

GAP ANALYSIS: There are four important and frequent questions an organization must ask itself: Where are you now? Where do you want to be? How will you get there? When will you get there? The point between ‘where are you now’ and ‘where you want to be’ is the ‘gap’. Identifying and understanding the ‘gap’ is known as ‘Gap Analysis’ and it’s depicted in this diagram:

How Will You Get There?

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Once an organization has identified a performance gap, the first challenge in bridging or mending the gap is to identify the causes behind the ‘gap’. There could be any number of reasons within the organization’s environment or structure that may be responsible for a ‘gap’, for example; flawed strategy, competitiveness, lack of talent, lack of leadership… Once an accurate cause (or causes) is discovered the organization must then develop an ‘action plan’ to– overcome or bridge or mitigate the gap… Usually there are a number of remedial actions that can be implemented, but the actual remedy depends highly on the specific cause of the gap, available resources, and most important– leadership…

If the cause of the gap is transformative then a change or shift in the organization’s basic strategy is required. One starting point for this remedial action might be Ansoff’s Growth Matrix, which suggests that an organization’s attempts to grow depends on answering two questions: How can you grow in the existing markets? What change can be made to the product/service portfolio to trigger more performance and sustainable growth? 

The output from the Ansoff product/market matrix is a series of suggested growth strategies which set the direction for the organization strategy. Ansoff’s Growth Matrix provides four options that can help bridge the gap; market penetration strategy, product development strategy, market development strategy, diversification strategy…

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However, if the cause is connected, for example; with a specific performance factor of the organization, then the solution should concentrate on just that specific elements… These are tactical decisions, for example; the solution can pick out relevant elements from the traditional marketing mix of; price, place, promotion, product, performance… And, the additional elements of; people, process, physical evidence allows an organization to deal with other issues connected with providing a service… In any of these analysis accurate performance data is required about all aspects of the– organization, markets, industry… Also, before an organization begins to develop an ‘action plans’ to deal with the ‘gap’, they must first ensure that the ‘remedy’ for target cause (Where you would like to be) is realistic and achievable… 

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In the article Do You Really Need GAP Analysis? by Tejasvi Chandrarkar Addagada writes: Initiating a GAP Analysis is usually due to a variety of causes, e.g.; market disruption, under performance, decline in competitiveness, change in strategic direction… also, technology innovations, reorganizations… Remember, GAP Analysis always address the questions: Where are you now? Where do you want to be? But, before even beginning a Gap Analysis ensure that the analysis process is consistent with the context of the organization’s overall mission, strategy, objectives… this consistency is important since it establishes the actual direction of the organization, which is: the As-Is’ analysis and the To-Be’ analysis…

Once ‘To-Be’ and ‘As-Is’ models are developed, then the actual gaps can be identified. But the analysis does not stop with just identifying the ‘gap’, in addition, you must also clearly elicit the necessary requirements to bridge the ‘gap’, which means– estimating resources, time-lines, available talent… then an actual solution is predicated on a comprehensive ‘impact or outcome’ analysis for proposed remedy itself… this is a critical step, because an ill-conceived remedy can exacerbate the existing gap, or in fact, in the quest to develop a remedy for the existing gap you might inadvertently introduce new gap, which might even be worse than existing one…

Hence, a consistent set of metrics that accurately measures the proposed remedy/solution and its impact on the organization is critical… According to Sandhya Jane; Gap Analysis is either enterprise-wide or restricted to specific function, product, competitor… it’s analysis between organization’s current situation and future expectation in terms of; performance, process, competitiveness, systems, outcomes… Gap Analysis is benchmark for the future direction of an organization or an important individual function within the organization…

In the article Steps for Gap Analysis by Tom Hawes writes: The difference between ‘where you are’ relative to ‘someone else’ is a ‘gap’. The gap could be positive (i.e., you are in a good position) or negative (i.e., your position is bad). In competitive intelligence, you study gaps because you want to know– why, where, how much… about the competitors advantages, or the same about your advantages over your competitors.  Identifying the known gaps (though not easy) is the first step in a robust Gap Analysis process.

There are specific steps that you can use to comprehensively identify and  understand gaps… and then create simple tracking methods to monitor a gap… Ultimately to stay competitive or just to improve performance/outcome, you might implement an ‘action plan’ to bridge the gap… Here are a few tips:

  • Start with the ‘known’ gaps:Known’ gaps are the ones for which there is general agreement about their identity and significance. For instance, you may know that competitor X is about to introduce a new product which is 20% faster than any product that you have… Furthermore, you know that your customers highly value performance. Hence, this is a gap that is well characterized and is significant to your competitive position…
  • Create a backlog of ‘potential’ gaps: ‘Potential’ gaps do not meet the full criteria to be considered as ‘known’ gaps. There may be information missing about the exact nature of the gap or its impact… If you hear that a competitor is introducing a ‘faster’ product sometime in the future, you might conclude that this could be significant. But without more information, it’s very difficult to assess the potential significance of the gap…
  • Make a list of triggers which may lead to gaps: Events, activities, announcements may trigger/signal a competitive gap in the future… Companies often signal much of what they plan to do through all types of disclosures. If we are in attuned with and track disclosures, you will get hints of future strategic directions, e.g; a competitor may have made patent filings, or purchased the assets of another company with specific technology competency, or active with venture investments in companies with complementary products…  Monitoring such a list of triggers can provide clues on whether or not a competitive gap is imminent…
  • List the key trends which affect the business: Tracking trends in markets, industry is critical, e.g.; there are broad trends, such as; things getting– smaller, faster, cheaper, more flexible… Also, trends in social media, lower energy consumption, increase in recycling, more emerging market support… these and other trends are increasingly becoming important. The key to trend monitoring to find the ones that most affect your customers, markets… The goal is to identify ‘triggers’ that describe the– what, when, how… competitors might gain some advantage…

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Gap Analysis is an assessment tool to help an organization’s leaders compare its current economic situation with its future expectations and outcomes… It’s a structured way to identify and bridge gaps between ‘desired’ organizational outcome and ‘actual’ outcome.

Gap Analysis conceptually is very simple to understand, but in practice it’s very difficult to implement: The big challenge is objectivity– it’s difficult for leaders to be ‘objective’, as well as; to be ‘inclusion’ and get the full ‘commitment’ of all the stakeholders; it’s critical for success of a Gap Analysis to involve all stakeholders in the process… According to Pasmore; only leaders make an organization come alive, only leaders can ‘bridges the gap’ between– strategy,  performance, outcome…