How to Perform a Gap Analysis

You’re leading a company on an upward trajectory. Sales are surging, and the future looks bright. But how do you ensure your current performance aligns with future business goals?

You perform a thorough checkup—a gap analysis.

A gap analysis systematically compares the actual (current) performance and expected results. It’s a powerful tool to bridge the gap between where you are and where you want to be.

By analyzing shortcomings in the present, your company can gain valuable insights into areas needing improvement and develop actionable plans to achieve future goals.

A gap analysis helps you stay competitive by

Identifying weaknesses and opportunities: It reveals areas where a company might be falling short or where untapped potential lies
Facilitating strategic planning: By understanding the gap, you can develop realistic and achievable goals that bridge the divide
Optimizing resource allocation: Resources can be strategically directed towards closing gaps and maximizing returns
Minimizing risk: You can preempt issues and develop risk mitigation strategies
Improving performance: By closing the gap, your business can enhance operational efficiency, customer satisfaction, and overall performance

How to Perform a Gap Analysis: A Step-by-Step Guide

The Gap Analysis Process

Gap analysis follows a structured approach where you need to

Identify your current state
Define your future state
Identify the gaps between the current and future states
Evaluate potential solutions to bridge the gaps
Implement change management strategies
Monitor the progress of implemented solutions

Here’s a detailed breakdown of each step:

Step 1: Identify your current state

This stage involves a thorough assessment of your current state. Here are two key steps:

Data analysis: Gather and analyze data relevant to the gap you’re addressing. This could include financial records, customer feedback, sales KPIs, employee performance metrics, or industry benchmarks
Qualitative research: Conduct interviews or surveys with relevant stakeholders like employees and customers to gain deeper insights into processes, experiences, and challenges

Step 2: Define your future state

This stage defines the organization-level goals and objectives that you’ve set. Here’s how to achieve this:

Forecasting: Use forecasting techniques to picture your ideal future performance. This could involve projecting sales figures, market share, or employee skill sets
Goal setting: Develop SMART goals—goals that are smart, measurable, achievable, relevant, and time-bound—that represent your desired future state
Strategic planning: Align your future state with your overall business strategy. Consider factors like market trends, competitor activity, and technological advancements

Step 3: Identify the gaps

Once you have a clear picture of the current and future states, analyze the difference to reveal gaps that need addressing.

Here’s how you can proceed:

Compare the current state analysis with the defined future state
Analyze the differences to identify specific areas where the current performance falls short of the desired outcomes
Quantify the gaps. For instance, the skills gap might be the difference between the current skill sets of employees and the skills needed to achieve those future goals

Step 4: Evaluate solutions

Brainstorm potential solutions to bridge identified gaps. Consider

Cost-effectiveness: Evaluate the financial feasibility of each solution
Impact potential: Assess the effectiveness of each solution in closing the gap
Viability: Consider the feasibility of implementing each solution in terms of resources and timeframes

Step 5: Implement change

Once you’ve chosen the optimal solutions, develop a change management action plan to address

Communication strategies: Clearly explain the changes to everyone involved to get their support
Resource allocation: Allocate necessary resources to implement the chosen solutions
Training and development: Provide training and development opportunities to equip your team with the skills required to implement the changes

Step 6: Monitor changes

It’s crucial to monitor the effectiveness of the implemented solutions. This involves

Self-monitoring: Track progress towards goals and adjust strategies as needed
Analysis: Regularly analyze data and feedback to assess the impact of implemented solutions
Key Performance Indicators (KPIs): Use relevant KPIs to measure progress and identify areas for further improvement

Types of Gap Analysis

Gap analyses focus on specific aspects of a business. For example, a value chain analysis demands a detailed assessment of all the product or service lifecycle processes.

However, a requirements analysis would include identifying stakeholders, assessing their requirements, prioritizing them, and managing change throughout the development lifecycle.

Here are some common gap analysis examples.

Skill gap analysis

This analysis assesses the mismatch between a company’s current skills and those required to achieve its goals. Identifying skill gaps allows targeted training and development programs to bridge the gap.

For example, in a skill gap analysis, a digital marketing agency identified that it lacked the expertise of social media video editing to expand its services. By assessing current skills and the market need, they could train their team or hire a freelancer to bridge the gap.

Market gap analysis

This analysis examines the difference between customer needs and a company’s existing products or services. Identifying market gaps can lead to developing new products or modifying existing offerings to better cater to customer demands.

Here’s an example:

A hypothetical healthy meal prep company could recognize a gap in the market and decide to capitalize on the growing demand for athlete-specific meal plans.

While their competitors focus on general healthy options for everyone, this company identifies an opportunity to create a new product line targeting athletes.

This new line would provide pre-portioned meals designed to meet the specific nutritional needs of different athletes. The meals would likely consider sports, training intensity, and dietary preferences.

Product development gap analysis

This analysis compares current product features, competitor offerings, and customer needs to identify areas of improvement or new products.

For instance, user feedback for a software firm revealed a need for a mobile app and improved software performance. The company could allocate resources to create a solution and enhance its product by identifying these user pain points.

Gap analysis can also support your product marketing initiatives by uncovering unmet customer needs you can fill with your product.

Gap Analysis Tools and Frameworks

Several tools, needs assessment templates, and frameworks can be used to facilitate gap analysis. Here are a few popular options:

SWOT analysis

Strengths, Weaknesses, Opportunities, and Threats (SWOT) analysis—and its close cousin, SOAR analysis—are a strategic planning framework that can be used to identify gaps.

By analyzing your strengths and weaknesses internally and the opportunities and threats posed by the external environment, you can identify areas where your current state doesn’t match your desired future state.

PEST analysis

PEST stands for Political, Economic, Social, and Technological. It refers to analyzing internal and external factors such as government policies, economic trends, social changes, and technological advancements and their potential impact on an organization, product, or service.

Here are a few examples of how analyzing the above factors can reveal gaps:

Economic shifts could highlight a need to adjust pricing or marketing
A growing health fad could increase demand for your healthcare product offerings, and you may need to increase production and reposition your brand image
Technological advancements could expose limitations in your capabilities

McKinsey 7S framework

The McKinsey 7S framework is a business model that analyzes seven interrelated elements crucial to an organization’s success: Strategy, Structure, Systems, Shared Values, Skills, Style, and Staff.

By examining how these elements interact, you can proactively address inconsistencies limiting your potential for adaptation and growth in a dynamic business world.

It helps analyze and improve your organizational structure, skill sets, and overall operational effectiveness.

Fishbone Diagram (Ishikawa Diagram)

The Fishbone Diagram, also known as the Ishikawa Diagram, is a cause-and-effect analysis tool for identifying the root causes of performance gaps.

It visually depicts a problem (the effect) and explores the various factors (the causes) that contribute to it. This helps companies identify areas where they need to focus their gap-closing efforts.

ClickUp Gap Analysis template

The ClickUp Gap Analysis template streamlines the gap analysis process by offering a visual workspace to map the different stages and steps.

Track progress and categorize information for clear analysis with customizable statuses and fields. Different views, such as Lists and Gantt charts, further aid in prioritizing and planning actions to close the identified gaps.

Analyze skill gaps effectively using the ClickUp Gap Analysis Template

Gap analysis templates such as this one allow you the flexibility to collaborate and pinpoint improvement opportunities effectively.

You can break down the identified gaps into actionable tasks, assign owners, set deadlines, and use ClickUp’s dependencies to ensure a smooth workflow.

The template’s reporting and progress-tracking features also help you monitor the effectiveness of your actions. You can adjust your approach as needed.

Download This Template

Benefits and Challenges of Gap Analysis

Now that we understand the core concepts of gap analysis let’s delve into its pros and cons.

Benefits of gap analysis

Benchmark against competitors: Benchmark your company’s performance against the competition, identifying shortcomings and opportunities for competitive advantage. This can be a powerful tool for staying ahead of the curve in a competitive market. You can further refine the process and save time by using custom industry analysis templates.

Enhances communication and collaboration: Conducting gap analysis requires cross-departmental cooperation. This fosters better communication and understanding of shared goals. Different departments can become more aligned and effective by working together to identify and close gaps.

Enhances employee retention: Addressing skill gaps and optimizing work processes can create a more engaged and satisfied workforce. For example, employees using the latest marketing tools (skill gap addressed) through streamlined social media campaigns (optimized process) feel empowered and see results.

Promotes continuous improvement: Gap analysis is not a one-time exercise. Regularly revisiting gaps helps you stay on track with your strategic goals and identify new areas for improvement as the business landscape evolves. Analyzing and addressing gaps also ensures ongoing improvement in areas like resource allocation, decision-making, communication, and risk mitigation.

Challenges of gap analysis

Compromised or inadequate data availability and quality produce inaccurate results: Gap analysis can be powerful, but gathering the correct data is crucial. Self-reported metrics or basic surveys might miss the mark in areas like employee skills or customer satisfaction. Relying solely on surface-level data can also lead to misidentifying the root causes of the gaps.

Without a deeper understanding of the complexities behind the numbers, crafting effective solutions becomes difficult, potentially throwing resources at symptoms rather than the underlying disease.

The impact on employee morale could be negative: In a skills gap analysis, highlighting gaps between employee skill sets and job requirements can discourage employees. For example, if the analysis focuses on shortcomings and lacks a clear path forward. It’s crucial to frame the performance gap analysis as an opportunity for growth and development instead of comparison and competition.

Also read: 10 Growth Marketing Strategies to Scale Your Business

Exceptional change management is necessary: When implementing solutions, you might encounter resistance from project managers and employees accustomed to existing processes. In other words, people used to doing things a certain way might push back on new approaches.

Resource intensiveness: Conducting a thorough gap analysis can be time-consuming and require much effort from your team. This can take time and distract resources from other vital tasks.

Cost considerations: Depending on the complexity of the gap analysis and the tools required, there may be associated costs.

For example, hiring a consultant to conduct a complex skills gap analysis using advanced assessments can be expensive, potentially delaying or limiting the scope of the analysis due to budget constraints.

Real-Life Use Cases and Examples of Gap Analysis

Here are some more examples of how gap analysis is used across other business processes and scenarios:

New product development: A company might conduct a gap analysis to compare its current product offerings to competitors’ products and identify opportunities for new product development.

Innovation: Organizations might use the gap analysis report to assess current innovation capabilities against industry leaders and identify areas for improvement in their innovation processes

Also read: Innovation Management Process: How to Cultivate an Innovative Culture and Entrepreneurial Spirit

Risk assessment: A gap analysis helps identify potential risks and their impact on achieving goals, allowing for the development of risk mitigation strategies

Pricing strategies: Companies might use gap analysis to compare their current pricing structure against competitors’ pricing and customers’ willingness to pay. The findings can help identify opportunities for price optimization or the development of new pricing models

Human resources: Organizations might conduct a skills gap analysis to identify the difference between current employee skill sets and those required for future goals. This allows targeted training programs to bridge the gap and ensure a future-ready workforce

Marketing and sales: Marketing and sales teams often use gap analysis to compare customer acquisition costs and lead generation rates with desired targets. Such a roadmap helps identify areas for improvement in lead generation strategies and campaign effectiveness

Gap Analysis Risks and Mitigation

Here are a few strategies to mitigate the common risks associated with the gap analysis process:

Risk	Description	Mitigation strategy
Scope creep	The gap analysis process can become overly broad and lose focus. As the analysis progresses, new gaps or issues might be discovered, tempting the team to add elements. While these discoveries can be valuable, including them can overwhelm the project and divert resources from addressing the core gaps.	Clearly define the scope of the analysis at the outset.
Analysis paralysis	When faced with a complex gap analysis, the sheer amount of data and potential solutions can lead to overthinking and indecision. This analysis paralysis can significantly delay taking action to address the identified gaps.	Establish clear deadlines for each stage of the process and prioritize implementing solutions with the most significant impact.
Lack of alignment	When different departments or stakeholders have different goals or priorities, the gap analysis might focus on the wrong areas. This could lead to identifying and addressing irrelevant gaps while missing crucial ones that hinder overall success.	Ensure all stakeholders are aligned on the identified gaps, chosen solutions, and desired outcomes to avoid miscommunication and wasted effort.

Fine-tune the Present for the Future with Gap Analysis

By embracing continuous improvement through the gap analysis model, you can sidestep challenges, capitalize on opportunities, and achieve long-term success.

But remember, the gap analysis process must be planned to perfection.

From its inception to the smallest performance-focused calibrations over time, gap analysis must be methodical and streamlined—doable when you have an invaluable tool like ClickUp.

What’s more, ClickUp Gap Analysis helps you:

Uncover the gap between current performance and desired goals
Clearly understand the story behind the gap through visual representation
Identify areas for improvement and provide a plan for closing the gap
Track progress and measure success against goals

Are you eager to find out if gaps exist or just want to know how to close them for good? Get started on ClickUp today.

Questions? Comments? Visit our Help Center for support.