GAP Analysis - Major Tools

 

Various gap analysis tools exist that can ensure that it is done right and nothing falls through the cracks. These are the most commonly used tools:

1. Fishbone analysis: This cause-and-effect visualization tool helps to analyze manpower, methods, metrics, machines, materials, and the time. It aids in identifying how each area links to any underlying issues that might exist and is often used to identify root causes of problems. Ishikawa diagrams (also called fishbone diagrams, herringbone diagrams, cause-and-effect diagrams, or Fishikawa) are causal diagrams created by Kaoru Ishikawa that show the potential causes of a specific event.
   
   
   The diagram looks just like a fish’s skeleton with the problem at its head and the causes for the problem feeding into the spine. Once all the causes that underlie the problem have been identified, managers can start looking for solutions to ensure that the problem doesn’t become a recurring one. It can also be used in product development. Having a problem-solving product will ensure that your new development will be popular – provided people care about the problem you’re trying to solve. The fishbone diagram strives to pinpoint everything that’s wrong with current market offerings so that you can develop an innovation that doesn’t have these problems.
   
       Finally, the fishbone diagram is also a great way to look for and prevent quality problems before they ever arise. Use it to troubleshoot before there is trouble, and you can overcome all or most of your teething troubles when introducing something new.
2. McKinsey 7S Framework: This tool, named after the consulting firm McKinsey & Co., is used to determine specific aspects of an organization that are meeting or not meeting expectations. It is an analysis of a business through the lens of seven people-centric categories, including strategy, structure, staff, systems, style, skills and shared values.
3. SWOT analysis: SWOT stands for strengths, weaknesses, opportunities, and threats. These are factors that have an effect on the efficiency and success of a product, project or person. SWOT analysis helps companies to determine the best possible solution by playing to their strengths, allocating resources in accordance with needs, while avoiding potential threats.
4. Nadler-Tushman model: Named after Professors David Nadler and Michael Tushman, the Nadler-Tushman model, also referred to as the organizational congruence model, examines how business processes work collectively and how gaps influence the operational effectiveness of an organization or a firm as a whole.
   
   
   The Nadler-Tushman model determines operational gaps by assessing an organization’s operations by separating its business processes into inputs, transformation, and outputs. Input refers to the operational atmosphere, physical and non-physical resources used, and the workplace environment. Transformation denotes the existing procedures, people and processes present in a place that changes input into an output. The Nadler-Tushman’s congruence model is used to identify performance gaps within an organization. It is based on the principle that a business’s performance is a result of these 4 elements; work, people, structure and culture.
   
   
   The higher the compatibility among these elements, the greater the performance will be.  

• Steps involved:

1. Gather all data that points at the symptoms of poor performance
2. Specify and analyze inputs which include the environment, resources and history. And define your organization’s strategy.
3. Identify which outputs are required at individual, group and organizational levels to meet the strategic objectives
4. Figure out the gaps between desired and actual output and the problems associated with it (and mark down the costs associated with them as well)
5. Collect data on and describe the basic nature of the 4 major components of  the organization
6. Assess the degree of congruence among these components
7. See how poor congruence and problems related to outputs are correlated. Check if the poor ‘fit’ of the 4 major components are related to  the problems
8. Come up with action steps to deal with the problem causes

5. Burke-Litwin Casual Model

Burke Litwin Model of Change explains three levels of changes- transformational, transactional changes and changes in performance. 

These changes are derived by 12 factors which include external environment, mission and strategy, leadership, organizational culture, structure, system, management practices, working climate, task and skills, individual values and needs, motivation level and individual and organizational performance.

Among these drivers some are hard factors and some are soft; some are tangible and some are intangible. 

Organizational change is a display of these complex yet interconnected factors of change.

This tool helps you understand the different components of an organization relate to each other when going through a period of change. There are 12 components that are interrelated and they are as follow:

Burke Litwin Model identify 12 factors or elements of change which drive change in an organization. Let’s check these 12 factors out and discuss these in detail. 

1.      External Environment

Organizations do not work in isolation. Many external factors like economy, culture, social norms, competition, market situation etc has effect on organisation. Organizations do have control over external factors and that is why these are the strongest factors of change. 

2.      Mission and Strategy

Mission and Strategy refers to purpose and goal of organisation. Leadership devises mission and strategy at organisations. This is also a powerful factor of change and for this reason it is among transformational factors as per this model. 

3.      Leadership

Leadership is also among strong transformation factors.  They are the champions of change and change leaders. They explain change, lead its process, assess its performance and take corrective actions to put change in the right direction.

4.      Organisational Culture

Another transformational factor is organisation culture. It is about norms, behaviour of employees and value system prevails in an organization. It is less tangible and formal but it has strong influence on the future and process of organizational change. 

5.      Structure

Structure is a tangible factor. It is about hierarchies and departments but it also includes communication channels and decision making relationship between those hierarchies and departments. As per this model, structure is a transactional factor. 

6.      Systems

Next transactional factor is system. It refers to rules and regulations, policies, procedures which help employees to function in an organization. These are tangible factors of change and it requires complete understanding of existing system before initiating any organizational change. 

7.      Management Practice

Management practices refer to behaviour and activities of managers towards implementing strategy. These practices inform how managers, leadership and employees are adhering to rules and regulations and what is the nature of relationship among different hierarchies and departments. Management practices do have influence on organizational change. 

8.      Working Climate

Working climate refers to organizational environment; what is attitude of employees towards work; are they comfortable in organizational culture; how they feel about the leadership. This working climate is also driver of change and it does affect the change process. 

9.      Tasks and skills

Actions which are required to be completed in a given time by employees are tasks and expertise which are needed to complete that actions are skills. For an organizational change to happen, skills of employees must be aligned to new roles and tasks.

10.  Individual values and needs

Employees come from different social and educational backgrounds and they have different expectations from organization about working climate, remuneration, growth opportunities etc. It is a powerful factor which affects productivity and efficiency of employees and has strong impact on success or failure of organizational change. 

11.  Motivational Level

It is about employees’ level of dedication and commitment towards achieving organizational goals. Motivation level of employees depends on many other factors like what is organizational culture, values, remuneration, management practices etc. This is a soft factor but it is prerequisite to implement change initiative in an organization.

12.  Individual and Organizational Performance

Performance of individuals refers to completion of tasks in effective and efficient manner. And sum total of individual performance is the organizational performance. The organizational performance is assessed by achievement of organizational goals in given time period. 

Steps involved:

1. Find out where the need for change is coming from; whether from the external environment, transformational factors etc.
2. Identify which of the elements in each group is responsible for the situation
3. Examine the key element along with the other 11 elements; pay special attention to those that are closely linked to the identified element
4. Figure out the changes you need to make to the main element along with the other few elements it is closely linked to

Advantages of Burke Litwin Model of Change. 

·         This is a comprehensive model covers all the important factors into account to explain why change is happening, what is driving change and helps in formulating change strategy. 

·         This model explains factors of change on the basis of cause and effect relationship which helps to have complete understanding about organizational change. 

·         This model explains the meaning and distinction between transformational and transactional level of change leadership in an organization.

Limitations and Disadvantages of Burke Litwin Model of Change

·         The critics of this model are of the view that over simplification of different factors of change results into producing sub factors which actually makes it a more complex model.

·         This model only focuses on what drives change and fail to explain how to implement change. 

·         It puts external environment factors on the top which drives change which is not always the case. There are internal factor as powerful factors which lead to organizational change. 

 

GAP Analysis - Steps in the Process

 

There are six key steps toconducting an effective gap analysis.

1. Describe General Area

In this step we describe the general area that we want to analyse and improve. This may seem like an unnecessary step, but by performing it, we not only highlight what general area is under investigation, but also what areas are not under investigation.

Identify any relevant information that is essential to analyzing current business processes in terms of performance and allocation of resources. Depending on the nature of the activities, a number of sources may be needed for information gathering.

This helps to avoid scope creep and keeps the rest of the analysis very focused. For example, we might decide to analyse our online marketing efforts. This then implies that we are not investigating our offline advertising such as print and TV. By being very clear about what we are, and what we are not investigating, we keep everyone involved on the same page. A sales team might be focused on lead generation and conversion rates while the accounting department may be focused on efficiency and accuracy. The metrics that you use will be what is most important to the success of your business or department.

2. Identify Specific Improvement Areas

Identify the current state of your business. This involves documenting your current processes, resources, and technologies.

In this step we identify specific areas for improvement within the general area described in step 1. For example, if the general area we are investigating is our online marketing, then we may identify content creation and paid advertising as specific areas we’d like to improve. Set S.M.A.R.T goals of where you want to end up. S.M.A.R.T. goals are specific, measurable, achievable, relevant and time-sensitive. Being specific narrows down exactly what you want to achieve and removes any ambiguity. You want tasks to be measurable so that you can see the growth towards the goal. While goals should be aspirational, they need to be achievable, otherwise you may see a lack of motivation and frustration creep into morale. Relevant goals help you achieve the overall goals of the company while being time-sensitive gives you a deadline to measure progress and evaluate success.

3. Determine Targets

Now that we have identified our specific improvement areas, the next step is to set targets for each area. Determine the desired state. This is how and where you would like things to be.

A common input to this step (and the next step) is benchmarking, whereby a company will benchmark its performance in an area against its competitors performance in that same area. The results of this exercise will show areas of underperformance and these areas are then commonly chosen as the improvement areas for this step. Another commonly used input for this step is to analyse industry best practices.

What targets are set will depend on a combination of the time available to address the gap as well as the ambition of the organization.

                4. Determine Current State

Now that we understand where we want to get to, it is important to understand where we are before putting the action plan together.

By understanding where we are it makes it more likely we’ll create a realistic action plan. It also makes it easier to see if we are making progress towards our desired state, because if we don’t know where we started then it’s very difficult to measure progress towards our goal.

 5. Determine GAPs

Determine where any gaps might exist between the two states. To do this, you will have to identify and map all of the missing pieces in your processes, resources, policies, or resources. This will help you to bridge the gap to bring your current state in alignment with your desired outcome.

The difference between step 4 and step 3 is our “gap”, that is, the gap between where we are and where we want to be. Analyze gaps from where you are to where you want to be. Now is the time to evaluate the gaps and get to the root of the problem. This involves getting to the details of why you aren’t as successful as you want to be. The why could be a hiring problem, a training problem, a resources problem or something else. This is where you dig in to discover it.

 

6. Determine Action Steps

Now that we understand the gap, we use this final step to describe the improvement steps we will take to close the gap and get to where we want to be. In essence, this step is our action plan to get to where we want to be.

The action plan should be prioritized so as to deliver the biggest return on investment. One way to do this is to prioritize the most critical gaps first, or to target low hanging gaps first.

Gap Analysis Reports

Project management, process improvement, and business transformation teams within small to large businesses will often use gapanalysis and related reports when determining the optimal allocation of resources. Gap analysis reports assist company leaders and key stakeholders in understanding any operational gaps that may exist in various areas of the business. Reports should include the identification of gaps, the roadmap to resolving each issue, the impacts and risks of each issue and its remediation, the progress being made, and the final outcome of any resolutions. In essence, it is a barometer for operational inefficiencies.   

As a widely adopted mechanism to identify gaps in performance, businesses continue to leverage gap analysis to transform various aspects of their operations and provide a higher degree of value to stakeholders.

 

GAP Analyis

 

A gap analysis is the process companies use to compare their current performance with their desired or  expected performance. It is the means by which a company can recognize its current state—by measuring time, money, and labor—and compare it to its target state. A range of factors including the time frame, management performance, and budget constraints are looked at critically in order to identify shortcomings. Strategic gap analysis aims to determine what specific steps a company can take to achieve a particular goal. The analysis should be followed by an implementation plan. A gap analysis may also be referred to as a needs analysis, needs assessment or need-gap analysis.

The "gap" in the gap analysis process refers to the space between "where we are" as a part of the business (the present state) and "where we want to be" (the target state or desired state). If an organization does not make the best use of current resources, or forgoes investment in capital or technology, it may produce or perform below an idealized potential. This concept is similar to an economy's production being below the production possibilities frontier.

 Gap analysis identifies gaps between the optimized allocation and integration of the inputs (resources), and the current allocation-level. This reveals areas that can be improved. Gap analysis involves determining, documenting and improving the difference between business requirements and current capabilities. Gap analysis naturally flows from benchmarking and from other assessments. Once the general expectation of performance in an industry is understood, it is possible to compare that expectation with the company's current level of performance. This comparison becomes the gap analysis. Such analysis can be performed at the strategic or at the operational level of an organization.

Gap analysis provides a foundation for measuring investment of time, money and human resources required to achieve a particular outcome (e.g. to turn the salary payment process from paper-based to paperless with the use of a system). Note that "GAP analysis" has also been used as a means of classifying how well a product or solution meets a targeted need or set of requirements. In this case, "GAP" can be used as a ranking of "Good", "Average" or "Poor". 

Gap analysis applications

 

Gap Analysis is a general tool and as such it can be used at different granularities, for example, at an organization level, as part of project management, or for strategy development. Gap analysis is a formal study of what a business is doing currently and where it wants to go in the future. The gap analysis also helps in benchmarking actual business performance so it can be measured against optimal performance levels.

Performance gaps can be measured across multiple areas of the business, including customer satisfaction, revenue generation, productivity and supply chain cost. Small businesses, in particular, can benefit from performing gap analyses when they're in the process of figuring out how to allocate resources. Gap Analysis will often focus on one or more of the following perspectives:

1.      Organization (e.g., Human Resources) : What skills or roles are missing or lacking? In human resources (HR), a gap analysis can be done to examine which skills are present in the workforce and what additional skills are needed to improve the organization's competitiveness or efficiency.

2.    Business Direction: Is there a gap in the product or a gap in the market that is not fulfilled by the product?

3.     Business Processes: How we do things be made more efficient?

4.     Technology: are there systems we are missing or are there incompatibilities between systems?

5.   Compliance Initiatives:  A gap analysis can compare what is required by certain regulations with what currently is being done to abide by them.

6.   Software Development : Gap analysis tools can document which services or functions have been accidentally left out; which have been deliberately eliminated; and which still need to be developed.

7.     Information Technology: Gap analysis reports often are used by project managers and process improvement teams as the starting point for an action plan to produce operational improvement.

       8.      Marketing : There are four types of GAP analysis conducted.

1) Product/Market gap

Product or market gap can be defined as the difference between the actual sales performed and budgeted sales.

2) Performance Gap

The performance gap can be defined as the gap between the actual performance and expected performance.

3) Manpower Gap

The manpower gap can be defined as the difference between the actual strength of the organization and quantity and the required number of workforces.

Benefits of Gap Analysis

Gap analysis, when used correctly, can be applied to a wide variety of situations where a business wants to improve. It is especially important for business leaders who want to make plans months and years into the future.

There are many advantages of a gap analysis, for your company now and in the future. Advantages of a gap analysis include:

·         An in-depth look at how your company currently operates.

·         A chance to assess if things are working as efficiently as possible at your company.

·         Forcing you to strategize around what you want your company to look like and how to get there.

·         Making better use of company resources and finances.

·         Allowing teams to quickly diagnose problems and create ways to solve those problems through integral changes in business practices.

The importance of performance gap analysis can vary by company or industry, but it is a worthwhile way to provide an in-depth look at your business to help it grow. The advantages of a gap analysis can be years of increased success for your company.

 

The Limitations of GAP analysis

Gap analysis is a useful tool for conducting an initial general assessment of the current situation. It can be used to identify weak points early on and implement the necessary corrective actions.

However, the range of possible factors associated with this analysis is so great that further research is necessary in order to apply these findings to the strategic direction of the company. Yet another problem is that factorsexternal to the company are not considered. Therefore, any projections for the future using current data are highly speculative.

As long as these limitations are kept in mind when conducting gap analysis, it can be a helpful starting point for the strategic planning of a company.