8 gap analysis tools to help your business grow

Gap analysis can help you compare the actual performance of your business or project against the performance you envisioned. 

This process lets you figure out what aspects of your plan worked and what didn't so you can replicate your successes and reduce the risk of repeating the mistakes. 

Let's look at what gap analysis is, how to do it, and the leading eight gap analysis tools.

Market analysis template

Save time, highlight crucial insights, and drive strategic decision-making

Use template

Gap analysis refers to the gap between a business's performance and expectations. Essentially, it compares where you are versus where you would like to be. 

This type of analysis is a good measure of whether a company is meeting projections and using its resources effectively. 

A management team can use gap analysis to create an action plan to fill performance gaps and move the business in the right direction. 

Gap analysis helps business owners find solutions to issues that are impeding growth. 

Businesses can perform an analysis in two ways:

• On a strategic level, comparing the company’s condition to the industry

• On an operational level, weighing the current state of the business with the desired state

While there's no standard process for doing a gap analysis, the typical steps would include:

1. Selecting an area to focus on

2. Defining goals

3. Determining the current state of the business

4. Deciding on the desired state and defining parameters

5. Identifying the gaps between those two states and coming up with a plan for closing them

When you’ve identified the gaps, it becomes easier to see why the business isn’t reaching its full potential. From there, you can reexamine company goals to figure out if you’re on the right track for accomplishing them. 

There are thousands of reasons why a gap analysis may be necessary and dozens of tools available for performing one. 

Here are the eight most popular gap analysis models right now:

SWOT analysis

A SWOT analysis helps a business determine its position in the industry or market. It focuses on strengths and weaknesses in the internal environment and opportunities and threats in the external environment, 

To perform a SWOT analysis:

• Assemble a team from relevant departments.

• Create a SWOT matrix that includes internal strengths and weaknesses of the business and opportunities and threats in the industry.

• Rearrange bullet points with the highest priority at the top and lowest at the bottom. 

• Analyze how your strengths can minimize weaknesses and threats

• Determine how you can use opportunities to avoid threats and lessen your weaknesses

SWOT analysis shows managers how to make better strategic decisions to get where they want.

PERT

PERT is short for program evaluation and review technique. 

The US Navy developed the method in the 1950s. The concept examines the predicted time to complete a project based on three forecasts: Optimistic, most likely, and pessimistic. 

Larger organizations use PERT when a project is complex, multifaceted, or heavily time-dependent. The technique relies on statistics to plan the timeline of a project, assigning estimations of how long the project will take in each potential scenario.

The PERT technique relies on two milestones: Activities and events. 

Activities refer to the work an organization must do to complete a task. 

An event is completing a task that allows the organization to move on to the next phase. 

PERT estimates the time needed for each activity and event, comparing it to the "critical path." This path is the longest it could take to arrive at the goal. 

Team members arrive at the optimal predicted scenario for time management by comparing the various scenarios to the critical path estimation. 

Fishbone diagram

Also known as a cause-and-effect diagram or Ishikawa diagram, the Fishbone diagram aids in identifying the root cause of an issue or effect. 

It lists the six Ms of manufacturing: 

• Method

• Material

• Machine

• Measurement

• Milieu

• Manpower

It enables business owners to see how these issues relate to the central problem. The resulting diagram looks like a fish skeleton, hence the name.

Nadler-Tushman congruence model

The Nadler-Tushman congruence model focuses on organizational performance gaps by looking broadly at how different elements come together to affect outcomes. 

Its principle is that business performance results from four elements: People, work, culture, and structure. 

It predicts how changes in one specific area can impact other company areas. The unity of all parts working together make up the organizational flow.

To apply the Nadle-Tushman congruence model:

1. Gather all data pointing to poor performance.

2. Specify and analyze inputs like environment, resources, and history to define the strategy.

3. Identify individual, group, and organizational outputs required to meet strategic objectives.

4. Identify gaps between desired and actual outputs as well as associated problems.

5. Describe and collect data on the four major components of the organization.

6. Assess the degree of congruence among components.

7. Assess the correlation between poor congruence and problems related to outcomes.

8. Identify actionable steps for dealing with the problem causes.

The higher the compatibility among core elements, the greater the performance.  

McKinsey 7-S model

The 7S in the McKinsey 7-S model refers to the interrelated elements in an organization: 

• Strategy

• Systems

• Structure

• Skills

• Style

• Staff

• Shared values

The model divides these facets into hard and soft elements:

• Hard elements are tangible and controllable: Strategy, systems, and structure

• Soft elements are intangible and uncontrollable: Skills, style, staff, and shared values

Companies can use the model to pinpoint core details to change to reach the level of harmony needed to achieve business goals. 

Businesses can use the McKinsey 7-S model to plot where the organization stands regarding the seven elements today and where it would like to be. 

Burke-Litwin Change model

The Burke-Litwin Change model aids in understanding how different organizational components relate to each other during a period of change. 

The 12 interrelated components include:

• External environment

• Leadership

• Management practices

• Work unit climate

• Motivation

• Mission and strategy

• Organizational structure

• Tasks and skills

• Organizational culture

• System and policies

• Individual needs and values

• Individual and organizational performance

Each element is a critical driver of organizational change. Together, they form a flowchart that shows how they interact and contribute to the change process. 

PEST or PESTLE analysis

PEST analysis stands for: 

• Political

• Economic

• Social

• Technological

PESTLE analysis also incorporates legal and environmental concerns. This type of analysis gauges external factors and how they impact business profitability. 

A company may not consider external factors that can cause, exacerbate, or solve current gaps. For example, technological conditions or government legislation may make certain products much more expensive to export.

The company may suffer a gap if external forces shift in a way that adversely impacts business. 

A PEST/PESTLE analysis can identify these factors, allowing a company to plan for them.    

Tables, charts, and spreadsheets

Because gap analysis involves organizing information to allow proper analysis and comparison, tools are highly visual. However, you don’t need complicated software or methodology. 

A spreadsheet, chart, or table can be just as effective as more sophisticated models and diagrams. Using basic layout and design skills, you can create a visual gap analysis for any type of assessment.  

Businesses may employ a combination of these gap analysis tools, as findings from one may contribute to the analysis of another.

A company must perpetually evaluate the products it offers, the customers it serves, the market needs it fills, and the efficiency of its operations. 

Gap analysis allows a company to identify where it currently stands, where it wants to be in the future, and what's missing to bridge the gap.

Times that warrant a formal gap analysis include:

• During project management to evaluate if sufficient resources, talent, knowledge, and information are available for success

• When planning for strategic endeavors like corporate restructuring or a potential acquisition

• When trying to understand performance deficiencies

• For marketing to external parties

A strategically administered gap analysis can assist in keeping a business operational.

Gap analysis provides businesses with:

• Improved profitability

• Increased market share

• Better manufacturing processes

• Operational efficiency

• Decreased risk for long-term endeavors

• Happier employees and customers

Gap analysis tools can help a business formulate and execute a long-term plan.