Gap Analysis

Where You Are
Where You Want to Be

gap analysis

Gap Analysis is all about evaluating and improving business performance. A gap is a space or opening - in management terms it is the space between where you are and where you want to be.

Gap Analysis Compared to Navigation

It can be compared to navigation or map reading... first you need to identify where you are, then you can plan where you want to be and how you want to get there.

The basic principles of navigation haven't changed since the Phoenicians, Christopher Columbus, Captain James Cook and so many others were able to explore and navigate with only crude instruments and even more crude charts. Sometimes they even had to make up the charts as they went along!

It didn't really matter if Columbus was a few miles off in getting back to Spain, or Cook missed the exact entrance to Plymouth harbor - they could adjust once they had the familiar land in sight. That was their gap analysis.

Nowadays, navigation uses lots of technology. In the air or at sea, one can carry a global positioning system (GPS) unit that takes readings from satellites in fixed orbit around the earth. They can identify a position on the face of the earth to within a few yards, and in military usage to within feet. By comparing the positions several times per second, they can tell someone how fast they are moving, whether the wind or tides are causing one to drift. They can store information about the airports or ports of call a person might want to visit or use in navigating, and they can quickly tell how to get to any of them if there is a change in course. On land, that same system has made its way out of the military usage and into automobiles. But it is still a form of gap analysis.

Navigating business performance has gone through a similar change to increasing use of technology. Manaagers, using massive computing power, crunch volumes of information, faster than ever before. But, as with navigation, the basic principles haven't changed all that much.

We are going to show you some tremendously powerful things you can do with basic information and little or even no use of technology.

Where Are We? One Side of the Gap

First, let's look at the basic information.

A "guide-post" or point of reference. The position of the sun in relation to the horizon. Polaris or the North Star, the Southern Cross, eventually more and more stars. A sextant to measure angle from the horizon.

Over time, the sun and the other stars we use to navigate by are actually moving through space. But this movement is on such a grand scale that in the short term we can treat them as if they were fixed in place.

At its simplest, navigation is estimating where you are by studying your position relative to known "guide-posts" like the sun and other stars.

Gap analysis estimates business performance in much the same way.

The "guide-posts" for business performance are principles or practices that have been studied, evaluated and tested over time to determine their reliability. True, over time there might be others added, and some might come to have less relevance, but basically they can be taken as fixed or constant.

We have set out a collection of "guide-posts" for family [and other] business organizations.

Organization Culture

Organization Strategy

Organization Design

In navigation, we use a sextant to measure the angle between horizon and the object we are sighting, then we refer to a table for that angle to get altitude and distance. Comparing sightings for two or more objects gives us position. Unless there is doubt about the ability of the person taking the sightings, there would be no need to take further measurements to get a better estimate.

In gap analysis, we rate or score our performance for each of the "guide-posts". For example, we set a scale of 1 through 6 for "strongly disagree" to "strongly agree". We then have a number of people who are familiar with the family business, the business unit, or whatever is being evaluated provide their evaluation and we aggregate their ratings for each "guide-post" to give a mean score. Here, the process is less precise so when we study the evaluation, we look to see how much consensus or disagreement there is amongst the various people doing the rating. Obviously, if most people evaluate an item about the same, the observation is more reliable than if the ratings are "all over the map".

Another way gap analysis differs from navigation is that there are many different "guide-posts" that are being evaluated. So we want to find out how important or unimportant the group feels each particular item is; that is, what is the impact of the item.

Where Are We Going? To The Other Side of the Gap!

In navigation, we set a course from where we are to where we want to arrive. A chart showing obstructions, tide tables to help us estimate drift of the water, weather forecasts for winds and danger, knowledge of the mission [longshoremen won't unload cargo until Monday morning; Customs Officials are not on duty until 8:00 a.m. etc.] help to shape our required course and speed. This is navigation's equivalent to Gap Analysis.

In gap analysis, we would first need to study the responses. Knowing whether we have consensus or diversion will help here. Knowing how the Board, senior management, employees or customers view the same "guide-post" will be important. The differences in the perspective of each group will have to be taken into account in setting out a new course. Also, since these are more subjective, less precise, than a navigation measurement, and since we are looking at a much more complex model than the single position of our ship or plane or car at one moment in time, we need to evaluate and agree on the impact of various "guide-posts". If everyone agrees that something is not important and that it does not have much impact on the business' performance, then we don't need to spend any time planning what to do about it. Conversely, we do need to address those items that we agree will affect our performance. And we will have to have agreement amongst the owners, managers and employees since we can not improve performance if each group has its own idea of what it needs to do and how to do it!

Once our Gap Analysis produces agreement on say three to five issues that have impact and need improvement we will be ready to chart a new course of action, or produce an Action Plan. In business, a good Action Plan will identify

  • key objective
  • resources allocated to get the job done
  • ownership - who is responsible
  • milestones - like navigation way-points
  • due date
  • measurements

Secret Revealed!

Both in navigation and in gap analysis, the secret lies in the fact that both measure a changing situation. So the navigation fix or Gap Analysis that is taken at one point in time does not remain valid forever.

The secret to using either effectively is to take another fix or do another Gap Analysis at a later time and to compare them over time. Navigation fixes might be every hour or so - Gap Analyses might be every six or twelve months. Comparing them over time reveals the movement or progress you have made toward the other side of the gap and indicates whether course changes are needed.

Use Gap Analysis to Focus on Different Parts of Your Family Business

  • Company-wide. Executives, employees, customers all have input.
  • Organizational Climate. Focuses on organizational culture, mission, internal assessment, information and systems, organization efficiency.
  • Customer Service. Find how executives, employees and customers each view your performance and their perceived degree of impact in 8 areas relating to customers.
  • Smaller family businesses. Focuses on a cross-section of the "guide-posts", using the same process as the full corporate evaluation.
  • Strategic Intentions and Plans. Really zero in on the integration of strategy with planning. Useful in larger businesses or business units where there is an existing planning culture, but it might need re-focusing or a "tune-up."
  • Leadership Effectiveness. An obvious focus on leadership, especially useful to evaluate candidates when there is succession planning going on.
  • Gap Analysis can be adapted very favorably to identify areas where coaching is needed, then to monitor the effectiveness and progress of the coaching.

Family Business Experts have extensive experience with different uses and focuses of Gap Analysis. The "guide-posts" are well recognized and benchmarked from extensive experience. We are able to use the Internet to collect the responses, so that means convenience and minimal time for you, your staff and customers. Our time with you is very focused: first on validation and confirmation of which areas you and your people want to pursue; second, a delivered Action Plan of how you are going to improve performance.

Typically, we would need about two days with you after you have provided the information.

The big benefits here are that you have consensus on what you need to do and a strong Action Plan on how it will be done - all accomplished in a few days, not weeks or months.

What If I Can't Afford Help With My Gap Analysis?

Do your own gap analysis! We have provided the "guide-posts" on our site and invite you to refer to them. The links are near the top of this page.

If you only find one a month and come up with your own Action Plan [follow our outline from above]...

... and ownership rests with you and your first mate [who really runs the ship anyway, right?]...

... you will have made good on twelve items in a year and should be seeing some real improvement!

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Family Values and Business Systems

Gap Analysis is all about evaluating and improving business performance.
Call Don Schwerzler today to discuss how Gap Analysis and its resulting Action Plan can help improve your business's performance - in days, not weeks or months.

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