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How to Do a Gap Analysis

hello and welcome to today's lesson

where we're looking at how to perform a

gap analysis we'll go through the theory

and then they'll look at a simple

example too so gap analysis is a simple

tool which is used by organizations to

raise their performance level imagine

that you're hiking along a path when you

come across a three-way Junction now

which direction should you take well

that depends on where you want to get to

now armed with the knowledge of where

you want to get to it becomes much

easier to work out the necessary steps

you'll need to take to reach your final

destination including which of the three

junctions you should take right now now

that simplistic analogy is the same

basis upon which gap analysis works a

gap analysis can help an organization to

understand where they want to be the gap

between where they are now and where

they're going to be and hence what steps

they should take to close that gap now

the concept of a gap analysis is

illustrated in the diagram you can see

here and you can see from it that to get

from our current state to our desired

state there will need to be a number of

key steps we need to take to bridge the

gap now from this will create an action

plan outlining the exact actions we'll

take to achieve each step so that over

time the gap becomes completely closed

and we've reached our desired State now

gap analysis is a general tool and what

I mean by that is that it can be used at

different granularity so for example you

could use it as an organization level

you could use it as part of project

management or you could use it for

strategy development there are all kinds

of different levels or granularities you

can use it at gap analysis will often

focus on one of one or more of the

following perspectives organizational

perspectives so for example what skill

sets or roles are missing or lacking

from the organization

now the business direction perspective

so for example is there a gap in our

product or a gap in the market that

we're not currently serving gap analysis

can be used from a business process

perspective so for example how can we

how can the things we do be made more

efficient and gap analysis can also be

looked at from a technology perspective

so for example are there systems that

were missing or are there

incompatibilities between existing

systems now there are many similar

methods to perform a gap analysis but

the process we will present in this

video consists of five steps which you

can see in the diagram which are step

one describe the general area to

identify a specific improvement areas

three determined targets four determined

current stage and five determine the

action steps so step one disconnect

describe the general area in this step

we describe the general area that we

want to analyze and improve now this may

seem like an unnecessary step but by

performing it

we not only highlight what area is under

investigation but also it informs people

what areas are not under investigation

and that helps avoid scope creep and it

keeps the rest of the analysis very

focused so for example we might decide

to analyze our online marketing efforts

and that obviously implies that we're

not investigating our offline

advertising such as print and television

so by being very clear about what we are

and what we are not investigating it

keeps everyone on the same page step 2

identify specific improvement areas now

in this step we identify specific areas

for improvement within the general area

we described in step 1 so for example if

the general area we're investigating is

our online marketing then we may

by content creation and paid advertising

as specific areas we'd like to improve

so step 3 determine our targets and as

we've now identified our specific

improvement areas the next step is to

set targets for each of those specific

areas now a common input to this step is

to use benchmarking so looking at how

other companies are doing to find your

areas of weakness or maybe analyzing

industry best practice is another input

you could use now what targets you set

will depend on a comet a combination of

things such as the time available to

address the gap as well as the ambition

of the organization and how far you are

you know industry event industry best

practices and the benchmarking you may

have done step 4 determine current

status now that we understand where we

want to get to it's also important to

understand where we are before putting

the plan together so by understanding

where we are it makes it more likely

we'll create a realistic plan of action

it also makes it easier to see if we're

making progress towards our desired

stage because if we don't know where we

started then it's very difficult to know

if we've made progress and if we have

made progress how much progress have we

made it's very difficult to know that if

we don't know where we're starting from

now the difference between step four and

step three is our gap and that basically

the gap between where we are and where

we want to be so the final step is step

5 to determine the action steps and now

that we understand the gap we use this

final step to describe the improvement

steps we'll take to close the gap and

get where we want to be now in essence

this step is our action plan to get

where we want to be and it should be

prioritized so its deliver the biggest

return on

this could be done by prioritizing the

most critical gaps first or you could

target you know low-hanging

easy-to-reach fruit first it's up to you

but it should be prioritized to deliver

the biggest return to the organization

so let's look at a simple example to

bring this to life now for the purpose

of this example suppose we work for an

electronics company and we're

investigating the customer satisfaction

of customers who return faulty equipment

to us would in warranty for repair now

the first step is to describe the

general area we are investigating so you

can see that in the diagram here we are

investigating the customer satisfaction

of faulty goods returned within warranty

we're not considering customer

satisfaction outside of warranty nor the

satisfaction of customers at the point

of sale so as you can see we're

concerned only with faulty goods

returned during warranty if we weren't

explicit in stating the area under

investigation then it's possible you

know that there could be some confusion

within the organization that we work for

around the scope of this gap analysis so

the second step is to identify specific

improvement areas and for the purposes

of our example we identify two specific

areas we want to improve so firstly

customer satisfaction rate that is the

percentage of customers that are

satisfied with the service they receive

and the pair time and that's the total

time it takes to repair the faulty

product and return it to the customer so

we update our gap analysis to reflect

this the third step is to determine

targets for each of these metrics and

the company decides to benchmark its

best competitors to do this now from

doing this it determines that to compete

with the best in the industry it should

be aiming for a customer satisfaction

rate

of 99% and repair time of 12 days and it

decides basically to choose these values

as its targets for these areas and you

can see that reflected in this diagram

here so step 4 determine the current

stage so now that we know the targets we

want to achieve in this step we assess

where we are currently against those

targets now unfortunately for this

company in our example it doesn't

currently benchmark customer

satisfaction but it does know that the

average of her time is 16 days so we

update our gap analysis template to

reflect this and that's it we have

reached step 5 where we determine the

action steps and that's where the

company describes the actions it will

take to close the gap between the

current stage and a desired stage now

because this company has no data for

customer satisfaction rate it decides

the first step is going to be to

benchmark the current situation and then

review the findings of this analysis now

to improve the repair time metric and

get it in 12 days the company decides to

implement a new repair system and train

staff how to use this new system now

through the completion of its gap

analysis the company has clearly

articulated the exact metrics it wishes

to improve and by how much it wishes to

improve them it has understood exactly

where it stands now for each of those

metrics and it has created a solid

action plan to address the gap between

the current stage of each metrics and

the desired stage so that is it all that

remains for the company now is to action

each of those action steps to eventually

close the gap and reach the desired

stage now if you wish to create your own

gap analysis there's a template you can

download by following the link below

this video so in summary a gap analysis

is a very simple tool which is used by

organizations to raise their performance

it can help an organization identify

where they want to be where they are now

and how to get there

so that is yes I hope you enjoyed this

lesson and I look forward to speaking to

you again soon