Gap Analysis

A leader’s job is to look into the future and to see the place not as it is … but as it can become.

Gap Analysis is an assessment tool to help a place (community, region, state) compare its current economic success with its future potential. The summary document prepared for a Gap Analysis also includes a discussion of the obstacles to achieving desired economic growth and an Action Plan for overcoming them. It is a structured way to identify and correct the gaps between desired place performance and actual performance in job growth and wealth creation.  This tool is one of the most conceptually simple to understand and practically difficult to implement. But, done well it is a powerful tool to define and lead change. It has been one of my “go-to” tools for creating strong and sustainable brands.

 

7 Steps of Gap Analysis

Step #1 – Identify Strategic Objectives

It is always helpful to start a Gap Analysis exercise with a clearly articulated goal that will guide your data collection and benchmarking work. Without a goal, the exercise can become overly cumbersome and participants will quickly lose confidence in both the process and results.

An example of a well-articulated goal is – “Define what is required for my Place to consistently be among the top three location choices in the [you name it] industry”.

A good goal sets parameters around the exercise and helps participants more easily envision what to expect as an outcome of the exercise. The goal helps focus discussion.

Step #2 – Identify The Current State

This is a benchmarking exercise to determine objectively how your location compares to the competition. Included are economic factors, political and legislative factors, workforce factors, technology factors and other considerations relevant to the capital investment decision in your targeted industries. The goal is to compare your location’s performance versus the expectation of a potential capital investor. There are a variety of qualitative and quantitative market research methods you could consider for this step. But, CEOs are extremely difficult and costly cohort to collect data from. Instead, you can get a reasonable working insight into the current state by listening to the input of industry executives already doing business in your community.

Step #3 – Identify The Desired Future State

This requires an understanding of what capital investors in your target industry truly value when evaluating competitive location choices. The people with this knowledge are 1) executives from the industries you are targeting for capital attraction, and 2) executives from companies in your community you are seeking to retain. Another excellent source of information are industry advocacy groups. The goal is to define what your community needs to offer n order to be considered among the best in class options.

Step #4 – Identify The Gaps

Gaps are the differences between what your place is today (image) versus what it needs to be (identity) in order to be a best in class choice. You need to identify the opportunities for improvement that will strengthen the attractiveness of your place as a location choice for capital investment.

Step #5 – Prioritize The Gaps

Not all gaps are created equal. Closing some gaps will provide you a much more significant on your community’s competitiveness. And, closing some gaps will require a greater investment of resources (both financial and political). It is important to focus your limited resources on closing the gaps that will make the biggest positive impact and have a reasonable probability of success. Creating a table that rates each gap based on potential impact, cost, time and probability of successful closure will help you decide which are the top three to focus efforts against. Your community will have a limited capacity to manage change and a limited budget. If you try to address closing every gap, you will likely accomplish very little. Make choices and prioritize to improve your odds of success.

Step #6 – Action Plan for Change

Action planning is where the proverbial rubber meets the road. You need to determine how to organize against the tasks and get specific commitments from people on who will do what and when. You also need to determine the resources required for success and at least have a general idea on how you will find budget. Successful action planning requires real leadership and discipline to achieve identified milestones. It also requires effective communication in order to ensure real progress is being made and that the planned project timing is not compromised.

Step #7 – Summarize The Results

It is not unusual that the team involved in completing the Gap Analysis is not the team responsible for implementation of the Action Plan. In fact, many times professional consultants are hired to facilitate the Gap Analysis process while local leadership implements the Action Plan. Gap Analysis takes a lot of work and requires a lot of input. It is important the data be captured for subsequent reference when decisions are revisited. It is also important to capture assumptions that may be challenged over time. Summarizing the results also provides a written blueprint of the exercise to guide future updates when new data becomes available. Gap Analysis should be considered a dynamic, not static process. Consideration should be given to completing a thorough Gap Analysis every two to three years. Here is a template for summarizing the results of your Gap Analysis –

  • Background
  • Strategic Objective
  • Research Methodology
  • Current State Overview
  • Desired Future State Overview
  • Prioritized Gaps
  • Action Plan
  • Discussion/Recommended Next Steps and Timing
  • Attachment with Participant List

Discussion

The biggest challenge in conducting a Gap Analysis is objectivity. It is hard to see your community the way a potential capital investor does. But, objectivity is key to success. Getting insights from the executives who will be making a capital investment decision is necessary to help you make rational and effective choices.  Another challenge is inclusion. It is important to involve everybody who will be responsible for implementation of the Action Plans. Without upfront participation it will be challenging to get the level of commitment you need for success.

What Are Your Thoughts?

Have you ever executed a Gap Analysis? What was your experience (positive or negative)? Any tips on how to successfully manage the process? Was a consultant involved and if yes, was it helpful to realizing a successful outcome?

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4 Comments so far

  1. Charley Bowman

    January 31, 2012

    Good morning Ed: I like this model. I’ve recently been asked to provide some consulting services, which include ED programming. I am going to use this model in conjunction with a SWOT to help create a path to improving the present situations. Thanks for the tool! As things move along, I hope to provide you with a case study that will support the narrative that you have spelled out. Thank you!

  2. Ed Burghard

    January 31, 2012

    @Charley – I am humbled the article provided you actionable value. If you think of it, please share your experience in using the model with your SWOT analysis. I’d be curious to know how it turned out.

  3. Bob Grant

    January 31, 2012

    I usually think of gap analysis in terms of brand perception both inside and outside the company. Management thinks the company’s employees support the company’s brand, but a survey of employees may discover employees have no clue about the company’s brand. Management thinks all of their customers love them. Survey says.. “not so much.” Find the gaps and fix them.

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