Gap analysis: 4-step process, types, and examples

Imagine your team is preparing for next year's strategic planning but is unsure where to begin. What steps should you take?

A gap analysis, or needs analysis, compares your current business performance to your desired outcomes to identify areas for improvement. This article covers types of gaps, when to conduct an analysis, practical examples, and a four-step process to guide you.

What is a gap analysis?

A gap analysis is a strategic planning tool that compares current business performance to desired future outcomes to identify gaps. By pinpointing these gaps, teams can develop targeted action plans to achieve their goals. Gap analysis can support your business in several ways:

• Brainstorm strategies. Gap analysis helps teams identify potential action plans to achieve their objectives.

• Identify weak points. If performance falls short, gap analysis helps teams determine the root causes of underperformance.

• Measure resources. A gap analysis shows how resources are allocated and used, enabling more efficient use in the future.

Benefits of using a gap analysis

Gap analysis reviews current strategies to identify what is effective and what needs improvement. It offers several business benefits, including:

• Identifying weak points. If results do not meet expectations, gap analysis helps teams uncover the root causes.

• Measuring current resources. Gap analysis identifies how resources were allocated, supporting more efficient future use.

Types of gap analysis

Not all gaps are the same. Identifying the specific type of gap allows you to select the most effective approach to address it.

Performance gaps

A performance gap occurs when business results fall short of established goals. For example, if a sales team aims for 100 deals but closes only 75, the difference is a performance gap. Identifying the root cause enables targeted planning to address it.

Opportunity gaps

An opportunity gap arises when your business must make strategic changes to enter new markets, adopt technologies, or pursue growth. Unlike performance gaps, opportunity gaps focus on capturing new potential rather than correcting deficiencies.

For example, if competitors expand into a new market and your business lacks the infrastructure to follow, this represents an opportunity gap. Unaddressed opportunity gaps may eventually lead to performance gaps.

When to perform a gap analysis

A gap analysis is a useful project management tool for identifying how to get from point A to point B. While a gap analysis can be used at any time, you can get the most out of your analysis when you apply it strategically to a specific project or initiative.

During strategic planning

If your team is developing a strategic growth plan, conducting a gap analysis early in the process provides a strong starting point. Gap analysis offers data-driven guidance for moving from your current state to a defined goal. Comparing achievements to original objectives helps identify areas for improvement.

When you encounter performance issues

If your team is unexpectedly underperforming, a gap analysis can be a useful tool for identifying shortcomings. Once you identify the root cause of the gap in your current situation, your team can improve processes to fix the issue without interrupting production. For example, a project manager on an assembly line may use a gap analysis to determine that the root cause of an issue is a problem with the machinery.

When stakeholders need additional context

When preparing business information for investors or other stakeholders, gap analysis offers valuable context beyond quantitative data. If management is concerned about underperformance, a gap analysis provides a detailed plan to address and close the gap.

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Gap analysis examples

Gap analysis is most useful when seeking improvement or when results do not meet expectations. Examples include:

• Software development: A gap analysis can reveal missing features or errors before launch.

• Project management: Use gap analyses during the project planning or review stages to identify areas that aren't up to speed with the rest of your project. Then, you can make requests for and allocate resources to that work as needed.

• Human resources: If you're on an HR team, you can use a gap analysis during the hiring process to show you what's lacking on a team, which, in turn, you can look for in a new candidate.

• Team leads: As a lead, you're often looking at the big picture problems. A gap analysis can help you identify when you may have overlooked something before it creates a bigger problem.

• Competitive research: Competitive analyses are important tools to boost customer satisfaction. Use a gap analysis to assess the market gap in your industry and strategise ways your business can fill it.

The 4 steps of a gap analysis

While it may seem complex, using the gap analysis process is not as complicated as it seems. Try this four-step process to create a gap analysis for your team.

​1. Define your business goals

To compare current performance to desired performance, you first need to define your ideal future state. Any goal-setting methodology works, but make sure your objectives are SMART: specific, measurable, achievable, realistic, and time-bound.

Common goal-setting ways include:

• Objectives and key results (OKRs): Connect high-level objectives to measurable outcomes.

• Key performance indicators (KPIs): Track specific metrics that indicate progress toward your business goals.

2. Benchmark your current business performance

Use goals, historical data, and past gap analyses to benchmark your current business performance, processes, or workflows, and set the standard for how you work.

At the same time, evaluate your current processes with a business process analysis (BPA). This can help you identify which process improvement methodology your team should use to reach the desired target state.

3. Analyze gap data

Now that you understand the difference between your current state and desired state, hypothesize different strategies and tactics your team needs to close that gap. This is when you meet with stakeholders to brainstorm strategic planning initiatives.

During this step, ensure your goals are achievable within the set time frame. If you adjust your current performance strategy, confirm your team can still meet the established goals.

4. Compile a detailed report

Once you have finalized your data and business goals, create an action plan that clearly outlines how your team will close the gap. Use both quantitative data, such as benchmark data from step two, and qualitative data, including current processes and past improvement strategies.

What is the difference between a gap analysis and a SWOT analysis?

A SWOT analysis is a type of gap analysis commonly used in project management to identify a business's strengths, weaknesses, opportunities, and threats. Usually, people complete a SWOT analysis via a 2x2 matrix.

Once the matrix is complete, use it to identify gaps that emerge as your team reviews each quadrant.

Other common gap analysis tools

McKinsey 7S model

Developed by Robert H. Waterman and Tom Peters, the McKinsey 7S approach is a management model often used for organisational analysis. The idea is that an organisation needs seven elements that are all aligned and reinforcing one another.

The seven S's in this model stand for:

• Structure: How your business is organised, including how activities are divided and how teams communicate.

• Strategy: The hard set of plans that your team uses to move the business forward.

• Systems: How performance is measured, along with procedures the team uses to do business.

• Skills: The competencies your team members provide for your business.

• Style: The behaviour patterns of certain groups within your business.

• Staff: The individuals who work for you, including their characteristics and how the company develops them.

• Shared values: The core principles that define how your company approaches work.

Use this model to test the relationships between each of the seven S's. Performing a gap analysis can provide concrete insights into how each facet of your organization relates to the others.

Nadler-Tushman congruence model

The Nadler-Tushman congruence model is a business management tool that identifies the root cause of performance issues. It was developed by organisational theorists David A. Nadler and Michael L. Tushman in the early 1980s.

The idea of the Nadler-Tushman model is that there are four main elements to a business, each with unique relationships to one another:

• Work: All of the individual tasks that make up your business's performance, including what is done and how it's processed.

• People: The interaction of individuals during work, such as a manager and their direct report, or a team lead and a contractor.

• Organisational structure: How your business organises itself, like how work is delegated and how processes are built.

• Culture: How your team implements group norms, best practices, and shared values throughout your company.

The Nadler-Tushman model pairs each of these elements into six combinations for analysis:

• Work and people: Are the right people completing the right tasks?

• Work and structure: Is there enough structure that clearly dictates what work needs to be completed?

• Work and culture: Does your company culture promote habits beneficial to performance?

• People and structure: Is your team organised so that individuals can produce their best work?

• People and culture: Are employees working in a culture that is productive for them?

• Culture and structure: Does your organisation compete with the company culture, or help it?

Pairing each element reveals how changes in one facet affect the others.

What is the difference between a gap analysis and a risk assessment?

While both are valuable planning tools, gap analysis and risk assessment serve different purposes:

The two approaches complement each other. Identifying opportunities for change through gap analysis can help reduce risks over time. Many organizations use both tools as part of their strategic planning process.

Turn your gap analysis into action

A gap analysis is only as valuable as the actions it inspires. Gap analyses work best when shared with stakeholders in an organised manner, with clear ownership and next steps.

A work management tool like Asana helps your team organise findings, assign action items, and track progress toward closing the gap. Ready to move from analysis to action? Get started with Asana today.

Frequently asked questions about gap analysis