Sometimes I’m asked what the relationship of a Gap Analysis is to strategic and business planning. This is the explanation that I provide…
A Gap Analysis is used to uncover the “truth” of what is going-on inside a business, to then see where improvements (significant positive changes) can be made. Under no circumstances should a Gap Analysis be performed by the business owner themselves. Why ? Because this would be likely to taint objectivity and cause the analysis to be something less than truthful. It is proven over and over that the owner of a business (particularly in New Zealand) will report that the vast majority of their operation is without flaw/ shortcoming – when in fact this isn’t the case.
In EVERY business, and in EVERY individual, there are ALWAYS strengths and there are ALWAYS weaknesses. It is in the best interests of the owner of a business that current weaknesses (irrespective of who/ what the weaknesses relate to) are identified and brought to their attention. If this doesn’t happen, the opportunity is not created for the business to improve how it operates – or for one or more individual within the business to improve their capability/ skills in a particular area.
The results/ insights from a Gap Analysis enable the Strategic Plan to be written. Generally, the most pressing improvement needs (i.e. Gaps) identified from performing the Gap Analysis are translated into top priority Strategic Plan Objectives. The Strategic Plan is the high-level framework to set the direction of the business/ organisation, usually in relation to a 3 – 5 year time-frame.. Objectives set in the Strategic Plan mostly focus on “what” the organisation aspires to achieve.
Once the Strategic Plan has been agreed (typically this involves formal adoption by the Board of Directors), the Strategic Plan can be translated into a written Business Plan. The Business Plan is an operational “living” document, and sets the priority for specific actions to be taken in the Financial Year under consideration. Objectives set in the annual Business Plan mostly focus on “how” the organisation is going to achieve what it wants to achieve, by whom/ what organisation, within what time-frame and (broadly) involving what financial resources (budget).
What many businesses fail to do is perform a Gap Analysis as the starting point for developing their Strategic Plan. By not doing this, they fail to perform a really “probing” examination of what their business is doing well versus not so well…and therefore this can cause the business to overlook opportunities to improve in key areas that have the potential to make a significant positive difference to their financial achievements.