Part of a series on Business Problem Solving
Every business has a purpose — a ‘why’. Knowing your company’s purpose is essential in strategizing and executing your business plan. However, finding and sticking to that purpose can be challenging. That’s where gap analysis can come in handy.
Gap analysis is a powerful tool that can help you determine where your business is currently and what is needed to achieve your business goals. How can you uncover your next why in Commerce and eCommerce (to simplify, we'll assume that everything falls under the category of "Commerce" now) we're and how can your business make the most of it?
It is a technique used to determine the gap (hence the name) between where you are and where you want to be. In Commerce, gap analysis is often applied to identify areas that require improvement, determine the causes of operational, performance, and service gaps, and establish solutions to bridge them. For example, Commerce businesses often need to focus on optimizing key areas such as inventory management, supply chain management, customer analytics, marketing campaigns, and payment processing to name a few.
Now this may seem a bit backwards. Trying to uncover my Why by working on the details of where my operations are failing to fulfill their core objectives seems like reverse logic. On the surface it is. When you dive in, however, we find that Gap Analysis shines a light on what exactly we are trying to achieve and whether we are close to achieving that goal, slightly off, or even wildly off in all directions and have failed to keep that Why in focus.
In more extreme situations Gap Analysis can help reveal whether that Why was even a reasonable vision in the first place.
Of course no one wants to be face with a grim reveal showing that we've been off course for months or even years, but in business (and arguably in life too), we have to come to grips with reality. On a more positive note, constantly aligning and reevaluating our Gap Analysis with our Why is an empowering and motivating experience when we realize we can see the direction we need to work towards.
Which is why we recommend performing and reevaluating Gap Analysis with your businesses' Why regularly; quarterly is a good benchmark for most operations. We want to keep our eye on the prize and relentlessly focused on evaluating and adjusting towards that end.
To perform gap analysis effectively, you need to define clear goals, define the current state of your business, and identify the gaps. The gaps can be identified by comparing your goals to your current state. You can then determine the causes of each gap and devise a plan to bridge them.
Diving deeper into inventory management as an example: this involves tracking and managing the stock goods that a business holds to meet customer demand. In order to maintain data integrity and stable business performance, a business must identify the current inventory levels, orders they have placed with suppliers, and the expected delivery dates for each order to ensure sufficient stock is maintained -- ideally, all in real time. If a business fails to keep accurate records of their inventory, they risk running out of products, jeopardizing customer relationships (don't piss off your customers) and losing potential sales.
Gap analysis in this scenario would involve examining the current state of the business’s inventory management by looking at various metrics such as stock levels, lost orders, backorders and delivery dates. The gaps between the current state and desired outcome can then be identified, which will allow the business to devise a plan of action to bridge these shortcomings.
Gap analysis ensures that business owners and managers have a comprehensive understanding of the current state of their operations. It enables them to identify areas of improvement and prioritize according to their goals. Additionally, gap analysis can help businesses make informed decisions about new investments, strategies, and processes—all of which are essential for staying competitive in the eCommerce space.
In short, gap analysis is a valuable tool in helping you uncover where you are at in fulfilling your businesses' why and how to plan your next steps in getting there.
It's one thing to use Gap Analysis en route to finding your why, it's another to be ready for the truth.
Using Gap Analysis to uncover your next why. The truth behind determine where your business is lacking can be, for some, a hard pill to swallow, but remember you are revealing opportunities for growth. By performing gap analysis, you can identify a new purpose or “why” for your business. This new purpose could lead to innovation, new product offerings, increased revenue,new channels, and improved customer satisfaction.
It's one thing to use Gap Analysis en route to finding your why, it's another to be ready for the truth. To make the most of gap analysis, you need to be detailed and thorough. You should also involve key business stakeholders in the process to ensure that all aspects of the business are covered - treat this as a cultural mainstay of your company. You need to be open-minded and willing to make changes, regularly reviewing and updating your gap analysis ongoing to ensure that your business remains on track.
Gap analysis has several benefits to your business. First and foremost, it helps identify areas of improvement, which is critical for business growth. It also reveals new opportunities and innovation, increases customer satisfaction, and helps with informed decision-making. In summary, by regularly performing gap analysis, you can stay ahead of the competition and keep your business thriving.