You may have heard the words “Mind the gap” as an audible or visual warning phrase when you entered or left a train, to take caution while crossing the horizontal gap between the train door and the station platform. It was first introduced in 1968 in the London Underground in the United Kingdom.
However, we’ve adopted the phrase to express our conviction that while growth aspirations provide teams with an evolutionary purpose to help them reach the firm’s mission, Growth Activation™ is the real challenge. As such, identifying which gaps deprive teams from reaching their growth aspirations is critical to the success of the entire operation.
Growth aspirations incite to seek new opportunities for growth while providing each and everyone in the organization with an evolutionary purpose. Aspirations express the level of ambition, however, it requires dedication and commitment to reach these goals. If not, why would you bother expressing aspirations in the first place? So, if we fail to reach the aspired growth, where did we go wrong?
An athlete who aspires a gold medal at the 2020 Olympics in Tokio has a purpose. To reach the aspired goal (gold medal) the athlete anticipates that he/she will need to run the 100 meters in at least 09.75 seconds. With a personal best of 09.95 seconds in 2016, the athlete wll need to peak in 2020 ─ running 0.2 seconds faster than ever before. This will require enormous dedication and commitment. The growth aspiration is to run 5 seconds faster each consecutive year. If the athlete fails to reach the aspired year-over-year growth, the gold medal will surely be out of reach.
Given the example: when current growth lags behind aspirational growth, we’ll need to identify the causes. After all, we are on a mission!
Experts use a Gap Analysis to examine what possible gaps may have caused the growth gap ─ between the current growth rate and aspired growth ─ to occur.
A Gap Analysis looks at (amongst others):
- Aspiration Gap ─ when aspired goals and growth conflict with stakeholder interests.
- Capabilities Gap ─ when performance falters due to insufficient or inadequate capabilities.
- Communication Gap ─ when promises are made to customers that are not met.
- Customer Gap ─ when one of the previous gaps drives customer dissatisfaction.
- Delivery Gap ─ when what brands deliver doesn’t match customer expectations.
- Feedback Cap – when a brand fails to respond to customer feedback.
- Image-Identify Gap ─ when a brand is perceived differently from what it thinks it represents.
- Knowledge Gap ─ when brands fail to understand customer needs and expectations.
- Performance Gap ─ when a capability doesn’t match the desired performance.
- Policy Gap ─ when rules and regulations don’t match the intentions of the business.
- Positioning Gap ─ when markets get excluded due to product or service characteristics.
- Process Gap ─ when processes fail to deliver the desired outcomes.
- Service Gap – when customers feel customer service isn’t a priority.
- Usage Gap – when customer demand differs from what is being offered in the market.
Goal setting is very much a subjective matter. The management team of a company may aspire to reduce the company’s waste contribution from the packaging by as much as 50% per year, however, if this means brand signaling will be less effective and revenue is likely to drop by 15%, stockholders may oppose the idea. Even at an individual level, aspirations may vary to such a degree that the alignment of the company and the overall commitment to achieving these goals becomes at risk.
One of the main gaps that may frustrate a firms’ performance is a gap between required and available business capabilities. Capabilities define what an organization needs to be able to do, to successfully achieve the outcomes that are defined as part of the corporate strategy, while a process describes how it gets done. For instance, a capability could be to ‘refund a customer’ while it is performed through the ‘customer service refund process’. Capabilities and processes are a part of the business architecture.
Experts use a Capabilities Map as an exercise to reveal what capabilities are available, rated above or below average, or missing. It is a framework that provides the necessary structure for stakeholders, such as the scope and context under which to effectively align organizational projects. It can be used to highlight what is most important to the business and channel efforts in the right direction.
To deliver products, a business needs a set of capabilities for which it needs resources. Capabilities impact value through increasing or protecting value (value capture), reducing or preventing cost (value creation), improving service (value delivery), achieving compliance, or positioning the company for the future.
After assuming the position of General Manager at a large ISP in The Netherlands, I was informed that we may soon face a cashflow problem. While looking at the level of outstanding invoices, which was huge, one customer in particular drew my attention. I decided to pay them a visit. The customer told me that he had been waiting for a credit note for over a year, however, the ISP had failed to send him one. The debate was over a 20 euro invoice while the outstanding amount was almost 100.000 euro. I went back to the financial manager and confronted him with the issue. He told me that the bookkeeping system, which was an in-house development, could not create a credit invoice.
He had raised the issue with IT several times, however, it was never perceived as a priority. Without the capability to create a credit invoice, the customer refund process was broken. So, I walked over to a secretary, asked her to type a credit invoice in a word processor and sent it to the customer per e-mail immediately. The next day the outstanding amount was paid in full and the cashflow problem was solved. When I discovered that the same issue prevented a rather large group of customers from paying their invoices, the creation of the credit invoice capability became the highest priority of IT. In the meantime, by creating manual credit invoices, almost 600.000 euro in outstanding invoices were collected in two weeks time.
Most companies assume they’re giving customers what they want. Usually, they’re kidding themselves. When Bain & Company surveyed 362 firms in 2005, they found that 80% believe they deliver a “superior experience” to customers. But when Bain asked customers, they say only 8% of brands are really delivering. This delivery gap doesn’t exist because businesses fail to recognize the importance of their customers: more than 95% of surveyed management teams say they’re customer-focused.
Bain found two reasons for the gap. The first is a basic paradox: Most growth initiatives damage the most important source of sustainable, profitable growth ─ a loyal customer. To increase revenue and profits, businesses do things like raising transaction fees that end up alienating their core customers. Efforts to pursue new customers compound the problem, distracting management from serving the core. The second is that a good relationship is hard to build. It’s extremely difficult to understand what people really want, keep your promises and maintain a dialogue to ensure you meet customers’ changing needs. Even initiatives to “better understand” customers can backfire, drowning firms in a sea of data.
A recent study by Cone Research revealed that 78% of consumers appreciate management responding to reviews. Replying to reviews, positive and negative, can bump up your customer conversion rate and revisits. 9 out of 10 customers now see online reviews. Cone Research found that 4 out of 5 customers reverse their decision after reading a negative review. By addressing your reviews, you ensure to minimize the damage of your negative reviews and maximize the benefit of your positive reviews.
To nurture and sustain a brand effectively, you must be constantly in touch with what your stakeholders (consumers, users, members) think about your brand and what you (your organization) think of your brand. Brand image is defined as the set of actual associations the customer has with a brand; Brand identity is defined as the set of aspirational associations the organization would like to have of its brand. The gap between what you would like the brand to represent and how it is perceived by customers may interfere with your growth aspirations.
Understanding your customers is vital to be able to offer relevant solutions. Research by Pegasystems revealed that while 87% of companies are convinced they know the customer well, only 23% of customers acknowledge that brands know them as a person and understand their demands. This huge gap of knowledge may prove to be quite the deal-breaker.
Capabilities can be assessed to identify explicit performance expectations. When a capability is targeted for improvement, a specific performance gap can be identified. The performance gap is the difference between the current performance and the desired performance, given the business strategy.
The product gap — also called the segment or positioning gap — is that part of the market a particular organization is excluded from because of product or service characteristics. This may be because the market is segmented and the organization does not have offerings in some segments, or because the organization positions its offerings in a way that effectively excludes certain potential consumers — because competitive offerings are much better placed for these consumers. This segmentation may be deliberate and result from policy. Segmentation and positioning are powerful marketing techniques, but the trade-off — against better focus — is that market segments may effectively be put beyond reach.
Process gaps are inefficiencies and failures that make a business process less than optimal. For example, planning failures may lead to overproduction. Or tasks that rely on a single resource doesn’t happen when someone in on vacation. Or some processes may stall due to slow or overburdened resources. Or a process is too complex to be executed effectively.
Bad service is something other companies deliver – not your organization, right? Think again. When it comes to delivering outstanding customer service, your brand may be falling behind. In 2019, outstanding service is speedy, personalized, and proactive – and customers expect nothing less. In fact, they demand it.
According to Pegasystems research though, too many companies have failed to get the memo. With regards to offering excellent customer service, 40% of brands believe that is what they offer, however only 10% of consumers have witnessed it. When asked, 88% of employees regard customer service as a top priority, yet only 11% of customers have experienced customer service as pleasant. Of those, 63% prefer cleaning a toilet over having to contact a brand’s customer service.
The usage gap is the gap between the total potential for the market and actual current usage by all consumers in the market. At some point, a gap emerges between what existing products offer and what the consumer demands. The organization must fill that gap to survive and grow.
Just remember: every gap harms the desired outcome that will not go away until it’s identified and properly dealt with.