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A-Z Of Business: Gap Analysis

Real innovation and big revelations seem to come wherever there are gaps in what everyone else in an industry is doing. Look for the gaps to find greatness. Gaps that will allow you to aspire big, be yourself, create new industries or circles of influence and where you can find fun and fame.

One of the most important ways to capitalize on opportunity in business and life is to study categories, segments or institutions and then do a gap analysis. Gap analysis is like walking all around the playground until you find just the right sandbox—one that no one is in—a gap that is the right size and feels good. And guess what? You are uniquely qualified to build within that gap and fill it with your presence, product or business. You can close that gap with what you have to offer.

The gap analysis is where you will find places to play and build. Places to exceed your wildest expectations. Places to succeed that might get turn out to be very near where others have failed. Places where opportunity is ripe for the picking.

The best way to find your gap is to move forward and strategically, purposely seeking out gaps. The second best way is find them accidentally, by stumbling into them through nurturing a culture that allows your segment category or institution to develop organically rather than always from a forced strategy. And sometimes it’s a combination of strategy and accident. Here’s an example of having a strategic plan to capitalize on a gap, but then being unable to execute it until literally stumbling into the solution:

We had a team working on the recycling business. The gap we were trying to fill was: If plastic is made from oil and oil is $100 per barrel, then how do we make recovering the plastic a value proposition. Yes, there are municipalities embracing this, but there is one issue—when you put all the recyclables into the blue bin at your curb you lose track of the particular materials they are made from and contaminate the plastic with things like food and broken glass, so the value proposition is lost. The very system created to collect recycling was devaluing it. For the majority of recycling, this is still the case.

We were convinced that this was a sandbox that we could play in and the “gap” was how we could get the value out of this “oil.” If we could figure out a way to extract the value of the oil out of the plastic, there wouldn’t ever be plastic thrown in the ocean like it is today. Our gap analysis determined there was an obvious gap, but we couldn’t figure out how to fill it. We were stumped. But at least we had identified the gap.

During the same project, I was in Las Vegas for a meeting and finished early. With time to kill, I noticed that the Produce Marketing Association was having a trade show. I love sneaking into trade shows, especially ones that I typically don’t go to, so I invited myself in and found myself among the beauty of fresh fruits and vegetables. It was a refreshing contrast to contaminated recyclables. I got a little carried away taking as much in as I could and was walking relatively briskly when I tripped on one of those electrical wire covers and went straight to the floor. One of the guys from the booth across came over to help me up and as he did, I saw that his company was tracing strawberries.

Curious, I sat down and they explained how their background was security for the government and how they had worked on all types of security systems for currency and physical items. Seeing a gap in the produce industry, they realized fresh produce had no security, they created a unique barcode for every unit of strawberries in their booth and by scanning you knew everything about that container of strawberries: When it was grown, what fertilizers were used, and what farm it was from. They had patented the technology to track virtually anything; and my fill-the-gap-motor started whirring.

“Do you think you could track materials at end of life?” I asked, “In other words, scan the barcode and know this is antimony fired PET, with a paper label and soy-based colors?”

“I know we could,” he said.

Suddenly, the gap he had found in fresh produce had given us the insight to step firmly into our gap with recyclables. This was a monumental step for us, because if we knew what the materials were, we could recover more of their value. This revolutionized specific recycling and gave us the missing link we needed to build out our system to a marketable point. We designed a complete system specific for recycling – very different than what was used for produce but strawberries gave us the insight. This system enabled companies that use containers to take them back at the end of their use knowing exactly what they are made of and where they came from and thus are able to best reuse or recycle them.

With our job of establishing the system complete and the logical understanding that this was bigger than our small team, we sold the business to Waste Management and the system still exists today. Pepsi uses this system for their highly successful recycling system and our system is being adopted by product-based companies as you read these words. General Motors is experimenting with it and the systematic tracking of end-of-life products will add a value proposition to electronics companies and others who could regain value from old products if only they can be tracked.

The key to this success was in analyzing and identifying the gap. Many businesses start in a small gap and continue to grow into billion-dollar companies solely by recognizing that a gap exists.

So go out and put yourself in places where the answers to your questions may be found, but don’t plant your flag too high on any one hill, because you never know from what industry, individual, or technology the missing link may come. To make your gap viable: Determine the boundaries of your gap with strategic obsession and structure, then fill it with flexibility and the nimble dance of art.

The ladder of success is best climbed by stepping on the rungs of opportunity. –Ayn Rand

All that is valuable in human society depends upon the opportunity for development accorded the individual. –Albert Einstein


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