All four steps taken in the First 100 Days move toward creation of a Business Plan and an Action Plan. Step 3, Build the Structure, is the Business Plan, and in Step 4 we Launch the Action Plan to begin executing the strategy. Of course, the Business Plan at this point is in an early, partial iteration, subject to change as the plan is tested against the reality of the next three to five years.

The structure that emerges from Step 3 is designed to transform the strategy outlined in Step 2, Create the Strategy, into an actionable plan. The vehicle of transformation is an 80/20 analysis that organizes the business into segments so as to create the optimum focus on only those customers and products that will yield strategic growth. Here is a graphical example of the output of the 80/20 analysis applied in Step 3:

In Step 2 Strategic Alignment aimed turned the company toward delivering profitable organic growth and also laid out the Cross-Functional implementation of that focus. Building on both Strategic Alignment and Cross-Functional Execution, Step 3 shows how these two functions will be carried out to achieve profitable market share gain by lowering operating costs along with growing sales organically. Step 3 also takes the company beyond the point at which profitable organic growth is delivered and outlines a plan for investing in further growth through geographic (territory) expansion and product line expansion.

On its own, the 80/20 Principle is remarkably clear and prescriptive. Strictly by the numbers, it will tell you what to do. It will not, however, tell you how to do it. For this, thinking is required. The place to start is with divergent thinking, a kind of freewheeling group brainstorming among executives and operational managers. Apply the divergent approach to the insights gleaned from your situation assessment in Steps 1 and 2. The objectives of this brainstorming are to evaluate the implications this assessment and to generate viable strategic options to achieve the Step 1 goal. Work to devise options in the following areas:

1. Adjacencies
2. New market and product development
3. Acquisitions and divestiture
4. Network/footprint
5. Make/buy
6. New capabilities
7. Core business improvement
8. Improving market attractiveness
9. Improving competitive position

Having inventoried what is possible, shift from divergent to convergent thinking. Filter your brainstorming laundry list to a short list containing only the imperative issues and highest-value opportunities. Use this list to deliver statements of strategic objectives and strategic initiatives. The goal of convergent thinking is to produce a strategy that fully answers three questions:

1. Where will we compete?
2. How will we compete?
3. How will we win?

Back in Step 1, you set a three- or five-year company-wide financial goal. You are now in position to do an initial formulation of specific financial targets in each sector of the business and/or for each product line. This formulation will serve to audit the overall strategy, assessing whether it has a fair chance of reaching your Step 1 goal. If there is a shortfall, indicating that the present form of the strategy will not reach the goal, look for and identify any resource allocation and capability gaps. To bridge these gaps, determine what more resources can be moved from Quads 2 through 4 to serve Quad 1 customers and products. Next, enumerate the trade-offs among the available options you have identified. Using your 80/20 results, focus on those likely to produce the greatest profitability. These are the key strategic objectives to retain for the business plan.

Convergent thinking is about zeroing-in on the best options. Filter out all but the highest-value opportunities by looking at their revenue and profit potential, affordability, and relative ease of execution in the  context of the company’s available CCSAs (core competencies and strategic assets). Next, filter the result from the first cut until you are left with the “critical few” (generally three to five) strategic initiatives required to attain the objectives you have listed. With respect to each of these initiatives, the convergent thinking sessions should enumerate:

1. The critical changes needed
2. Financial analysis and projections
3. Resource requirements
4. Risk assessments

When you have narrowed your focus to key programs and projects as well the actions, resources, organizational implications, and investments required to execute the strategic priorities, evaluate each within a quick-and-dirty long-term financial forecast covering the coming three to five years (depending on the timeframe of your business plan). This will yield the segmented structure that is the core of the Business Plan. This iteration of the plan should clearly stake out the boundaries of the business as well as the strategic assets and core capabilities that will ensure a disciplined focus on the priorities. It should set out and explain relevant market and customer dynamics, the competitive landscape, the firm’s positioning, and its sources of competitive advantage.

In the context of the three- or five-year goal set in Step 1, restate or formulate three to five high-priority objectives, which may be related to any or all the following:

1. Customer segments to be penetrated
2. Products to be developed
3. Channels to access in order to reach the customer segments identified
4. Operational effectiveness
5. Data required

With these final five pieces of information, the business plan is sufficiently complete to Launch the Action Plan (Step 4).