Whatever the size of a company, it is vital it has robust decision-making processes in place to ensure the business can pursue a coherent strategy for long-term sustainable growth.

Exactly what this process looks like will be different at a small start-up and a FTSE 100-listed multinational, but there are a number of enduring principles that all successful organisations adhere to.

Jellyfish Pictures, Aviva and Unilever share how their boards and executive teams work together to reach strategically important decisions, and how strategy is then communicated and implemented throughout the business. The companies have existed for very different lengths of time – Unilever is nearly a century old; Jellyfish was founded in 2001 – but they have remarkably similar approaches to making decisions with the long term in mind.

Devising the right strategy starts with truly understanding the market the business is in, and the challenges and threats it faces, says David Patton, CEO of Emmy and BAFTA award-winning visual effects and animation specialists Jellyfish Pictures.

“It is critical to have a deep understanding of the market and industry, not only in terms of how it looks today, but how it is going to evolve into the future,” he explains. “We spend a considerable amount of time on the market – on a daily basis, even – looking at how it is growing, how our customer base is evolving, how technological and other trends are influencing the market, how our competitors are changing, and what influence political and economic factors are having.

“This intelligence is used to inform every business decision we make and to assess all opportunities and risks. We also use this to measure our pace of growth against competitors and to maximise customer value. Without that perspective, it is pretty much impossible to build any intelligence into your business plans, or set relevant KPIs.”

Patton says setting the right KPIs is crucial to ensure strategy is implemented and measured for effectiveness. “Some of them are financial, some operational and some around culture,” he adds. “A three-year business plan isn’t just about numbers: it’s also about the written word and culture. But numbers enable people to measure their own value and contribution to success. This creates empowerment across the company – once people know what has to be done, they can be trusted to be left alone to get on with it.”

At Jellyfish, Patton adds, strategy development is a “very collaborative process”. “We have a strategy group that is led by me as the CEO, but we have a clear understanding of the path and ambition we need to grow the company for our shareholders.

“It is critical to ensure the right people have the opportunity to participate, discuss and understand that strategic plan. For any long-term strategy to be successful, there has to be an element of collective ownership. Once the senior management team has bought in, they themselves can understand what role they need to play – and they can communicate this to their teams to ensure the plan is achieved.”

Effective strategic decisions should take into account the views of all stakeholders, says Vikram Kumaraswamy, Executive Vice President for Corporate Development at Unilever. “We are in constant conversation with shareholders,” he says. “We set out our stall on strategy as a first step and then we get their feedback. In addition, many board members meet with our shareholders directly, so they have that input.”

Kumaraswamy points out that there is often a tension in organisations between the strategy direction, which is set in a top-down manner, and how this strategy is translated into more concrete financial plans. “The top-down approach assumes a positive scenario – it’s what I’d like the company to achieve,” he explains. “The bottom-up, financial-planning scenario is what we think is possible. We have a process involving the board and the leadership team to join the two together, to resolve this tension.”

Kumaraswamy says that smaller companies can emulate many aspects of what a multinational like Unilever does. “When you are setting strategy, don’t focus on what you can do compared with last year. Instead, ask: ‘What can someone with this business and these capabilities do?’.

“First, think clearly about the strategic direction unconstrained by the financial plan – and then think about the financial plan and work out how you can meet the strategic direction. Considering these issues in a conceptually separate way can be helpful, even if in a smaller business it is the same person or same team addressing these things.”

He adds that periods of macroeconomic weakness should not mean abandoning longer-term strategy. “We manage economic downturns through a portfolio approach,” he explains. “Take something like the US haircare market, where our long-term strategy is to ‘premium-ise’ the category: to provide better products and technology, to invest more in advertising and communication, and then to charge a little bit more. We believe this is the way to drive greater brand strength for consumers and ourselves in the long-term.

“But when inflation is high and consumer spending is fragile, a slightly different approach is needed: what you would do is focus on communication with the premium brands while also promoting the cheaper brands – because that is what people are looking for. So you would use more tactical levers to ensure the cheaper brands are available, but your overall strategy doesn’t really change.”

For the Aviva corporate governance team run by Kate Graham, a vital task is to assess the quality of the data provided to board members to inform their strategic decisions. “We monitor the effectiveness of our governance practices to ensure all of our boards are making good, well-informed decisions,” she says. Graham and her staff also have a system that evaluates potential governance risks. “We check that the boards are getting effective challenge from the independent NEDs and that the second line (the risk function) is well engaged with the information that is going up to the boards.”

Another factor that can drive higher-quality decision-making is the collective abilities of the board or strategy team members, Graham adds. “We have a clear picture of the skillset we need in terms of our board make-up: we constantly try to identify where any gaps are, especially considering any future-looking strategy such as technology and data,” she explains.

“Diversity and inclusion is an increasingly common conversation we’re having – so as well as skillset, we also take into account diversity of thinking. This means looking at the socio-economic and educational background of our board members, and factors such as neurodiversity as well.”

Tensions between long-term strategy can arise when short-term developments – for example in the economic or regulatory environment – threaten the strategic direction. At Aviva, Graham explains, it is especially important for the company to be aware of – and to manage – regulatory risks. “We speak frequently with regulators so we know what is on their minds, and regulatory trends in the European Union are still important,” she says. “We also tend to respond early to consultations where we feel strongly, especially if there is a risk of unintended consequences.”