The Three Layers of Running a Software Company

Every software company operates across three layers, whether they name them or not. Understanding these layers, and which one you're neglecting, is the key to running your company without chaos.

The three layers

1. Strategy Layer

This is where you decide where to go.

What it contains:

• Vision and long-term direction
• Quarterly priorities and big bets
• Resource allocation decisions
• The "what" and "why"

Time horizon: Quarters to years

Typical artifacts: Board decks, annual plans, OKRs, strategy documents

Most founders have this layer sorted, even if it lives in their heads rather than documents. You know where you're trying to go.

2. Delivery Layer

This is where the work gets done.

What it contains:

• Tasks and tickets
• Code, designs, and content
• Daily execution
• The "how"

Time horizon: Days to weeks

Typical artifacts: Linear issues, GitHub PRs, Figma files, shipping logs

Teams usually have this layer sorted too. Modern delivery tools are excellent. Your engineers, designers, and PMs know how to get things done.

3. Operating Layer

This is the connective tissue between the other two. The layer most companies neglect.

What it contains:

• Progress toward strategic goals
• Confidence and risk signals
• Check-ins and updates
• Decisions and their rationale
• The "are we on track?"

Time horizon: Weeks to months

Typical artifacts: OKR tracking, weekly reviews, decision logs, metrics dashboards

The operating layer answers the question: "Is the work we're doing actually moving us toward our goals?"

Why the operating layer matters

Strategy without delivery is just hope. Delivery without strategy is just motion.

The operating layer connects them. It's where you:

• Track progress. Are we actually making headway on what matters?
• Surface risk. What's off track before it becomes a crisis?
• Make decisions. Do we need to adjust course?
• Create memory. What did we do, decide, and learn?

The symptoms of a missing operating layer

Strategy ↔ Delivery gap: Leadership sets goals, teams execute tasks, but no one connects them. "We shipped 47 features but didn't move the needle on our objective."

Quarterly surprise: Everything looked green until suddenly it wasn't. "How did we miss this?"

Status theater: Weekly meetings are performance, not substance. "Everyone says they're on track, but I don't trust the numbers."

Decision drift: Important choices are made in Slack, forgotten by next month. "Why did we decide that? No one remembers."

Onboarding black hole: New leaders take months to understand what's happening. "I've been here 6 weeks and I still can't tell what our priorities are."

What a functioning operating layer looks like

Goals connected to work: OKRs aren't abstract hopes. They're linked to real projects and metrics. Progress is verifiable.

Rhythm without overhead: Weekly reviews happen. Check-ins get submitted. The system creates cadence without becoming bureaucracy.

Risk surfaces early: Confidence scores and exception-based reviews catch problems in week 4, not week 12.

Decisions are recorded: When something is decided, the rationale is captured. Institutional memory exists.

Leadership trusts the data: What the dashboard shows matches what's actually happening.

How to build the operating layer

Step 1: Choose your goals wisely

2-3 objectives per team. Fewer is better. If everything is a priority, nothing is.

Step 2: Connect goals to reality

Link OKRs to metrics and delivery work. Progress should update from actual data, not just self-reporting.

Step 3: Establish cadence

Weekly check-ins. Weekly reviews. Monthly course corrections. Quarterly planning and retrospectives.

Step 4: Focus on exceptions

Don't review everything. Review what's off-track, at risk, or needs a decision. Green items don't need airtime.

Step 5: Capture decisions

When something is decided, write it down. Date, decision, rationale, who made it. Future you will thank present you.

Step 6: Close cycles properly

At end of quarter: grade OKRs, capture learnings, record what happened. Create the historical record.

The mental model

Think of your company as three concentric circles:

• Strategy (outer): Where are we going?
• Operating (middle): Are we on track?
• Delivery (inner): What are we building?

Information flows in both directions. Strategy informs delivery. Delivery creates reality that updates strategy. The operating layer is the translation layer where this happens.

The common mistake

Most companies try to solve operating layer problems with delivery layer tools. They add more Jira tickets, more Notion docs, more Slack channels.

But delivery tools optimize for tasks. The operating layer needs to optimize for goals, decisions, and learning.

The principle

Strategy sets direction. Delivery does work. Operating connects them. Without operating, you're either hoping or hustling, not running.

The companies that win are the ones that build this middle layer well.