The 3 Levels of OKRs

The 3 Essential Levels of OKRs: How layering Strategic, Tactical, and Operational Goals can help achieve organisational success.

Understanding and implementing Strategic, Tactical, and Operational OKRs can transform an organization’s approach to goal setting and achievement. By understanding and effectively utilizing these different levels of OKRs, organizations can ensure that their long-term visions are translated into actionable plans and tangible results.

Three Levels of OKRs: Strategic, Tactical, and Operational

Objectives and Key Results (OKRs) are a cornerstone of modern business strategy, enabling organizations to set, track, and achieve their goals. These goals can be categorized into three distinct levels: Strategic, Tactical, and Operational. Each level has its unique characteristics and plays a crucial role in the overall success of an organization.

Strategic OKRs: The Visionary Compass

Strategic OKRs are set at the organizational or enterprise levels. They are the guiding stars of an organization, encompassing long-term goals and visions. These OKRs usually come with outcome-based lagging metrics as Key Results, which means they measure the long-term impact and results of the strategies implemented.

They typically span over a year, sometimes extending to two years or more, reflecting their focus on long-term results and impacts. Strategic OKRs provide top-down guidance, shaping the entire organization’s direction and often include ambitious goals, sometimes referred to as Moonshots or Roofshots.

Strategic OKRs are set at the organizational level and are designed to guide the overall direction and long-term goals of the company. They should be aligned with the company’s mission and vision, setting aspirational yet achievable objectives.

Strategic OKRs Example for the Technology Company:

Objective: “Establish Market Leadership in Innovative Software Solutions.”

This objective is broad and aspirational, reflecting the company’s ambition to be a leader in its field. It encompasses improving product quality, customer satisfaction, and operational efficiency.

Key Results:

  1. Increase Overall Company Revenue by 40%: This key result focuses on significant growth in revenue, indicating successful market penetration and product adoption, which is underpinned by improved software quality and efficiency.
  2. Achieve a Customer Satisfaction Score of 85% Across All Products: This key result is about ensuring high customer satisfaction, which is a direct outcome of enhancing software quality, as indicated in the operational and tactical OKRs.
  3. Launch Three Innovative New Products in the Market: This key result aligns with the strategic goal of market leadership and innovation. It relies on the efficient development processes and high-quality output indicated in the tactical and operational OKRs.
  4. Expand the Customer Base by 50%: This KR targets market expansion, which would be supported by the improved processes and product enhancements at the operational and tactical levels.
  5. Secure Two Industry Awards for Innovation and Design: This key result aims at earning recognition in the industry, which would be a testament to the company’s strategic focus on innovation and quality.

These strategic OKRs are designed to provide a clear direction for the entire organization. They are ambitious and represent long-term goals, but they are grounded in the improvements and achievements expected at the tactical and operational levels within the software development department. The success in tactical and operational OKRs contributes directly to achieving these strategic objectives, ensuring alignment and coherence in the company’s overall strategy.

Tactical OKRs: The Bridge Between Strategy and Execution

Tactical OKRs exist at the functional, departmental, or smaller team level. They serve as the crucial link between the organization’s overarching strategic objectives and the more immediate, operational activities. These OKRs are usually equipped with outcome-based leading indicators as Key Results, which means they focus on the immediate outcomes that lead towards achieving the strategic objectives. They have a shorter term, often spanning a few quarters up to a year, and provide medium-term results and impacts. Tactical OKRs are multi-directional; they not only give direction to the teams below but also ensure alignment with the strategic OKRs above, functioning both bottom-up and top-down alignment. They enable the realization of strategic Moonshots or Roofshots by breaking them down into more manageable and actionable objectives.

Tactical OKRs Example for the Software Development Department:

Objective: “Streamline Development Processes and Elevate Team Productivity.”

This objective aligns with the operational goal of enhancing code quality and efficiency, focusing on improving overall departmental processes and team performance.

Key Results:

  1. Increase Code Review Efficiency by 25%: This key result aims to make the code review process more efficient, which supports the operational goal of refactoring legacy code and integrating feature branches more effectively.
  2. Improve Bug Resolution Rate by 30%: By setting a target for improving the bug resolution rate, this KR supports the operational goal of closing a specific number of bug tickets and enhances overall code quality.
  3. Achieve 95% Coverage in Automated Testing for New Features: This KR supports the operational task of developing new automated test cases by setting a department-wide goal for test coverage, ensuring quality in new developments.

Operational OKRs: The Engines of Daily Operations

Operational OKRs are typically found at the individual level within the organization. These are the most action-centered and focus heavily on outputs, aligning closely with Performance Management systems. They have the shortest duration, emphasizing immediate tasks and initiatives. Operational OKRs provide a bottom-up impact to tactical OKRs and, albeit rarely, to strategic OKRs. They are essential for translating the broader objectives into day-to-day actions and efforts, ensuring that the organization’s strategic vision is consistently pursued at all levels.

Operational OKRs Example for a Software Development Team:

Objective: “Enhance Code Quality and Efficiency in the Upcoming Release Cycle.”

This objective remains focused on tangible improvements in the software development process.

Key Results:

  1. Refactor 30% of the Legacy Codebase: This key result focuses on a quantifiable amount of code to be refactored, emphasizing the volume of work to be done rather than the impact it might have.
  2. Close 150 Reported Bug Tickets: Instead of targeting a percentage reduction in bugs, this key result specifies a concrete number of bugs to be addressed, making it output-oriented.
  3. Develop and Integrate 10 New Automated Test Cases for Core Functions: This key result specifies a clear number of test cases to be created and integrated, focusing on the output of test development.
  4. Complete Documentation for Modules X, Y, and Z: This key result focuses on completing a specific, tangible task—documenting certain modules—regardless of the broader impact on software quality or efficiency.
  5. Merge 20 Feature Branches into the Main Codebase: This is a clear, output-focused goal, emphasizing the number of branches to be merged rather than the effect of these merges on the product.

Integrating OKRs for Organizational Success

In short, strategic OKRs set the overall direction, tactical OKRs break it down into smaller teams or departmental goals, and operational OKRs turn those into specific, actionable tasks. The alignment across these levels ensures that the entire organization is working cohesively towards its main objectives.

The integration of Strategic, Tactical, and Operational OKRs is critical for any organization seeking to achieve its goals effectively. While Strategic OKRs set the long-term vision, Tactical OKRs bridge the gap between strategy and execution, and Operational OKRs ensure that everyday actions are aligned with the broader objectives. This layered approach allows for a comprehensive and cohesive strategy execution, where each level of OKRs supports and reinforces the others, ensuring that every team member’s efforts contribute to the organization’s overarching goals.

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