The post-pandemic whiplash has brought to an end one of the longest bull periods in the market, leaving a lot of excellent engineers now out of work.

Given that the last financial crisis was over a decade ago, many leaders have not had to deal with a downturn before. Nevertheless, as a leader, you will have to go through multiple periods of rapid growth and contraction during the course of your career, so learning to navigate them is essential. Ultimately, we need to be able to guide our teams by helping them understand what is happening, and help them move forward regardless of the outcome.

Relinquishing control during a downturn 

During an economic downturn, we are not in control of the situation. You didn't commit a line of code and then the economy blew up. This is a problem. Typically, we are used to leading from a position of control: that the success of a product or team is in our hands. We prioritize what to build, we hire the people we need, and we set the goals that we want to achieve. Our planning and execution will determine whether we achieve them. If we didn't succeed, we can reflect on what we did and try again next time with a better strategy. 

This model of leadership makes an assumption that inputs always map to outputs. But, during a downturn, this model completely breaks apart. Our inputs have nothing to do with the outputs. Despite the best product, team, and plan, even with the best execution, the market can change, and mass layoffs can decimate an organization. 

The Trichotomy of Control

Ironically, the only way to regain control over the narrative for yourself and your team is to accept that there are things which you have no control over. You don't need to have any specific engineering leadership skills to do this. In fact, we can dip into philosophy to help us. In A Guide To The Good Life: The Ancient Art of Stoic Joy by William B. Irvine, he introduces a concept called the Trichotomy of Control. There are:

• Matters you have control over such as whether you can do a good job, whether you can be kind, and whether you can get a good night’s sleep.
• Matters you have no control over such as whether it is going to rain, whether you may get seriously ill, or whether or not there is going to be a natural disaster.

The idea is that you should focus on the things that you can control, and not worry about the things that you can't. Applying this to your team: you can control your planning and execution, but you can't control the market downturn. Sounds good, right? Well, not quite.

An attitude of not caring about things that you can't control may lead to more issues. For example, if you don't care about whether people like your product or not, it will likely lead to poor alignment with your customers, a lack of quality and product-market fit, and ultimately, the failure of your product.

In practice, you have some control over whether people like your product or not, since you have the ability to change it, improve it, and market it. The same is true for a downturn: making broad macroeconomic changes is not in your control, but you can control how you react to it.

As such, Irvine suggests that there is a third category:

• Matters you have some control over, which you should not measure based on external goals, such as economic recovery. Instead, you should judge yourself on internal goals, such as making your product even better, or making your team more efficient.

This is the key to navigating difficult times. No, you could not control a market downturn and the layoffs at your company. You should not measure your own success based on that. However, you should work with your team to understand the situation, and then set internal goals for how you can make the best of the situation going forward.

Setting internal goals

Given a challenging period like the one that we have all been facing, it's essential that you are transparent with your team about what this reality is and how it came to be. You should explain what has happened, what you know, and what you don't know, individually, and in groups. Pretending to be in control of things that you are not is bad leadership. It erodes trust.

Instead, discuss what you can collectively control, and what you can't. Then, set internal goals for how you can make the best of the situation and measure your success against them. 

Examples of internal goals could be:

• Reprioritizing the roadmap to focus on the most important features given the team's new capacity.
• Sunsetting features that are not being used, or that are not core to the product so that you have less to maintain.
• Changing the pricing model to encourage more growth and market penetration.
• Focusing purely on the resilience and stability of your product for a period of time to ensure that you are set up for success with a smaller team in the future.

The key to these internal goals is that they put control back in the hands of the team regardless of the outcome. They provide a framework for you to align around and to work towards, and they reinstate the ability to plan, execute, and also feel good about making measurable progress in times of uncertainty.

Final thoughts 

An essential part of leadership is understanding what is and isn’t within your control during challenging times, and then leading your team transparently through them. By focusing on what you can affect, and ceasing to worry about what you can’t, you can rally a team behind how to make the best of any situation. This ensures focus and calmness when it is needed the most.