Juxtaposed against the excitement about radical new advancements in artificial intelligence, the technology industry continues to endure valuation pressure, bulk layoffs, and tightening budgets. Considering the fact that the Nasdaq grew 8.5X from 2009 to 2021 and spurred an era of hyper-growth in Silicon Valley that abruptly downshifted this past year, it’s understandable that many technology leaders are struggling to manage their teams for success in more spartan times.

Aditya Agarwal, head of ICONIQ Growth’s Technical Advisory Board, and former CTO of Dropbox remembers what it was like to be an entrepreneur when he co-founded collaboration startup Cove in late 2010 as the world was still recovering from the Global Financial Crisis and capital was harder to come by. So last month, ICONIQ Growth and Aditya led a conversation in New York City with technical leaders about running world-class engineering organizations in constrained environments.

“We are coming off a period of money being cheap and a culture of ‘growth-at-all-cost.,’” said Madalina Tanasie, CTO of Collibra. “For too long people looked at FAANG companies as the end-all-be-all and assumed that what they do and how they do it is the way to work and that innovation-at-all-costs is the way to succeed in business. [But] creativity requires discipline. Innovation alone is not enough; you also have to execute.”  

Along with Madalina, panelists at the event included Mike Abbott, former VP Engineering at Apple; Jon Hyman, co-founder and CTO of Braze; Alexis Lê-Quôc, co-founder and CTO of Datadog; and Keith Adams, investor, and former Chief Architect at Slack. The event was attended by 70 technical founders, chief technology officers, and chief product officers of companies such as ezCater, Jellyfish, Lightning AI, Merge, Squire, and Unite Us, among others. 

The biggest takeaway from the session was a collective recognition that truly great engineering organizations tend to share a few characteristics: 1) an ability to prioritize and focus on the highest-value projects; 2) a deep, intrinsic desire to deliver excellence and win; 3) and a persistent search for new ways to achieve leverage and increased efficiency.

If you want your technical team to emulate the best in the world, consider developing and strengthening the following:

A Drive to Win

When things feel unstable and unpredictable, it helps to remind employees that there is one thing they can control: their own performance. The best engineers want agency and autonomy, and to feel like their work has an impact. Leaders can keep them motivated by ensuring they understand the company’s goals and financials, and give them the opportunity to connect their individual work product to specific business outcomes.

By tracking and sharing figures such as annual recurring revenue per employee and net promoter scores, you make it clear that the company’s success and the employee’s success are inextricably linked. As Aditya bluntly put it, you need to “instill the feeling of an early stage startup where if we don’t do a good job, the company will die.”

Mike recommended elevating internal conversations beyond monetary goals in favor of something more purpose-driven: “At Apple,” he said, “We don’t talk about the revenue opportunity of a product before we answer ‘Why should this product exist in the world?’ You have to authentically believe in what you’re building.”

Keith posited that tapping into engineers’ desires to do meaningful work and achieve personal excellence will lead to greater accountability and ultimately greater satisfaction over the course of their careers:

“Great engineering organizations that are highly functional defend some notion of engineering value as a professional and personal code that you uphold,” he said. “It can sound like we’re talking about art for art’s sake but that doesn’t mean you don’t get told what to do and you’re not accountable for your project succeeding. It means you start to care about those things above and beyond OKRs and whether it helps you get promoted. That ethos is contagious.” 

If the notion of “excellence” feels too vague and difficult to quantify, Keith recommended you find a way to put it into terms that matter to your customers. For example: reliability, performance and cost might be top priorities. If you hear the product is too slow,” find out how slow it is, for which people, and under what conditions. Break code base problems down into smaller pieces that can be addressed in two-week bursts, rather than committing to overhaul-sized projects that require 500 people and three years. Aim to make safe structural changes that deliver business value rather than taking on “Battlestar Galactica versions of the future.” Ultimately, he said, you should choose “the lowest risk and highest reward engineering you can undertake.”

Reminding the team of a common enemy is another powerful driver. Aditya shared something that has worked for him in the past: “Drill into them that we must win and must destroy the enemy at all costs.” 

If you sense that your managers don’t have the constitution for a high-stakes competition, it might make sense to reassess whether they’re the right type of leaders for the times we’re in.

“Peacetime leaders are great, but they typically don’t run toward the fire; they run away or they watch,” Mike said. 

Jon shared a similar message: “The scarcity of the times helped us focus. The message to everyone was ‘Is your group the team you want to go to war with?’”

(Re)Dedication

In the pandemic years when companies were scaling teams as fast as possible to meet increased demand, they showered new recruits with generous packages and perks—much of which got cut when runways needed to be stretched as far as possible. Perks are now getting recontextualized: The little things don’t matter as much when layoffs are happening all around.

While cuts can be scary and destabilizing at first, they can lead to more committed, more efficient, higher-output teams if they’re well-executed and well-communicated.

 “When you let people go, the people who remain end up being more motivated, leaner and faster,” Aditya said. “Invariably, after cycling out lower performers, everyone’s happier.”

It’s important to remind the employees who remain that they were chosen, and they matter—maybe even more than before. Create an environment where engineers are proud to work and remind them that they have the power to shape the company’s future.

“Engineering managers should be getting their teams to build good software,” Jon said. “Develop staff and help them grow. Make sure that people are feeling fulfilled. That’s more important than people’s sense of ‘fun.’”

Ruthless Prioritization

As companies grow, they sometimes can get caught up in investing in new products even though they don’t yet have full penetration in their current market. Jon said Braze allocates a lower percentage of operational expenditures to research and development relative to growth stage startups. That’s because his team critically considers whether new products or features would likely lead to more revenue or whether another approach—such as investing in a new go-to-market campaign—might deliver a higher return on investment.

“Engineering efficiency is a hairball - notoriously complicated and elusive.,” said Madalina, who highlighted the responsibility of leadership to decide on the company’s top priorities and then communicate that to the team.

She added, “In this environment, you say: ‘These three things can’t fail. The other things can be delayed or canceled.’ Focus and ruthless prioritization have brought the biggest efficiency gains.” 

Tactically, Madalina recommended tracking engineering utilization to understand how much time engineers are spending on revenue-driving activities vs other tasks.

“Ideally, it should be 80%,” she said, pointing out that you should incentivize and reward employees accordingly. For additional best practices and metrics for engineering organizations, check out ICONIQ Growth’s Engineering in a Hybrid World report.

Leverage

Engineers are particularly adept at finding new ways to streamline processes and improve efficiency, including their own work. Our speakers recommend that you challenge yourselves and your teams to get creative about getting more important work done faster. Similarly, remote and offshore work were discouraged at the early stages.

“I don't think you can underestimate the cost of time zone differences and cultural differences,” Madalina said. “That’s going to lead you to need more managers. Whatever you might save in individual contributor [costs], you’re probably going to pay in loss of efficiency and engineering management.” 

Recent breakthroughs in AI promise to deliver even more time savings. Jon offered the idea of employing AI to attend, record and summarize meetings to give employees more time to do productive work, vs. sitting in meetings.

“We have grown up with the idea that, ‘Oh, I need two more heads,’ as if software had no leverage, as if the more software we wrote, the more people we needed to tend it,” Alexis said. “Can we be more efficient with the same number of people? Can we automate ourselves out of part of our jobs? We don't have infinite resources. We cannot mistake the means, which is more people, for the end, which is more business.” 

Communication

Productive communication is always important. But when teams are stressed, timelines are compressed, and the company’s future is on the line, it’s absolutely critical. Keith and Mike, both members of ICONIQ Growth’s Technical Advisory Board, emphasized the importance of developing empathy between product and engineering teams and adjusting your method of communication and vocabulary to meet the other team members where they are. When providing updates to non-technical stakeholders, make an effort to understand that audience to help them contextualize the engineering team’s performance. 

“Asking questions is your superpower,” said Mike. “As an engineering leader you need to work on communication and adjust your vernacular to that of other non-engineering functions to explain why you’re challenged with X, Y or Z.”

We invite you to review this template we’ve created for ICONIQ Growth companies to help frame board updates in a way that is less technical and more data-driven.[DP4] 

Part of what draws us to work in technology is that it is the fastest-moving industry in the world. That also means it also changes quickly. Ultimately, the winners will be those of us who can embrace change and be the swiftest in our response. Challenge yourself and your team to harness the power of creative constraints to drive new solutions that may surprise you.