Layoffs and Second Order Effects

Hello! 👋

It’s Thursday, 29^th January 2026. Welcome to Bold Efforts. I write this to make work feel a little less confusing, especially when the surface story sounds neat and the lived experience feels anything but.

A lot of people have lost jobs recently, including many of you reading this. If you were affected, I’m sorry. It is one of those events that looks clean on a spreadsheet and feels messy in a life. Even when you know it was not personal, it feels personal.

Most coverage of layoffs stays at first order. Headcount went down. Costs went down. Stock went up or down. Leaders talk about efficiency. Some talk about a shift toward AI. Those are real motives. But they are not the main thing that changes.

What is changing is the operating assumption behind modern corporate work.

For a long time, many tech (and other) companies ran on a simple belief: growth comes from adding people. If you add enough teams, you can add enough surface area. New products, new markets, new bets. When money was cheap and markets rewarded expansion, that belief held.

Now the constraint has moved (and will move again). Growth is harder. Capital is more selective. Customers are more careful. And AI makes a specific promise that leaders find irresistible: do more without adding layers of coordination. Whether the promise is fully true or not, it changes behavior.

So layoffs are not just a reset. They are a signal that the rules are being rewritten.

This is where second-order effects matter.

Second-order effects are what happen after the obvious consequence, when the system responds. The first-order effect of a layoff is fewer people and lower payroll. The second-order effects are the shifts in trust, risk, memory, and incentives that follow. They decide whether the company becomes sharper or simply smaller. They also decide how safe it feels to build a career inside any one place.

A layoff makes one uncomfortable truth clearer than any all-hands: performance is not the only variable. Strategy changes. Budgets change. Narratives change. A team can do good work and still be removed from the plan.

Once people see that clearly, they adapt.

The adaptation is usually quiet. People choose safer projects. They avoid controversial opinions. They optimize for work that looks legible in a weekly update. They keep options warm, even if they love the mission. Managers become more cautious with bets that take time to pay off. Teams become less willing to carry experiments that do not have immediate proof.

None of this requires bad leadership or weak employees. It is how intelligent people behave when uncertainty rises.

The second-order effect is that the organization gradually trades ambition for defensibility. Not because people stop caring. Because the system teaches them what is rewarded.

Companies like to say they are removing redundancy. Often, they are also removing coherence.

Every organization runs on two kinds of knowledge. One is written down: docs, tickets, dashboards, playbooks. The other is lived: the reasons behind decisions, the unwritten dependencies, the map of who to call before something breaks, the small constraints that never make it into a PRD. The lived knowledge is not glamorous, but it is the glue.

When layoffs happen quickly, that glue gets removed unevenly. The work does not disappear. It reorganizes itself around the gaps. You see more handoffs. More rework. More questions that used to have answers. More time spent rediscovering what the system already knew.

Then the system compensates in a predictable way. It adds process to reduce mistakes. It adds approvals to reduce risk. It adds coordination to replace missing context. From far away, this can look like “discipline”. Up close, it often feels like slower execution and weaker ownership. The company may become leaner and also more brittle. Vibe coded projects will not save the day.

There is another ripple that matters, especially now.

When leaders talk about efficiency, they usually mean measurable efficiency. Work that is easy to count and easy to tie to near-term outcomes becomes safer. Work that is cross-functional, long-horizon, or quietly foundational becomes easier to question, even when it is the work that prevents future fragility.

This reshapes careers.

It raises the value of people who can turn ambiguity into clear outcomes, and lowers the protection around roles that depend on context and institutional memory. It increases pressure to be visibly useful, not just deeply useful. It pushes more people toward portable skills, clearer proof of impact, and work that travels across companies.

Again, this is not a claim that AI replaces everyone. It is a claim that the threshold for defending certain kinds of work is rising. That changes incentives at every level and with every technology.

The first-order problem is practical: income, time, logistics, and the weight of uncertainty. The second-order problem is narrative.

A layoff invites you to make a harsh interpretation. It whispers that you were not good enough. Sometimes it tries to rewrite your whole story in one afternoon.

Resist that.

In most cases, a layoff is a decision about structure, timing, and priorities. It is not a clean signal about your worth. If you treat it like a verdict, you hand the event too much power.

The calmer response is to rebuild clarity. What you do that creates value in more than one environment. What problems you want to be close to for the next couple of years. What evidence you can show that reduces uncertainty for someone hiring you. In a market shaped by caution, reducing uncertainty becomes a real advantage.

And give yourself permission to stabilize before you sprint. Routine is not a productivity hack here. It is how you keep your judgment intact. And if you require help in looking for relevant roles, send me an email and I can assist using my new search engine for jobs which is on tracking to reaching 0.5M jobs in a month.

Do not read layoffs like gossip. Read them like information.

Notice what your company is choosing to prioritize. Notice what gets described as “core”. Notice what work gets pushed to the edges. Watch who gets protected, and what those people do. You are learning what your organization believes is scarce.

If the environment is rewarding legibility, make your work legible without turning your job into theater. If the environment is rewarding outcomes, define outcomes early and make progress visible. If the environment is rewarding resilience, build skills that survive tool shifts.

The layoff announcement is not the main moment. The months after are. I would be scared if I were a team leader with a fraction of a team.

People do not rebuild trust because they heard the right words. They rebuild trust when priorities become clearer, workloads stay humane, and the organization stops pretending that fear is focus.

The second-order effect you should care about most is simple: what your best people conclude about whether they can plan their lives around you.

Layoffs are a first-order act with second-order consequences.

They reduce costs. They also change risk appetite. They remove roles. They also remove memory. They tighten focus. They also reshape incentives about what kinds of work are safe to do.

If you want to understand where work is going next, pay less attention to the headcount number and more attention to the ripples that follow it. That is where the real change is happening.

Thank you for reading this rather long essay. See you next week.

Best,
Kartik

I write Bold Efforts every week to think clearly about where work and life are actually headed, not where headlines say they are. If you want these essays in your inbox, you can subscribe here.