Confront brutal facts

Keep it real.
Do not give false hopes or solutions to your team. Present the facts as they are and ask for their insights, thoughts and feelings.

Ask questions.
Your role as a leader is not to have all the answers/solutions and have the team follow you. Lead by asking questions and engaging your team.

Encourage dialogue and debate.
It is okay to argue and debate. This is where the best resolutions often come up.

Discuss past failures without blame.
Create an environment wherein you can discuss past failures openly. Identify what went well, what went wrong and what you can improve to make the situation better.