How Companies Should Invest in a Downturn

by Vijay Govindarajan and Anup Srivastava

June 17, 2022

Illustration: Aaron Marin

Summary.

Technology firms’ stock prices have declined recently, bringing memories of the early 2000s’ dotcom bust. For example, the value of Cathie Wood’s Ark Innovation ETF has declined by 75% from its peak. This downfall is quite similar to the 78% decline in Nasdaq from March 2000 to October 2002, which was followed by a recession.

Vijay Govindarajan is the Coxe Distinguished Professor at Dartmouth College’s Tuck School of Business, a Dartmouth-wide chair and the highest distinction awarded to Dartmouth faculty; a Faculty Partner in the Silicon Valley incubator Mach49; and Senior Advisor at the strategy consulting firm Acropolis Advisors. He is a New York Times and Wall Street Journal bestselling author. His latest book is Fusion Strategy: How Real-Time Data and AI Will Power the Industrial Future. His Harvard Business Review articles “Engineering Reverse Innovations” and “Stop the Innovation Wars” won McKinsey Awards for best article published in HBR. His HBR articles “How GE Is Disrupting Itself” and “The CEO’s Role in Business Model Reinvention” are HBR all-time top-50 bestsellers. Follow him on LinkedIn.

@vgovindarajan

Anup Srivastava holds Canada Research Chair in Accounting, Decision Making, and Capital Markets and is a full professor at Haskayne School of Business, University of Calgary. In a series of HBR articles, he examines the management implications of digital disruption. He specializes in the valuation and financial reporting challenges of digital companies. Follow Anup on LinkedIn.

Read more on Economics or related topics Recessions, Economic cycles and trends, Strategic planning and Financial markets

How Companies Should Invest in a Downturn

Summary.

Partner Center