Companies that cut R&D in recessions underperform for a decade

A 2019 Harvard Business Review analysis of 4,700 public companies across three US recessions found that firms that protected their R&D budget outperformed peers who cut it by an average of 4.5 percentage points annually for the following ten years.

Not marketing. Not sales. R&D.

The playbook most boards reach for during a downturn — freeze hiring, cut travel, pause the moonshot — is correct on the first two and catastrophic on the third. The moonshot is often the thing that funds the next cycle.

If you're making cuts right now: cut what protects quarters, keep what protects decades.