In 1919 the United States Congress passed an amendment to the Constitution prohibiting the manufacture, sale, and transportation of intoxicating liquors. Not surprisingly, prohibition devastated American breweries. Of the more than 1,300 brewers in operation in 1915, fewer than 100 survived. Yet some that made it through remain among the most iconic names in the business, such as Anheuser-Busch, Coors, Miller, Pabst, and Yuengling.

They survived by implementing a concept I call strategic hibernation—a form of purposeful retreat that allows companies to preserve capabilities critical to their missions during hostile political and cultural cycles, and then quickly ramp up again when the tide turns. Some brewers, for example, repurposed equipment to produce soft drinks, malt extracts, or even dyes, which were in short supply after World War I. Anheuser-Busch sold dozens of nonalcoholic products, including infant formula and ice cream. Miller produced Vivo (a “near beer”), soft drinks, and malted milk. When prohibition was lifted, these brewers came roaring back into the alcohol business.

In an era marked by economic turbulence, business leaders today find themselves navigating a whiplash of regulatory measures on issues such as trade, climate change, and diversity and inclusion. These executives would be well served by examining how companies have successfully managed historical moments of sharp political change, such as biotech firms amid the George W. Bush–era stem cell restrictions, Indian banks during the period of intense regulatory oversight that started in the 1980s, and Chinese tech firms under Xi Jinping.

Conventional strategy responses to such challenges typically include exit, voice, and loyalty. For example, Uber exited several Southeast Asian markets in 2018 by selling its operations to local rival Grab, recognizing the significant regulatory and competitive hurdles. Tesla used its voice by lobbying against dealership protection laws in multiple U.S. states to preserve its direct-to-consumer sales model. Apple showed loyalty by agreeing to host Chinese users’ iCloud data on local servers managed by a state-affiliated partner to comply with Chinese cybersecurity law. These firms used predictable, differentiated responses to complex political and regulatory landscapes.

All three responses, however, can have drawbacks. Exit may mean losing competitive footholds. Voice could escalate conflict, opening firms up to attacks by politicians and consumers. And loyalty may dilute a company’s reputation for ethical behavior.

Strategic hibernation offers a fourth option: quietly preserving internal capacities while reducing external exposure. This approach is not simply about cutting back—which is often executives’ instinct during turbulence and uncertainty—or pivoting away from the challenging area. It’s about building flexibility and discreetly preserving the firm’s options—knowing when to turn down the volume without walking away. In our politicized environment, that might mean reworking DEI departments to focus on culture or talent, or continuing climate initiatives under the umbrella of resilience or future-proofing. The point is that the activities continue, at least in a minimally viable form. Such a strategy allows firms to retain what they need to reenter key areas with momentum once the environment becomes more favorable.

In this article I discuss three examples that demonstrate the keys to a successful hibernation: first, maintain core assets; second, invest in political risk analysis; and third, be disciplined about external visibility.

Keep the Lights On

The first step in strategic hibernation is to maintain the company’s core assets. One of the most illuminating examples comes from 2001, when the Bush administration imposed limits on federally funded embryonic stem cell research, a decision that was driven by the politics of abortion. To respond, many biotech firms adopted strategies to preserve their scientific capacity while avoiding political firestorms.

This decision to pause rather than pivot to new research areas or abandon their missions, which included the research and development of cutting-edge therapies that relied on stem cells, was driven in part by the firms’ core values. Many were grounded in the belief that embryonic stem cells had transformative medical potential for a range of uses, from treating spinal cord injuries to curing or managing degenerative diseases. The approach also reflected the foresight that the government’s policy would likely be reversed. In retrospect, we can see the following pattern in the tactics deployed to maintain core capabilities.

First, biotech firms recognized the ideological nature of the opposition and believed future administrations would be more supportive of scientific freedom and biomedical innovation. They understood that the Bush-era restrictions were rooted in the Republican Party’s religious and pro-life base, so they expected that a future Democratic administration might reverse these policies, which occurred under President Obama in 2009.

How could they be confident in this prediction? Public opinion polling and the federated nature of the U.S. political system both clearly demonstrated that opposition to embryonic stem cell research was not monolithic. Several states countered the federal restrictions with public funding initiatives, such as California’s Proposition 71, passed in 2004, which committed $3 billion in state funding for stem cell research. Companies like ViaCyte, based in San Diego, leveraged this funding to advance diabetes therapies.

Second, it was clear that many other countries were enthusiastic about this line of research, as they stepped in to offer funding. While their resources paled in comparison to what was being withheld in the United States, they still provided a lifeline for firms. These signals—from state-level investments to global partnerships—indicated that stem cell research was not only surviving but thriving outside U.S. federal constraints, reinforcing the rationale for a strategic pause rather than a strategic pivot.

The alternative sources of funding also let biotech firms maintain the infrastructure and workforces that later allowed them to resume the paused work. Importantly, firms faced with these restrictions did not play a passive waiting game—they managed their risk dynamically to preserve their values and options, such as by offshoring key operations to more-permissive environments. For instance, California-based biotechnology company Geron collaborated with the University of Edinburgh on therapeutic stem cell research. Many leading U.S. stem cell researchers and companies moved their research to Singapore, which had a more favorable regulatory and investment environment.

U.S. biotech firms also retained core teams, managed IP portfolios, and continued research that did not require direct work with stem cells. They focused instead on areas including data analysis, bioinformatics modeling, protocol development, and intellectual property planning. This way, the firms could sustain scientific progress, protect knowledge capital, and remain ready to restart high-cost experimental research as soon as the policy barriers lifted. Douglas Melton, codirector of the Harvard Stem Cell Institute, explained that complying with the Bush-era restrictions in a way that did not abandon the work required extreme care, such as by creating new ways to segregate and label experimental materials and procedures.

These strategies allowed research ecosystems to stay intact—albeit partially inactive—until federal support could be restored. And while they kept their heads down in the United States, the firms weren’t entirely silent. When they did speak, they often did so collectively, issuing group statements to diffuse their individual exposure. For instance, in 2001 executives from the Massachusetts biotech company Advanced Cell Technology (ACT)—notably Michael West, Jose Cibelli, and Robert Lanza—secured the signatures of eighty Nobel laureates in a letter to Science advocating for federal funding. Their public engagements extended to testimonies before the National Bioethics Advisory Commission and the U.S. Senate. It’s not clear if this effort actually had an impact, but it showed that lobbying doesn’t need to stop during periods of hibernation.

As a result, many of the biotech firms were able to thrive when the policy was reversed in 2009. For example, in 2014 ACT rebranded as Ocata Therapeutics and in 2016 was ac-quired by Astellas Pharma for $379 million, reflecting the value of its preserved capabilities and foresight. In 2022 ViaCyte was acquired by Vertex Pharmaceuticals for $320 million, with clinical trials underway using embryonic stem cell–derived pancreatic progenitor cells.