By now, many of you have read that my alma mater, Cisco Systems Inc., has laid off more than 4,000 employees and is shedding businesses right and left in an effort to assuage investors.

This is a mistake.

Don’t get me wrong, I can think of about 5,000 people off the top of my head who need the ax at Cisco, but those aren’t the ones being axed. They are the ones doing the ax-ing. Please don’t misinterpret this as “I hate executives,” as there are good and bad executives just as there are good and bad marketeers, salespeople and engineers.

The mistake is that they are repeating their error of the dot-com crash of 2001 and contracting when they should be expanding. They are cutting down the new growth areas in their infancy, hobbling their growth potential and damaging themselves in the long term. They are retreating to a conservative posture of their core, cash-cow, mature businesses that have no rapid growth potential. They had market dominance and cash on hand during the last downturn, and could have purchased key technologies and companies until the Department of Justice red-carded them for a market monopoly.

Investors want consistent quarterly results and linearity in a non-linear market. This gives no latitude for executives who need to rapidly innovate, as rapid innovation introduces large upswings or downswings depending on success. Investors hate swings.

Face it, routers and switches are a mature market. In any mature market, multiple companies will come to dominate and rule, stealing 1 percent of market share here and there but otherwise reaching an inert homeostasis until they wither and die. Meanwhile, back in the real world, progress rolls along and people are innovating in disruptive technology areas, business and delivery models, etc. You can try to dam the flow of innovation, but eventually it overflows and washes out the inert players. Think Microsoft and then Apple.

You get companies like Arista Networks, which was founded by two innovators (previously within Cisco) who finally got tired enough of the inertia that they left to go it alone. They don’t have any sacred cash cows or sales models to protect; they can quickly disrupt without fear of reprisals.

What the market needs during downturns is more experimentation and innovation, not less. We have had a great forest fire that burned down much of the unneccessary undergrowth and old trees with this recession, allowing for new growth. Some of this new growth happens within the boundaries of large companies, but most does not. When the tough times come, shareholders demand cuts, and the first things on the chopping block are the new efforts that have yet to bear fruit.

Yes, let’s plant a very expensive vine to make fine wine and then chop it down before it has taken root and borne its first fruit. Smart.

You get the point.

Christian Renaud is CEO of Present.io and mentor-in-residence at StartupCity Des Moines. This piece is excerpted from his blog.