HP, Bank of America and Alcoa dumped from the Dow!
Robin Helweg-Larsen
Published Date
A Changing Dow: What the New Members Tell Us About Business Acumen
As of September 20, three companies are leaving the Dow Jones Industrial Average:
- Hewlett-Packard
- Alcoa
- Bank of America
Their replacements?
- Nike
- Visa
- Goldman Sachs
There’s nothing particularly scientific about how the Dow is constructed, but it’s always interesting to examine the changes.
What is the Dow, Really?
The 30 stocks in the Dow are meant to represent the U.S. economy as a whole. They aren't all "industrial" anymore, but they are all large, publicly traded companies.
A few quirks:
- The index doesn’t include transportation or utility companies for some reason.
- The selection process is not formula-driven—it’s determined by the editors of The Wall Street Journal (which is owned by Dow Jones).
Some argue the Dow is just a PR exercise designed to paint Wall Street in a good light. Maybe so—but it still offers an interesting snapshot of corporate power.
What This Shift Tells Us About Business Trends
The companies leaving the Dow are large, well-established, but struggling in various ways. Their replacements? More vibrant, leaner, and innovation-driven.
Let’s compare:
CompanyFortune 500 Rank (2012)Fortune 500 Rank (2013)EmployeesSectorHewlett-Packard (HP)1510331,000ComputingNike12613640,000Wearable ComputingBank of America2126260,000Traditional BankingVisa2602818,500Mobile BankingAlcoa12811561,000Mining & MetalsGoldman Sachs688032,000"Minting Money" (Finance)
Okay, so that last description is a little flippant. But the key takeaway?
- The companies leaving employ over 650,000 people—they are big and slow-moving.
- The companies joining employ just 80,000 people—they are smaller, faster, and more innovative.
That may seem unfair to HP, given that it operates in a fast-moving industry. But Nike—a clothing company—is at the forefront of wearable technology, integrating sensors to track health and performance.
Similarly, Bank of America may have greater revenues than Visa, but it remains a traditional banking institution with 260,000 employees. Visa, on the other hand, has only 8,500 employees—and is leading the shift to mobile banking and digital transactions.
The Lesson: Business Acumen, Innovation, and Agility Matter
With these changes to the Dow 30, the editors of The Wall Street Journal are effectively endorsing three key characteristics:
- Business Acumen
- Innovation
- Speed of Change
And I support that—because those are the same characteristics we teach in every Income|Outcome workshop.
Book a call and find out how we can help your team build these capabilities.
