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The Big Squeeze
Article

The Big Squeeze

How Compression Threatens Old Industries

Omar Abbosh, Paul Nunes, Vedrana Savic and Michael Moore
MIT Sloan Management Review, 2017
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8

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Recommendation

Change doesn’t disrupt asset-heavy industries: It slowly erodes value instead. Accenture researchers explain how this “big squeeze” reduces earnings and can suffocate a company’s core business. If you operate in the telecommunications, utilities, energy, materials, automotive or industrials sectors, don’t bypass this eye-opening article.

Summary

Six asset-dense industries – telecommunications, utilities, energy, materials, automotive and industrials – have seen only ripples of technological disruption. Still, they face another serious threat: “industry compression.” This ”big squeeze” reduces companies’ earnings and can mean the end of their core business. Yet such compression can be hard to detect. Its short recovery periods are particularly deceiving, and many at-risk firms may not grasp the full scope of the threat. Typically, in asset-rich sectors, compression starts with a phase of...

About the Authors

Omar Abbosh is chief strategy officer for Accenture. Paul Nunes is global managing director of thought leadership for Accenture Research, where Vedrana Savic is director of thought leadership and Michael Moore is a senior research fellow.

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