Skip links

Icarus Paradox and the Businesses. Why Successful Ventures Fail?

It’s all greek !

This legend about Icarus indulges the readers because it describes his desire to endeavor beyond human boundaries and the resultant ramifications. Daedalus (his father), was ordered by the king to build a space to be able to contain Minotaur, a monster. He decided to build a complex labyrinth, the exit to which was difficult to decipher. The king resolved to incarcerate Daedalus’s family in the labyrinth, to keep all of this a secret. Daedalus gathered feathers to build wings held together by beeswax, the only mode of escape for his son. However, he warned him not to get too close to the sun! Neglecting his father’s advice, Icarus took flight in a pompous fashion. His excitement soon met with shock, as his wings melted from the heat and the overconfident Icarus fell to meet his doom.(1)

The business parlance
‘Icarus Paradox’ (2) is a term used for those businesses whose behavior and practices led to their success, only to constitute their failure afterwards. Did you know that when the list of ‘Fortune 100’ of 1966 and that of 2006 is taken, 66 of the companies don’t even exist?

Only 19 of them made it to the list again! (3) Sometimes, a particular sales strategy or a product can quickly gain success and lead to manufacturing complacency and arrogance in the top management. The capricious nature of the variables of the business environment reduce the triumphant methods to “old and outdated“ ones. Specialisation and rituals don’t necessarily harmonise with variant competitors, customer demands, new technology or business model.

Many organisations follow dogmatic paths, often of ‘deadly momentum’ which leads to plummeting profits, amplification of schemes, falling sales and even bankruptcy. Modest marketing strategies and galvanised corporate culture subside to humdrum promotion techniques giving unduly attention to core strengths, ignoring other important aspects.

There are four common ‘trajectories’ of decline taken into consideration. The ‘focusing trajectory’ takes painstaking Craftsman with airtight operations to a detail obsessed Tinkerer who alienates his customers. The ‘venturing trajectory’ converts the entrepreneurial Builder to an Imperialist unaware of his expansions and their functioning. The ‘inventing trajectory’ takes Pioneers with unparalleled R&D departments, state-of-the-art products and converts them into Escapists in pursuit of hopelessly grand and futuristic inventions. Lastly, the ‘decoupling trajectory’ changes Salesmen with broad markets and unexcelled promotion techniques to Drifters who produce stale and disjointed products. The notions of ‘layout’ and ‘momentum’ are primary to understand this phenomenon. Akin to organisms, organisations constitute layouts – mutually supportive elements built around a central theme. Sustaining one particular motif, choosing one set of values and focusing tightly around them suppresses other variants. As the organisations move towards consistency and obsession, they turn into extreme versions of their former self. Firms that focus on one target market rely on a narrow set of customers, the ones that aggressively diversify become too complex and fragmented. Considering strategic change, the dynamic ones move towards hyperactivity and the conservative ones inch towards stagnation. Yesterday’s excellent design becomes today’s sacrosanct anachronisms.

For leaders, success only reinforces their preconceptions and supports their recipes, however only failure helps them break the shackles of monolithic cultures and skills, and structural memories. They need to let go of their pride, people not directly related to the organisation will be able to tell them the hard truths. Some successful organisations encourage their managers to reflect broadly and deeply about the direction of the company. They scan widely and temporarily de-couple activities from the established operations, at least for a while. The only assumption they need to make is that they may have to go to war with the past. Going beyond the formal information system, they need to scan erratically with commitment and diligence. Many Japanese companies also set up small development teams with limited budgets that work on improvised experiments for making unique products. They are filled with young turks with tremendous energy who work on tracks for advancement outside the already existing structures. Famous quintessentials would be 3M, Honda, and Hewlett Packard. Paradoxically, the power of a tool increases both the potential benefits and its dangers. Cultures and strategies contain possibilities of success as well as the daunting risks of isolation and rigidity.

Dossier

Bajaj scooter was a big success at its launch, at one stage people had to wait for almost a decade for its delivery. However, the company was not innovating, competition from Japanese two-wheelers led to decline in its sales. Bajaj failed to pay heed to the changing market dynamics, producing only difficult to drive gear scooters with outdated designs manufactured in inefficient factories. The iconic ‘Chetak’ previously on ventilator support was killed in 2005. They came up with the gearless ‘Kristal’ , hoping it to be their phoenix. However, it failed miserably and they had to finally vacate the scooter segment from the company in 2009.

Kingfisher Airlines was set up in 2003 but had not seen a single year of profit since it got listed in 2006. (4) When Vijay Mallya acquired Air Deccan, he got the huge market share, several aircrafts with immediate listing. Along with the license to fly overseas, he also inherited the losses faced by the airline. It had a great brand loyalty and wide networks, however, Vijay Mallya was more like an absentee landlord. He wanted to set up a luxury carrier, however, he could not foretell the mounting losses. “When two aircrafts are alike, people will choose the less priced one”, remarked a business analyst. Without first consolidating the domestic routes, the hunger to expand operations without a fully grown manpower and strategy was detrimental to the mother company as well. The airline had to shut down in 2012. The accumulated debt owed by him traversed more than a billion pounds to a group of banks. The once ‘king of good times’ had to abdicate his throne, only to be claimed as a willful defaulter now !

Infosys had surely set the standards for the software and service industry. However, it did not acquire a consulting firm early on. The company had to forgo the opportunity to purchase Axon and its organic consulting practices were faulty. After that, it purchased Lodestone albeit it can be considered a case of ‘too late, too little’.

There is no defined magnitude of loss, which qualifies a company to be a victim of the Icarus Paradox. Some companies face losses beyond repair, while others learn from their mistakes and get back on their feet again. Just as the human body had evolved to beat the atrocities of time and weather, a company cannot remain intact without the necessary modifications. Companies that meet with an early success tend to get overconfident and obstinate only to meet the end just like Icarus. In life, as in business, we must necessarily remember ‘Pride goeth before the fall’!

By Kapish Jalan
Senior Secondary Student, The Yuvabharathi Public School, Coimbatore, Tamil Nadu


References

1. (https://greece.greekreporter.com/2018/04/17/the-tragic-story-of-the-fall-of-icarus/ )
2. Danny Miller – ‘How exceptional companies bring about their own downfall‘
3. (https://hbr.org/2009/03/businesses-and-the-icarus-para)
4. (https://www.thehindu.com/business/companies/the-rise-and-fall-of-a-castle-in-the-air/article2622215.ece )
This website uses cookies to improve your web experience.