Finance Glossary

The Icarus Factor refers to when a company undergoes an overly ambitious project and does not succeed, leading to a decline in financial health. The phenomenon is associated with overly-enthusiastic, misguided leadership. The term comes from the mythological figure Icarus, whose artificial wings melted when he flew too close to the sun.

Icarus-like occurrences often happen when a company tries to diversify into new markets. The company might run into business models they are not used to dealing with. They may end up spending valuable cash reserves from the core business in an attempt to catch up with other companies already in the industry. The Icarus Factor can also occur when a company tries to expand too rapidly in its own market. An example of the latter would be India-based Kingfisher Airlines, which failed in part due to rapidly growing its fleet and prematurely commencing international operations.