The Tale of Icarus

In an investment classic “Practical Speculation”, the authors, Victor Niederhoﬀer and Laurel Kenner, write about the dangers of managerial hubris.

Daedalus, a brilliant engineer, earned much honor from Crete’s King Minos by building a splendid palace with a running-water system. Daedalus also built a labyrinth to hide the Minotaur, the monstrous issue of the king’s wife’s passion for the white bull of Poseidon. When King Minos learned that Daedalus had assisted the queen in consummating the union, he imprisoned Daedalus. Daedalus secretly fashioned wings from wax and feathers for himself and his son, Icarus, to escape to Sicily. When the time came, Daedalus counseled his son:

“Icarus, I advise you to take a middle course. If you ﬂy too low, the sea will soak the wings; If you ﬂy too high, the sun’s heat will bum them. Fly between sea and sun! Take the course along which I shall lead you.”

But Icarus could not resist the temptation to soar high into the sky. His wings disintegrated as the sun softened the wax, and he plunged into the sea.

Hubris is the sin to which the great and gifted are most susceptible, and it provided Greek tragedians and historians with a rich source of material. Recounting the punishments of heroes who aspired to godly heights provided catharsis, scholars say, allowing Greek audiences to cleanse themselves of fear and pity without becoming paralyzed by those emotions. Some writers presented the hero as wholly blameless. Aeschylus, for example, believed that the gods begrudged human greatness and inﬂicted hubris on men at the height of their success.

Twenty-ﬁve centuries later, hubris is still a potent force in our lives, from the moment we reach out as toddlers and challenge the gods with our invincibility by touching the stove’s red-hot burner. We all have our own examples of hubris. There is story of Old Man Hemingway. Hemingway was in the habit of ending meetings with lower-level executives by picking up a copy of the New York Times and holding it in front of his face. One day he was found dead, with 15 bullet holes in his paper. Apparently, a lower-level employee, enraged by his boss’ hubris, knew the newspaper gesture only too well and took the opportunity to do him

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In Wall Street’s tragedies, hubris often turns out to have been the culprit. The late historian Robert Sobel, surveying the past century of business downfalls in his 1999 book “When Giants Stumble: Classic Business Blunders and How to Avoid Them”, prominently featured hubris in his list of 15 deadly sins that destroyed such leading companies as Osborne Computer, LTV, Schwinn, and Packard Motor Car. (Sobel’s list also included nepotism, nonstrategic expansion, cutting corners, isolation, and dependency.)

The sense of being above the world is basic to hubris. The revered British negotiator Sir Harold Nicolson pinpointed the attitude in his 1939 classic, Diplomacy: “The dangers of vanity in a negotiator can scarcely be exaggerated. . . . It may bring in its train vices of imprecision, excitability, impatience, emotionalism, and even untruthfulness.””