The Icarus Paradox states that the more a company becomes committed to its core competence, the less

The Icarus Paradox states that the more a company becomes committed to its core competence, the less able it is to change direction and see the dangers lurking from changes in technology and the environment and from its focus on a particular product. How does the Icarus Paradox help to explain IBM’s reaction to developments in the computer industry? T. V. Learson took over as CEO of IBM after Tom Watson Jr. in 1971 and became the head of a company that had a 75% share of the world market for mainframe computers—computers powerful enough to manage the information processing needs of an entire company. Learson had made a major personal contribution to IBM’s emergence as the dominant global mainframe manufacturer when he led the development of IBM’s highly successful System/360 mainframe series that led to the rapid rise in the company’s fortunes. IBM’s 360 mainframes fully automated a company’s manual information processing systems, such as payroll, accounting, and customer record keeping, making the punch card obsolete. As the former head of the 360 program, Learson understood the critical importance of research and development (R&D) in maintaining and defending IBM’s preeminent position in the mainframe market. Because of this, he initiated and oversaw the development of IBM’s new, more powerful System/370 computer series.

 

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