Learning Curve Theory - An Effective Management Tool

The Learning Curve

Many definitions have been given to describe the learning curve theory. Although most, if not all delineations are closely similar, their interpretations would provide clearly the same essence on the subject. 

A learning curve can be defined as a graphical representation of the changing rate of learning of an average person for a given work activity, whether physical or mental. Typically, the increase in retention of information is sharpest after the initial efforts, and then gradually evens out, meaning that less and less new information is retained after each repetition of the process. To put it simply, a learning curve is a graphical representation of the increase of learning (vertical axis) with experience (horizontal axis). 

See graph below:

The learning curve can also represent at a glance the initial complexity of learning a certain work activity and, to an extent, how much there is to learn after initial familiarity.

The concept of the Learning Curve basically states that there less and less learning   achieved as more repetitive work stages are made. For example, if the hours between doubled quantities are reduced by 20% (rate of learning), it would be described as a curve with an 80% slope.  See below a graph of what that curve might look like:

The familiar expression "a steep learning curve" is intended to be interpreted that the activity is difficult to learn, although a learning curve with a steep start actually represents speedy progress.

The first time a new operation is performed both workers and operating procedures are untried but as the operation is put into place the workers becomes more familiar with the work process so that less hours are required, a phenomenon known as the learning curve effect. The theory also indicates that human performance usually improves when a task is repeated. Specifically, each time output doubles worker hours per unit decrease by a fixed percentage. This percentage is called the learning rate.

Origin of the Learning Curve Theory

Hermann Ebbinghaus
Photo courtesy of en.wikipedia,org

The first person to describe the learning curve was Hermann Ebbinghaus in 1885, in the field of the psychology of learning. Ebbinghaus was a German psychologist who pioneered the experimental study of memory, and is known for his discovery of the forgetting curve and the spacing effect. He was also the first person to describe the learning curve.

It was in 1936 when Theodore Paul Wright, an aeronautical engineer who described the effect of learning on production costs in the aircraft industry. This formula, in which unit cost is plotted against total production units, is sometimes called an experience curve.

In 1968 Bruce Henderson of the Boston Consulting Group (BCG) generalized the Unit Cost model pioneered by Wright, and specifically used a Power Law, which is sometimes called Henderson's Law. He named this particular version the experience curve. The BCG conducted some empirical studies in learning curves in the 1970s and observed that experience curve effects for various industries ranged from 10 to 25 percent. Hereunder are the conclusions from the findings of that study:

Ø  the time required to perform a task decreases as the task is repeated,

Ø  the amount of improvement decreases as more units are produced, and

Ø  the rate of improvement has sufficient consistency to allow its use as a prediction tool.

In the same research, it was confirmed that there is a consistency in improvement in the form of a constant percentage (%) reduction in terms of time required over successively doubled quantities of units produced. The constant percentage by which the costs of doubled quantities decrease is called the rate of learning.

Learning Curve Theory as an Effective Management Tool

A learning curve is now recognized throughout business and industry as a valuable tool to improving productivity in the workplace.

This is so because the learning curve theory affects not only direct labor costs but also impacts direct labor related costs such as supervision, and direct material costs due to reduced wastage as experience and expertise is acquired. The time to perform many operations begins slowly and speeds up as employees become more skilled. Gradually, the time needed to complete an operation becomes progressively smaller at a constant percentage.

In general, learning curves can ensure improvements in work performances of workers owing to mastery of the activities of producing the product or carrying on the production process as well as the elimination of initial bottlenecks (teething problems) naturally associated with new systems.

Learning curves likewise provide a comprehensive understanding of problem areas in the organization and enhance the formulation and implementation of strategies to resolve them. Learning curves also increase the enthusiasm of the working staff to excel and achieve excellence in work performance in order to enjoy higher responsibilities and corresponding rewards.

Learning curves are very effective in “job specialization” programs of companies, where a worker is assigned to particular job to achieve work proficiency and increase efficiency at the least minimum production costs such as men, time, materials, and spoilages.  

In conclusion, the learning curve theory aids business owners and managers to understand how costs go down over multiple repetitions of the work process.  When an individual worker starts to do a repetitive task he will take more time than he will after several repetitions. It is practical that, since work-time is money in operations, business companies would like to know what production costs will be over time in order to attain corporate goals and objectives.  

Rogelio G. Balo

Oct. 10, 2013

Central Valley,

California USA