Learning Curve

A learning curve is a concept that graphically depicts the relationship between the cost and output over a defined period of time, normally to represent the repetitive task of an employee or worker. The learning curve was first described by psychologist Hermann Ebbinghaus in 1885 and is used as a way to measure production efficiency and to forecast costs.

In the visual representation of a learning curve, a steeper slope indicates initial learning translates into higher cost savings, and subsequent learnings result in increasingly slower, more difficult cost savings.

The learning curve also is referred to as the experience curve, the cost curve, the efficiency curve, or the productivity curve. This is because the learning curve provides measurement and insight into all the above aspects of a company. The idea behind this is that any employee, regardless of position, takes time to learn how to carry out a specific task or duty. The amount of time needed to produce the associated output is high. Then, as the task is repeated, the employee learns how to complete it quickly, and that reduces the amount of time needed for a unit of output.

That is why the learning curve is downward sloping in the beginning with a flat slope toward the end, with the cost per unit depicted on the Y-axis and total output on the X-axis. As learning increases, it decreases the cost per unit of output initially before flattening out, as it becomes harder to increase the efficiencies gained through learning.

Benefits of Using the Learning Curve

Companies know how much an employee earns per hour and can derive the cost of producing a single unit of output based on the number of hours needed. A well-placed employee who is set up for success should decrease the company’s costs per unit of output over time. Businesses can use the learning curve to conduct production planning, cost forecasting, and logistics schedules.

The slope of the learning curve represents the rate in which learning translates into cost savings for a company. The steeper the slope, the higher the cost savings per unit of output. This standard learning curve is known as the 80% learning curve. It shows that for every doubling of a company’s output, the cost of the new output is 80% of the prior output. As output increases, it becomes harder and harder to double a company’s previous output, depicted using the slope of the curve, which means cost savings slow over time.

Points to Remember

• The learning curve does a good job of depicting the cost per unit of output over time.
• The learning curve is a visual representation of how long it takes to acquire new skills or knowledge.
• In business, the slope of the learning curve represents the rate in which learning new skills translates into cost savings for a company.
• The steeper the slope of the learning curve, the higher the cost savings per unit of output.

Application of the term “learning curve”

Two applications of the term “learning curve” can be found:

1. Generalized

The “learning curve” is often used in colloquial speech to describe the time and effort required when learning something challenging.

The application can be broad and generalized, such as describing the learning curve involved in learning to read. In these scenarios, a graphical representation using mathematics is not being applied to explain learning progression. The term is therefore used as a qualitative description of learning progression over time.

2. Measured

The other application of “learning curve” is quantitative, where mathematical models are created to represent the rate of proficiency or mastery of a task.

This learning curve model is only applicable when used to measure the real rate of progress for completing a specific task against time. The task needs to be repeatable, measurable, and consist of only one variable within a procedure; it cannot measure an entire procedure on its own.

Where to apply the learning curve?

There are many variables in learning that impact the rate of progression and cannot be accurately reflected in the learning curve model.

In the example of learning to read, the variables could include phonetics, vocabulary, type of reading material, teaching methods, motivation, previous knowledge or experience, quality of practice, and much more.

The learning curve model requires that one variable is tracked over time, is repeatable and measurable. Individual motivation, for example, would be difficult to measure. As a whole, learning to read is a complex procedure involving many variables and is not ideal for a learning curve.

An example of where a learning curve can be applied could be a measurable task like a factory worker learning to operate a new machine that requires specific, repeatable steps. As the worker learns to operate the machine following the procedural steps, he becomes faster and more proficient at using it. A learning curve would measure this rate of progression and mastery.

The learning curve model is used most commonly in organizational or industrial management to improve output by way of improving the performance of the human workforce.

The model was widely applied during World War II (WWII) when it was realized that the cost of aircraft decreased with the increase in production performance. It was later taken up by the industrial and business sector for a variety of performance improvement applications.

Real world examples of application the learning curve theory

The learning curve is known by different names partly due to its wide variety of application.

Terms used to describe the learning curve include:

• Experience curve
• Cost curves
• Efficiency curves
• Productivity curves

The model can be used to determine how long it takes for a single person to master a skill or how long it takes a group of people to manufacture a product. In most applications, the “learning” in the curve is actually referred to as process improvement.

Let’s take a look at some different examples of where the learning curve is being applied today.

Industry

Manufacturing costs as related to workforce performance can be tracked by using the learning curve. Instead of performance and number of attempts, the values could be unit cost or unit labor hours and cumulative production in units. As workers produce more product, the per-unit cost will often decrease.

The learning curve can be used to predict potential costs when production tasks change. For example, when the pricing of a new product is being determined, labor costs are factored in.

If a product takes two hours to produce, the product is released to the market for sale at a cost that reflects the two-hour production period plus other associated costs and markups.

But what if the production time was based on the first few attempts? What if by the 100th time the product was produced, production time is reduced to one hour? The product would be on the market at a price that is much too high, resulting in potentially lower sales. Using the learning curve can provide additional insight for planning purposes.

Business

Learning curves can also be applied to organizational performance using either the generalized approach or by conducting a measured analysis. Determining which approach to take depends on whether the desired performance can be directly measured.

For example, employees learning a difficult task, such as learning to use a complex software program, may have poor performance at the beginning due to the inherent difficulty of the task. If the goal is that employees need to know how to use the software in their day to day tasks, this may be difficult to measure as it involves many variables. By applying the learning curve theory as a framework, organizations can still benefit.

The learning curve as a framework can help organizations to understand in this scenario what is required to become proficient in the software. If training support and time to practice are identified as important factors, then it can be seen that employees who are given support and time to practice with the software will over time have better performance than employees who are not given support or time to practice.

If the software is important for productivity, then employee performance could decrease over time if employees cannot effectively use the software. Organizations can then provide additional support or resources needed.

To utilize a measured learning curve, organizations would need to identify a specific variable to analyze. For example, an organization seeking to improve the performance of customer service could decide that the implementation of a new initiative (# of attempts) would result in a decrease in customer complaints (performance). The organization could track and analyze the repetitive practice of this initiative over time to determine if indeed customer complaints decreased over time.

Medicine

For surgeons in the operating room, many procedures will involve the same repetitive tasks.

Because a surgeon is essentially practicing the same skill over and over whenever that procedure is done, the learning curve can be applied to show individual learning and performance over time.

This enables not only insight into the improvement that the surgeon is achieving, but aides instructors with identifying where more resources and assistance can be directed to improve performance.