Difference Between Larning Curve and Experienced Curve

The core concept that people and organizations learn by doing is the foundation on which experience and learning curve models are built. Organizations and people may produce relatively lasting behavioural or learning changes by repeating actions and gathering experience.

The cost per unit often drops at a decreasing rate as more goods are manufactured by a producer or as more transactions take place in a service. This phenomenon has an exponential distribution. The difference between these two curves along with their detailed explanation is provided below.

What is the Definition of a Learning Curve?

The notion of a learning curve in mathematics demonstrates how process improvement occurs over time as a result of greater expertise and learning. According to the learning curve idea, operations will demand less time and resources as they are completed more often because of the proficiencies acquired when the procedure is learned. The learning curve is a tool used to estimate expenses and gauge production efficiency. It was initially described by psychologist Hermann Ebbinghaus in 1885.

A percentage that indicates the pace of advancement used frequently to define a learning curve. A learning curve's graphic representation shows that a steeper slope denotes early learning, which converts into larger cost savings, and that subsequent learning leads to slower, more difficult cost reductions.

Having an Understanding of Learning Curves

There are several terms for the learning curve, including the experience curve, cost curve, productivity curve, and efficiency curve. This is because of the fact that the learning curve offers cost-benefit evaluations and descriptions of each of the previous corporate elements.

This is based on the idea that all employees, regardless of rank, must invest time in learning how to do a certain activity or function. A significant amount of time is required to create the corresponding output. Following that, the worker becomes proficient at performing the operation rapidly as it is repeated, which cuts down on the time required to produce a unit.

Because of this, the learning curve, which shows the overall output on the X-axis and the cost per unit on the Y-axis, starts out trending downward and ends on a flat slope. As learning grows, the cost per unit of production first drops before levelling off as increasing the efficiencies achieved via learning becomes more difficult.

In order to indicate the pace of progress, learning curves are often linked to percentages. When the cumulative amount doubles, for instance, a 90% learning curve indicates a 10% increase in efficiency in the cumulative mean production time per unit. When productivity is doubled, the percentage indicates the portion of time that will be carried over to subsequent task iterations.

Formula for the Learning Curve

A formula for determining the intended cumulative average time per unit or batch is included in the learning curve. The learning curve formula is as follows:

Y=aX^b

Where:

  • Y=Total Average Time for Each Unit or Batch
  • a= Duration required to generate the initial quantity
  • X = The total number of batches or the total amount of units produced
  • b = The slope, also known as the learning curve index, is computed by dividing the log of the learning curve percentage by the log of two different types of learning curves.

The following are some typical kinds of learning curves:

1. Diminished Profits

The rate of advancement rises quickly in the initial stages of learning and falls with time in the diminishing returns curve.

Difference Between Larning Curve and Experienced Curve

The graph above illustrates an instance in which an activity or task may be simpler to learn at first, leading to a quick and quick advancement. When assessing and forecasting changes in workforce efficiency and output over time, tasks that adhere to a declining learning curve are simpler.

When it comes to decision-making, this outcome indicates that while the worker is doing well, expenses should continue to be controlled beyond the first plateau.

2. Increasing Profits

The rate of advancement is slow at first and rises with time until full competency is attained in the increasing returns curve.

Difference Between Larning Curve and Experienced Curve

The situation shown in this graph involves learning a complicated task at a slower beginning learning rate.

Since slow learning rapidly recovers its initial costs once it reaches the high-efficiency phase, no action items are needed in this decision-making scenario. This graph, however, should be used as a signal to adjust your employee training programme if the remaining data indicates that workers should not need much time to master the activity.

3. The S-curve

The commonly mentioned learning curve, often referred to as the "S-curve" model, is an increasing-decreasing returning learning curve.

Difference Between Larning Curve and Experienced Curve

The bottom of the curve shows that a student has to put in a lot of effort and time to master these abilities. The learner is now doing projects more quickly and has mastered the skills, as shown by the latter half. After this, the learner's performance will begin to average, and further increases are likely to be marginal.

When workers are given access to a new productivity tool, they can face this kind of learning curve.

Performance is regarded as highly effective if the level is closer to the X-axis. However, performance might not be as effective if the level is closer to the highest point of the graph. When making decisions, examine the method of training and other variables that affect the cost of maintaining efficiency during the peak period carefully.

4. Complex Curve

A more intricate learning pattern and more careful surveillance are visible in the complex learning curve.

Difference Between Larning Curve and Experienced Curve

This implies that learning while subject matter is difficult and requires practice before an individual becomes skilled.

  • Stage 1: denotes a slower initial phase of learning.
  • Stage 2: exhibits a rise, indicating that the learner is mastering the ability.
  • Stage 3: After a student has mastered a skill, it indicates that their skill level is plateauing.
  • Stage 4: It means that the student is still trying to grow better at the skill.
  • Stage 5: This is the stage when the learner undergoes "overlearning," or the moment when the skill becomes automatic or is stored in the brain.

The intricate learning curve model appears differently with every activity, person, or group. When learning activities include complex learning curves, students experience a variety of peaks and plateaus.

When making decisions, try to find approaches to save expenses or improve training by choosing applicants who have the knowledge required to do this work as efficiently as possible.

The learning curve model finds potential for development and assists in tracking multiple aspects of an organization's success. It has certain restrictions, but it offers information on worker performance and training. Let us look at the primary advantages and disadvantages of the learning curve paradigm.

Benefits of the Learning Curve Model

The learning curve structure has the following main benefits.

1. Decrease in Expenditures

The time required to perform operations tends to decrease with increased expertise and effectiveness of personnel or processes, which decreases labor expenses. Experience also imparts more knowledge about how to cut waste and maximize resource utilization, which lowers manufacturing costs.

2. Elevated Level

Workers have an in-depth into their jobs and processes as they gain more experience. Higher quality goods and services are produced as a result of the reduced mistakes and flaws brought about by this increased expertise and knowledge. The learning curve makes it possible to enhance procedures and methods, which raises quality standards all around.

3. Improved Instruction and Advancement of Skills

The learning curve model strongly emphasizes ongoing development and learning. As employees advance in competence, they become increasingly important assets to their business. This model additionally promotes constant training and skill development to ensure that workers are continually knowledgeable about the most recent methods and innovations in their industry.

4. Accurate Delivery

The learning curve model supports to development of reliable growth in performance tendencies over time. Planning and forecasting benefit tremendously from this predictability. Businesses can apply past data to figure out the duration it will take for fresh hires to become completely skilled or how long it will take for newly implemented procedures to reach peak efficiency.

5. Reduction of risk

Businesses can recognize and avoid possible dangers and traps while they gain expertise. The learning curve helps people formulate strategies and backup plans by using their prior experiences. As the company improves its ability to foresee and deal with possible problems, this understanding helps reduce the risks connected with starting new projects or implementing new procedures.

Drawbacks of the Learning Curve Model

The learning curve model has the following major disadvantages.

1. Limited Significance

In situations when actions become regular and repetitious over time, the learning curve model functions optimally. The advantages of the learning curve could be decreased in professions or sectors where duties are very volatile or call for a lot of creative or adaptable effort. The idea of efficiency and productivity increase over time, for example, is not applicable in the same manner in manufacturing or mundane service jobs as it does in creative or research-based sectors.

2. Major Inefficiencies

There is generally a time of less efficiency and more expenses at the start of the learning curve. This is because workers are still learning the skills and knowledge required to carry out their jobs well. This stage might regard a greater number of mistakes and rework, which could end up in higher upfront costs and perhaps longer production or service delays. These early inefficiencies could be a serious problem for companies that are budget-conscious or have a deadline for outcomes.

3. Unwillingness to Change

A propensity towards rigidity can develop when workers or procedures become more skilled at certain activities. Employees may get so used to their present practices that they become resistant to innovations or adjustments. This rigidity can be used against you in fields that shift quickly and need a high degree of adaptation. Moreover, placing too much emphasis on present methods and efficiency might deter the investigation of perhaps more efficient techniques or technologies, resulting in a halt to innovation.

How to Make the Learning Curve Flatter to Strengthen Staff

These eight strategies can help businesses create staff training programs that are both successful and efficient by using the learning curve.

1. Configure the Output Unit.

Establish both short-and long-term measurable objectives to assess worker efficiency and the efficacy of training. Outlining the goals that staff members could have accomplished at the end of the program will help you clearly define its purpose.

2. Effective Onboarding

Be careful to design a productive onboarding procedure that will help a new person become proficient and maintain confidence in their position. In the first weeks of employment, a solid onboarding procedure gives freshly recruited team members the knowledge, skills, and resources they need to succeed, shortening and increasing the productivity of their learning curve later on.

3. Personalised Instruction

Provide training materials for customized learning programs suited to each participant's specific work tasks and learning styles. Personalized training increases training efficacy while flattening the learning curve and raising employee engagement.

4. Make Knowledgeable Choices

If the learning curve data indicates that the current training procedure is ineffective, investigate alternative methods for staff training and make additional modifications to improve your training initiatives. Finding the right adjustment that boosts performance might involve several rounds of trial and error.

5. Guidance Mentoring

Traditional employee training programs, regardless of how organized they are, typically do not impart the understanding and data people need to carry out their jobs properly. This is where getting in-the-moment guidance from a seasoned expert, such as a mentor, supervisor, or long-time employee, could be beneficial for learning.

6. Invest in technologies for learning

A growing number of companies make use of employee training software for providing efficient training with tailored learning materials which make use of user analytics to assist in reducing the learning curve for staff members.

To establish and manage staff training programmes, a variety of employee training software options are available.

  • Corporate LMS: Corporate LMS technologies support learning and development (L&D) teams in establishing and assessing organizational and individual learning objectives, creating and evaluating learning materials, monitoring progress towards those objectives, and gathering information to monitor and enhance the learning process.
  • Digital Adoption Platform: A digital adoption platform (DAP) integrates with currently available digital technologies to offer an automated, individualized training system in the course of work. Based on a student's profile, DAPs create a contextual work list for each learner that includes interactive inspections and other in-app substances. Walkthroughs are detailed instructions that lead users through certain procedures or activities.
  • Video Training Software: Video training software allows you to create, publish, and share training films. It also has analytic tracking capabilities to monitor the pace of training and learning advancement. Training films are produced to educate viewers about software, compliance, onboarding new employees, and other topics.

7. Set an End Date

Setting a time schedule to achieve the set of intended outcomes can help you determine if your training techniques produce the required results, which will reduce the learning curve. For example, after a three-week CRM training program, new recruits should be able to create and handle leads and accounts on the company's CRM platform.

8. Persistent Observation

Applying the learning curve idea shouldn't be limited to periods of change or training challenges; rather, it is recommended to track the learning curve continuously. When issues arise, they are quickly identified through continuous monitoring, which makes it simple to adjust and change your strategy as needed.

Illustrations of Learning Curve Theory

The foundational principle of the learning curve hypothesis is that organizations or people develop more proficiency in a subject over time when they practice it. The concept finds application across multiple domains, including project management, personnel education, technology integration, healthcare, and medicine. Let us investigate how each of these instances fits inside the structure of the learning curve theory:

1. Management of Projects

When project teams gain experience with ongoing duties or comparable projects, they can see the learning curve in project management. Because of unfamiliarity or unanticipated issues, a project can begin to take longer and need more resources. But over time, the team improves its problem-solving techniques, streamlines its procedures, and gets a deeper understanding of the project's criteria. Future initiatives will take less time and expense as a result.

2. Training for Employees

When new hires are being taught, there is often a significant learning curve in the beginning. Their completion times may be longer, and they can require additional supervision. However, they become more productive as they acquire more information and experience. In this case, factors such as the quality of training courses, the complexity of the work, and the capacity to learn the person could all influence the learning curve.

3. Usage of Technology

When new technology is implemented in an organization, there is always a learning curve. Workers' initial refusal to change and decreased productivity could result from finding it difficult to adjust to new software or processes. Eventually, they gain more experience with the technology as they become more used to it, which increases output, fosters creativity, and often gives them a competitive edge.

4. Medical Treatment and Prescription Medications

The learning curve in healthcare is obvious in many areas, including surgical techniques, testing techniques, and patient care approaches. For example, a surgeon might require longer to complete treatment the first time, but as they practice, they become faster and more efficient, which often results in better patient outcomes. In a similar vein, experience helps medical personnel become more skilled at using novel medical equipment or treatment techniques.

How to Use DAP to Help Employees Get Over Complicated Learning Curves

Employers could assist staff members in overcoming the challenging learning curves associated with complicated software applications and digital procedures by providing role-based in-app instruction and real-time assistance using a digital adoption platform (DAP).

Employers can provide staff members with a DAP by providing them with:

  • In-app Instruction Flows that guide workers through complicated CRM, HCM, ERP, or other application workflows.
  • Employees can decrease the time it takes them to become proficient with key software and tasks by using task lists and onboarding tours.
  • Contextual Smart Tips motivate end users to do certain things by offering more information.
  • End users are notified of new updates, process modifications, feature additions, or team announcements via pop-ups and beacons.
  • Field validation helps to guarantee that data is input accurately and appropriately formatted.
  • Employees can get to self-help inside their apps, offering them real-time performance assistance.
  • Enterprise Insights and User Actions, which allow teams in charge of IT and L&D to monitor employee flows, end-user friction, application implementation, and any customized in-app actions.
  • By closing the knowledge gap between theory and application, DAPs enhance learning, encourage continual education, and automatically activate staff memory.

How Do You Measure and Compute a Learning Curve?

Calculating how long a job will take to complete allows one to quantify and compute a learning curve. The rate of effectiveness the task performance will experience as they learn and gain greater task proficiency is then determined by assigning an improvement value using a learning curve.

The formal formula to get the add-up time is Y = aX^b, where an is the time it takes to generate the initial task, X is the total quantity of tasks completed, and b is the learning curve slope.

What is the Meaning of a 90% Learning Curve?

A learning curve provides an indication of the pace of learning and progress with a percentage. Usually, the % indicates how long it will take to do twice as many repetitions. This indicates that, in the circumstance of the 90% learning curve example, there is a 10% improvement each time the total amount of recurs doubles.

Define Experience Curve.

The concept which demonstrates how accumulated production expertise and average cost for each unit of output are related is called the experience curve. Its objective is to ensure that if cumulative output doubles, the average cost per unit constantly lowers.

As experience grows, an organization's ability to find more productive ways to produce goods, optimize workflows, save expenses, and boost profitability are all made possible by the experience curve. It is essential because it helps in the long-term strategy planning of companies by predicting cost savings as well as cost modifications. It helps businesses to calculate the amount of time needed to meet cost goals.

An Explanation of the Experience Curve

The experience curve expresses the correlation between the average cost for each unit of output and cumulative production experience. The basic principle is that a company's production costs decrease over time as it grows expertise and learns how to make something more effectively as it produces more units of it.

The following fundamental ideas form the foundation of the experience curve:

  • Learning and Efficiency: Employees and managers increase their productivity and efficiency as they acquire experience and master their jobs. This commonly happens as an outcome of improving their knowledge of manufacturing procedures, lowering mistakes, and figuring out more efficient methods of doing jobs.
  • Process Innovation: New methods and equipment are often adopted because of experience, which stimulates innovation and helps save costs while increasing production efficiency.
  • Standardization: Increased efficiency and reduced expenses can come from the standardization of manufacturing methods and parts.

Reasons

Consider the following justifications:

  • Economies of Scale: Businesses can take advantage of economies of scale if they increase their production quantities. Spreading fixed costs into bigger units and making bulk purchases of components and materials could considerably lower the average cost per unit.
  • Standardization of Processes: Organisations choose to standardize processes as they gain experience. Standardization reduces mistakes, streamlines processes, and improves resource allocation, all of which lead to lower costs.
  • Acquiring Knowledge from Experience: Life provides chances to gain knowledge from errors and inadequacies. Businesses could raise overall efficiency by addressing issues and putting remedial measures in place when they face difficulties.
  • Employee Experience: Skilled workers have grown acquainted with their jobs and are capable of performing tasks more efficiently. Higher job competency results in reduced training expenses, fewer mistakes, and higher overall output.

Experience Curve Examples

To have a better understanding of the idea, let us examine the instances.

Example No. 1

Suppose ABC Electronics is a smartphone manufacturing firm. At the start of its operations, ABC Electronics had substantial manufacturing expenses due to inadequate manufacturing process efficiency and expertise. To create a smartphone, $300 is spent on each unit.

As it develops expertise and starts manufacturing more devices, the company has started to find places where it can optimize production, cut waste, and apply more efficient processes. Every time cumulative output doubles, ABC Electronics sees a 20% average cost-per-unit decrease.

The average cost per smartphone decreases to $240 when 1,000 are manufactured. The cost per device drops to $192 with the manufacturing of the next 1,000 cellphones, and so forth.

ABC Electronics could price their smartphones reasonably, which will improve sales and market share, as long as the experience curve remains to have an impact on their business operations. In order to remain on the leading edge of technical developments and increase the experience curve effect, the corporation could additionally dedicate extra funds to technological advancement.

Example No. 2

Assume that $500 is the manufacturing cost per solar panel for SolarTech Solutions when it strikes the market. The cost was lowered to $400 (20% decrease) when 2,000 panels were produced. It declines even more to $320 (20%) at 5,000 panels and reaches $280 (12.5%) at 10,000 panels. The cost savings allow SolarTech Solutions to stake out an important share of the market for green power by charging reasonable prices, drawing in more clients, and investing in research and development for innovative solar technology.

Benefits

Here are the main benefits to consider:

  • Economic Efficiency: Cost-effectiveness is one of the experience curve's major benefits. Businesses that have more experience and knowledge are able to create products and services at a lower cost per unit. They can retain profitability by offering competitive prices for their goods due to this cost advantage.
  • Competitive Advantage: Businesses can exceed their competitors by taking advantage of the experience curve. Because manufacturing costs are lower, companies can invest in new products or provide products at competitive pricing, which increases their popularity among customers.
  • Enhanced Profitability: As manufacturing expenses become cheaper with skills, the difference between costs and selling prices gets larger, which improves profit margins. Companies have the ability to spend in marketing, R&D, and growth thanks to their higher profit margins.
  • Entrance Obstacles: Businesses with a more prominent experience curve can create significant barriers to entry for potential rivals. It might be challenging for new competitors to gain market share if they are unable to match the cost-efficiencies of more established firms.
  • Sustainable Growth: Experience curves help firms grow sustainably. Businesses can maintain their competitiveness and profitability as long as they continue to improve their efficiency, which will contribute to their long-term success.

Limitations

Let us examine some of the restrictions:

  • Cumulative Volume Hypothesis: The experience curve makes the presumption that cumulative production volume is the only factor influencing cost reductions. Though this is commonly the case, expenses can be impacted by other variables, including market dynamics, technology advancements, and outside events.
  • Learning Saturation: After a particular period of experience, the pace of lowering expenses can slow down or plateau. Organisations could ultimately deplete their experience-based options for making meaningful cost reductions.

Additional Examples of Experience Curves

Texas Instrument

Eugene McDermott, J. Erik Jonsson, Patrick E. Haggerty, and Cecil Howard Green established Texas Instruments (TI), an American producer of semiconductors and unique integrated circuits, in 1930.

The business saw a great opportunity to implement an experience curve approach in the early 1970s due to advancements in portable calculator technology and a large volume of price-sensitive demand. Over a ten-year period, calculator unit costs fell from hundreds of dollars to less than $10 when Texas Instruments joined the market and used the method in 1972.

Sales surged in response to the pent-up demand, and as the firm was an experienced-based cost leader, its advantages in competition could not be overtaken. Experience curve techniques work particularly well in situations when demand is very susceptible to price variations, as shown by the case of Texas Instruments.

The increased demand hastened up the curve's development once the corporation was able to cut prices, allowing TI to substantially boost production. This caused a further reduction in production costs, which raised demand and drove down calculator prices in a positive feedback cycle.

Extraction of Oil and Gas

Studies on the experience curve's impact in the context of oil and gas drilling businesses have also been conducted. As many as 45 percent of wells drilled during the initial phases of the shale boom, which started in the 1950s in the United States, produced no apparent resources.

However, the number of gas and oil wells that were bored dry dropped sharply to under 10% by 2010.

Numerous reasons related to the gains in cost reduction:

  • Technology Develops Gradually.
  • Enhanced crew and technical knowledge
  • Decreased geology uncertainty.

Researchers determined a suitable range of marginal costs for geothermal extraction using a hypothetical scenario of shale oil and gas production.

For certain enhanced geothermal systems (EGS) projects, these expenses were added to development cost estimates. Through this technique, researchers aimed to determine the levelled price of electricity (LCOE) for various initiatives proportional to the total number of wells that were dug.

Based on the study's outcomes, EGS projects as an entire could save a substantial amount of money. Researchers calculated the unsubsidized LCOE for many projects at varying degrees of maturity by accounting for realistic cost assumptions and a multi-stage completion well design.

Results indicated that initial expenses were substantial compared to market rates. However, the experience curve provided an obvious path for creating EGS projects that are competitively priced without depending on technological advances.

According to the research, attaining cost competitiveness may need hundreds of wells in locations where power costs are low. But the experience curve would enable new ESG projects to get affordable in just a couple of iterations in favourable regions with high power costs and a well-established carbon market.

According to the researchers, this would dispel the idea that the cost of geothermal and ESG projects would not continuously drop to the point where they could rival other resources.

In reality, the lower exploration risk of ESG initiatives made a manufacturing approach to project development possible, and this strategy ultimately resulted in significant cost and efficiency benefits due to variables such as scale, learning, and innovation.

Difference Table

AspectExperience CurveLearning Curve
DefinitionThis curve illustrates how the link between total output (production or experience) and cost cuts over time. It depicts how overall expertise leads to increased output, decreased expenses, and improved efficiency. Costs per unit tend to go down when production volume increases or expertise levels rise due to factors like economies of scale, learning, process improvement, and technology developments.The learning curve shows the correlation between the total amount of work completed and the duration required to acquire new abilities. It measures the rate at which a certain job or talent gets acquired or improved over time. Although the curve is sharp initially, it gradually softens as individuals or organisations become accustomed to a job or procedure.
FocusThe experience curve's primary goal is to show how costs can be reduced over time. It highlights the relationship between experience and bigger production, cost savings, and efficiency.The learning curve primarily deals with the development of skills and their gradual improvement. It brings attention to the process of learning that people or organisations go through in order to pick up new competences, information, or skills.
VariablesThe experience curve study usually involves the following factors: time, units produced, and costs (total production costs or unit costs). These variables are included in the analysis of the link between experience acquired over time and cumulative output.The learning curve focuses extensively on time and performance indicators. While performance indicators like error rates, productivity, or job completion times are used to monitor performance gains over time, time is utilised to track the learning or skill acquisition development.
ApplicationIn company planning, the experience curve is frequently applied for pricing plans, process optimisation, competitive advantage analysis, and cost forecasts. Businesses have more resources to decide on pricing, cost control, and market competitiveness when they have a better understanding of how costs vary with experience and production volume.The learning curve is used in many different kinds of fields, including project management, training, education, and production scheduling. The learning curve is used to determine resource needs, optimise job assignments, and boost general project or production effectiveness in project leadership and production planning.
Shape of curveThe experience curve usually has a downward slope, indicating that costs decrease as experience or cumulative output rises. As expertise develops, the curve, which is initially steep, shows significant cost savings. As the organisation gets closer to the equilibrium of the curve, however, the pace of cost reduction steadily slows down.When people or organisations become familiar with a job or method, the learning curve first displays a sharp fall, indicating quick learning or improvement. But when the pace of progress slows down, the curve eventually flattens out. This flattening of the curve signifies the crossing of a learning or skill development level, beyond which incremental gains are possible.
Management toolThe experience curve is an approach to management that is used for competitive edge analysis, cost management, and strategy development. Companies design pricing, position in the market, cost-cutting, and long-term growth plans using the information gleaned from the experience curve.The learning curve is an important tool for skill growth, performance oversight, and workforce planning. The learning curve is a tool used by companies to determine the level of training required, divide tasks effectively, define performance goals, evaluate the effectiveness of training, and promote ongoing skill and competency development among employees.

Conclusion

This article acts as a precursor to the concept of Experience Curve. Here, we compared experience curve with the learning curve and discuss its benefits, drawbacks, and examples.






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