Learning Curve

A learning curve is a graphical depiction of the improvement of a certain process over a period of time due to increased proficiency and learning. Usually a learning curve is described with the percentage that identifies the learner's improvement rate. Simply put, the learning curve is a graphical representation of the change in the process of learning or producing anything. 

Learning сurve explained

The more people perform a certain task, the better they are at performing it. Usually, people spend much more time and resources to complete the task when they just start working. However, over time people adapt and find new, more efficient ways to perform the tasks. For example, the first time Mary knits a scarf, it takes her a long time, but knitting the scarf for the tenth time will take her much less time because of the experience she’s gained. This constant improvement is measured through the learning curve.

The learning curve theory suggests that the more certain tasks are performed, the less time it will take to complete them. Tasks take less time because as the process is learned the experience in this process is gained. 

A well-known psychologist, Hermann Ebbinghaus, was the one who discovered the learning curve in 1885. He clearly showed what the process of forgetting previously learned information was like. 

The learning curve method is widely used in education, business, economics, and human resources. In economics, a learning curve is a function that shows how the number of hours required to produce a unit of output decreases overtime. From a business perspective, if there is a new computer program, the learning curve can estimate the time it will take to train the company’s staff so they know how to use it. 

Learning curve formula

The formula for the learning curve is as follows:

Learning curve calculation

As an example, we are going to use a 90% learning curve, meaning that every time the cumulative quantity doubles, the process becomes 10% more efficient. Let’s assume that completing the task for the first time took 100 hours. Completing the task for the second time will take 90 hours. Consequently, for the third and the fourth time the same process will take 81 hours and 72,90 hours, respectively.

Learning curve table

Sometimes, it might be difficult to distinguish between such variables as the number of units of output produced, average time per unit, and total production time. The learning curve table neatly organizes the needed data, which is useful in cost accounting. 

90% Learning Curve Table, Assuming First Task Takes 100 Hours

Learning curve graphs

Graphic depiction of learning curves is pretty common, because learning curve data can easily create trend lines. Usually, the learning curve graphs represent such data points as production time and the number of tasks. With a relatively simple task, the dynamics of success can be reflected in the units of output produced over a certain period of time. In order to measure the dynamics of success with a task that is more complex, more sophisticated methods should be used. Learning curve graphs are useful because they help a company understand its staff performing the tasks efficiently enough. 

Shapes of learning curves

There are different ways in which learning curves can be illustrated. They can be depicted as a chart, with linear coordinates; in this case the chart would be in the shape of a curve. It is also possible for a learning curve to be represented by a straight line instead of a curve.

The shape of the learning curve can help companies determine whether the staff's performance is improving, declining, stagnating or fluctuating. It can also draw companies’ attention to the potential impact on employees’ performance in order to increase the positive impact on the business and mitigate the negative impact. 

The lower the curve percentages, the higher degrees of improvement. Lowering the learning curve percentages results in the steeper slope of the graphs. 

Advantages and disadvantages of the learning curve model

The learning curve model is extremely useful for monitoring various aspects of a company’s performance and identifying areas for improvement. It can give companies a lot of useful ideas; however, there are some limitations. 

Using a learning curve model to track a company improvement in various aspects can help in:

• Strategic planning 
• Employee motivation
• Identification of trends that can be used to make better business decisions

There are some important limitations that need to be understood in order to use the learning curve model correctly. Some of the main disadvantages and limitations are:

• There are a number of variables that can affect the learning process including time, previous experience etc. Tracking only these variables can provide misleading data. 
• Some performance or progress might be difficult to evaluate. Thus, identifying a single unit of output becomes rather difficult.
• The learning curve model on its own is not enough to provide a complete picture of the manufacturing process. There are many variables that can affect performance. Therefore, the learning curve model needs to be used in conjunction with other performance management tools and methods.

Example of learning curve 

For instance, Ben is a new employee on a production line. Everyday this employee has to construct a certain part of medical equipment. Of course, at first Ben has less experience and his work efficiency is decreased compared to his colleagues. However, as Ben gains experience, and becomes more and more proficient at what he is doing, he is going to manufacture more medical equipment parts faster. 

In Ben's case, an 80% learning curve would mean that every single time the number of repetitions doubles, there is going to be a 20% improvement. Eventually, it is important for the company to use this information in order to price their goods, create their financial plan and be prepared to meet customer demand.

Importance of the learning curve

Learning curves are widely used to determine when operational efficiencies can happen. Moreover, the learning curve helps to identify how fast a certain task can be finished by the employees as they gradually gain the needed experience. The learning curve can also be useful in distributing working hours between employees.

As a company gains experience in producing a product or providing a service, the cost of producing a single unit of outcome for this company decreases. A company that specializes in the production of a certain product has more experience and knowledge on how to make the manufacturing process as efficient as possible. Therefore, this company will have more profit compared to the company without relevant experience.