When referring to learning curves, most people tend to think of individual performance, that is, the increase in output as the individual gains experience. Organisations learn as well. Why do organisations differ in their performance, even when they produce the same product or service? There are a number of reasons, some of these are:
1. Existence of standards
2. Presence of similar experiences
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3. Simplification of work tasks
4. Avoid employee turnover
5. Position on the learning curve
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6. Maintain demand
7. Rate of output
8. Economies of scale
9. Effects of calendar time.
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10. Attending meetings, conferences and professional associations.
11. Separate the work when operating two or more shifts.
12. Avoiding discontinuity.
13. Standard design of work tasks for an entire industry programmes.
14. Employee participation in productivity and cost reduction programmes.
15. Ability to learn from other firms.
16. Hire experienced personnel (especially from the competitors).
1. Existence of standards:
Without a comparison base, performance cannot be measured. Standards can be historically based (what has been done before); however, it would be better to establish standards using more formal methods. For example, these could be engineering specifications for equipment speeds or stopwatch time studies for assembly operations.
2. Presence of similar experiences:
A firm can take advantage of its existing experience by choosing complimentary products. Much of the knowledge may be transferable resulting in a more rapid learning rate as well as starting at a lower initial point. If two organisations produce the same product, the one with a related product has a higher learning rate.
3. Simplification of work tasks:
The simpler the task, the easier it is to learn. Training is a major factor in learning rates. Therefore, simpler tasks normally require less training.
4. Avoid employee turnover:
Organisational learning is a composite of many factors. New employees require training and thereby affect the learning rate.
5. Position on the learning curve:
All other things being equal, the firm that has the higher cumulative output should have the lower cost.
6. Maintain demand:
Regression in learning curve based output occurs not only from interruptions in the production process but also from decreased production rates. Rather than reducing production rates to meet reduced demand, the efforts should be find alternative markets simply to maintain demand.
7. Rate of output:
Studies have shown that recent experience has much more effect in reducing cost than more distant experience. Therefore, it we compare two firms with the same cumulative output, the firm with the higher rate should have a lower cost curve because its experience is more recent.
8. Economies of scale:
The benefits of increasing output through economies of scale in equipment, personnel and operations are to be recognized. Increases in productivity through economies of scale are added to the productivity gains from learning. This double benefit can be reversed, however, if rates or methods are changed and diseconomies of scale occur.
9. Effects of calender time:
It is interesting that calendar time is not as good a predictor of performance as cumulative output. Spending some time learning from others at the beginning is important (calendar time to learn from others); however, shortly after productivity begins; the firm’s own experience is more important.
10. Attending meetings, conferences and professional associations:
Attending meetings, conferences and professional association’s results in a transfer of knowledge across organisations.
11. Separate the work when operating two or more shifts:
Rather than having two or three shifts with duplicate learning rates for the same jobs, assign different jobs to each of them. Each shift achieves higher productivity by producing more units and moving further down the learning curve.
12. Avoiding discontinuity:
Interruptions require relearning even if it only involves a simple restart of an operation. More lengthy interruptions, such as plant shut down, or strikes or that involving employee turnover can take a long time to regain the previous learning curve rate.
13. Standard design of work tasks for an entire industry:
There are numerous rewards when firms in an industry develop standard design and procedures. A simple example is when a company can hire a worker with prior experience from another firm and benefit from that employee’s experience. Don’t change the design significantly unless it is justified.
14. Employee participation in productivity and cost reduction programmes:
Programs such as employee stock purchases, profit sharing, and group incentive plans can significantly improve the rate of learning as in the case of individual performance, groups also need motivation to improve.
15. Ability to learn from other firms:
Much can be learned from industry or other data about competitor’s performances. However, it is interesting that this knowledge only helps during the initial starting phase. Once underway, a firm’s learning is dominated by its own experiences.
16. Hire experienced personnel (especially from the competitors):
The value of outside experience is very important during the early stages of a learning curve. Similar to “learning from other firms”, after just a short time, progression down the learning curve becomes diluted with the existing firm.