Limits of the learning curve
Citation: William J. Abernathy, Kenneth Wayne (1974) Limits of the learning curve. Harvard Business Review (RSS)
DOI (original publisher): Article
Semantic Scholar (metadata): Article
Sci-Hub (fulltext): Article
Internet Archive Scholar (search for fulltext): Limits of the learning curve
Tagged: Business (RSS) Innovation (RSS), Economics (RSS), Organizational Learning (RSS)
In The learning curve as a production tool, Frank Andress (1954) argued argued that as a firm increased the scale of manufacturing of a product, it got better at doing so and that costs would be reduced -- essentially, it was an argument about curvilinear effect of economies of scale. In this semi-academic article in Harvard Business Review, Abernathy and Wayne introduce the role of innovation to the discussion of the curve as a way to cautious against following the learning curve strategy "single-mindedly."
Essentially, the authors argue that a side effect of the learning curve (or a tension that is raised by it) is that it introduces inflexibility that will make it harder for the firm in question to innovate or to respond to new innovations. In the words of the authors, "the consequences of intensively pursuing a cost minimization strategy is a reduced ability to make innovative changes and to respond to those introduced by competitors."
The authors use model from the auto industry and from Ford's Model T and Model A programs. The authors argue that although Ford followed the learning curve with the Model T exceptionally, the consequences were that their infrastructure and manufacturing capabilities were so catered to the specific of that design that it took them a year to retool their factors to switch to the Model A and that the long term consequences for the company were not great. Essentially, they overspecialized and product innovation declined.
The authors generalize their results by using shorter examples from airframes and computers. They argue that the conditions stimulating innovation are different from those that stimulate high-volume established operations and that switching between the two can be difficult.
Theoretical and Practical Relevance
Abernathy and Wayne's short article has in it the seeds of much of the work on innovation at the industry dynamics levels that will come in future years but it's framing in terms of organizational learning seems particularly keen. In this sense, the article provides a bridge between learning and more of the core innovation literature.
For example, Tushman and Anderson's (1986)Technological discontinuities and organizational environments provide a description of one mechanism of how this conflict can play out. Leonard-Barton's (1992) Core capabilities and core rigidities: A paradox in managing new product development might be seen as explaining a more micro approach to the same issue. The article has been cited more than 320 times since it was published more than 35 years ago but its key insight remains a common trend in much innovation work to date.