Accumulation of Experience Framework
Learning curve
The accumulation of experience can provide a competitive advantage by reducing unit costs and increasing efficiency. However, the learning curve can be affected by the diffusion of proprietary technology.
- Experience can provide a competitive advantage
- The learning curve can be affected by technological diffusion
- Continual innovation is necessary to maintain a competitive advantage
- Identify Opportunities for Experience AccumulationIdentify opportunities to accumulate experience and reduce unit costsPro tipConsider investing in research and developmentWarningFailure to accumulate experience can lead to loss of competitive advantage
- Assess Learning CurveAssess the learning curve and its impact on unit costsPro tipConsider the complexity of the technology and the availability of skilled personnelWarningUnderestimating the learning curve can lead to loss of competitive advantage
- Develop Strategy to Maintain Competitive AdvantageDevelop a strategy to maintain a competitive advantage through experience accumulation and innovationPro tipInvest in research and developmentWarningFailure to innovate can lead to loss of competitive advantage
Light Aircraft Example
The light aircraft industry experienced changes in industry structure due to the accumulation of experience
OutcomeCompanies that accumulated experience and innovated maintained their competitive advantage
Underestimating Learning Curve
Failing to consider the learning curve can lead to loss of competitive advantage
Failing to Innovate
Failure to continually innovate can lead to loss of competitive advantage
The framework is based on the idea that experience can provide a competitive advantage, but it can be affected by technological diffusion.
Source · BOOK
Competitive Strategy