Why Do Organizations Learn at Different Rates?

Linda Argote, David M. Kirr and Barbara A. Kirr Professor of Organizational Behavior and Theory, speaks about her research on learning curves within organizations.

Video Transcript

I was going into organizations (these were mainly manufacturing organizations) and I was struck at this phenomenon of a learning curve — the improvements that an organization observes with experience. So the more experience they have (and plotting that on the x-axis), typically their defects go down at a decreasing rate, their costs go down at a decreasing rate.

When we delved into the area, we found some really interesting phenomena. One was this variation in rates of learning across organizations. We looked at how do organizations transfer knowledge? In our case, we were looking across products to answer the question whether a very homogeneous product mix, where you're producing similar products over and over again, is more advantageous, or more heterogeneous, where you're producing different products that can be challenging, but you can also learn things from one product to transfer to another.

So we did this project in a large contract manufacturer and we found that variety of the core products was valuable and that they were able to transfer knowledge from one to the other so they might learn something on one product that they could then transfer to make it more efficiently. But too much variety, especially on peripheral products, did hurt the organization's performance. So that was a finding that I think was interesting to the company, and we were able to publish that in Management Science, a top-tier journal.