05 Jul 2006Working Paper Summaries

Learning Tradeoffs in Organizations: Measuring Multiple Dimensions of Improvement to Investigate Learning-Curve Heterogeneity

by Francesca Gino, Richard M.J. Bohmer, Amy C. Edmondson, Gary P. Pisano and Ann B. Winslow

How and why experience leads to performance improvement has made the learning curve an important management topic for sites ranging from nuclear power plants to cardiac surgical units. This new research looks deeper at learning curves by focusing on learning rates in technology adoption in similar organizations along multiple, potentially competing dimensions. Using longitudinal data from sixteen hospitals that are adopting a new technology for cardiac surgery, it specifically studies two dimensions: efficiency and application innovation and the potential tradeoff between efficiency and application innovation. It also asks how such tradeoffs are influenced. Key concepts include:

Organizations should explicitly decide which dimension of learning is of greatest strategic importance to them.
Some organizations may learn more slowly on a particular dimension because they are investing in a different, potentially contradictory dimension of learning.
Hospitals in the study that focused on increasing the technical difficulty and innovativeness of their use of a new technology were less likely to increase efficiency as quickly as those that were focused on efficiency.

Author Abstract

Learning-curve research has found that rates of learning can vary across similar settings, such that cumulative experience is a necessary but insufficient predictor of learning-curve slope. One explanation for this finding is that how the learning process is managed affects rates of learning. We investigate an additional possibility. At any point in time, organizations can learn along multiple, potentially competing, performance dimensions. In particular, we suggest that organizations adopting a new technology or practice can "learn" on more than one dimension at the same time, such that more than one meaningful learning curve may exist for the same learning challenge. Thus, by arguing that effort invested in learning on one dimension may inhibit learning on another dimension, we propose a new explanation of learning-curve heterogeneity across organizations. Using a sample of sixteen academic and community hospitals adopting a new surgical technology, we demonstrate a tradeoff in organizational rates of learning on two dimensions: improving proficiency in an existing application use of the technology (efficiency) and applying the technology to novel and more challenging uses (application innovation). Our results provide support for our proposed explanation of learning-curve heterogeneity and suggest the salience of both rate and direction (i.e., dimension) in learning. We also find that the goal orientation of the organization influences the direction of learning (efficiency vs. application innovation).