The 5 Charts that Changed Businesses: the Experience Curve

Posted on August 30, 2012

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People don’t usually think of charts as groundbreaking innovations.  But the visual aid of a chart often helps us draw valuable conclusions from otherwise unorganized data.  Today, we here at DaVinci Business Graphics begin our series on the 5 charts that changed the business world.  Today’s offering: the Experience Curve. 

 The experience curve is a simple concept, but one that many economists failed to represent visually until 1966.  The idea behind the experience curve: the more experience a business has in producing a certain product, the better able it is to reduce costs.

Developed by the Boston Consulting Group while analyzing a producer of semiconductors, the experience curve has been shown to apply to industries across the board.  The invention of the chart itself was not earth shattering.  However, the implications were.  Businesses realized that if falling costs were directly related to experience, and experience was also related to market share, then the business with the largest market share would also have a big cost advantage over its rivals.

It was also discovered that different products have experience curves with different slopes.  Some one that produces semiconductors for 5 years may see a 30-40% reduction in costs, while a constructor of nuclear reactors may only see a 5% reduction in costs.    But, what the chart revealed was that the experience curve applies to almost every business.

The experience curve is now taught to students of business and economics, who recognize the chart instantly.  If your business needs help representing data using the visual simplicity of a chart, consult DaVinci Business Graphics.  We’ve been providing businesses with the custom business charts they need for over 25 years.  We print the highest quality business charts designed to your specifications.

 

Contact DaVinci Business Graphics today and discover how our charts can help you better manage your business

Visit Us on the Web at davincibg.com

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Call Us at 1-949-679-7666

 

Image 1 via davincibg.com, Image 2 via hbr.org, Image 3 via cob.niu.edu, Image 4 via extension.iastate.edu

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