Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Learning Curve

What it is:

A learning curve is the time it takes to master a concept. It is more of an idea than a chart or other visual representation of learning.

How it works (Example):

For example, piloting a 777 has a steep learning curve -- you can't just walk in off the street and learn how to do it in 10 minutes. It takes months if not years of training and simulation before one can be considered a master of the concept of flying and landing a 777.

Why it Matters:

In the business world, learning curves cost money and they create competitive advantages. If a company is training employees how to pilot 777s, for example, the training time costs a lot. However, if the company becomes the only one to have employees who know how to pilot 777s, it has used the learning curve to create a competitive advantage.

In many cases, a graphical representation of the learning curve shows what many experience in the real world -- initial concepts are easy to pick up, but the long-term detail involved in mastering the concept takes years to acquire.