“If you don’t read past this first paragraph, remember just two things: You almost never move up a learning curve, only down. And the steeper the curve, the easier the learning.” –Computerworld Magazine
Thank you, Computerworld, for clarifying what a learning curve is all about. Too many times, too many people get it wrong.
The classic learning curve, also known as the experience curve, is defined by Merriam-Webster as follows:A curve plotting performance against practice; especially: one graphing decline in unit costs with cumulative output
1. The course of progress made in learning something
2. The term was first applied in manufacturing to measure the progressively shrinking cost to units of output as the manufacturing process becomes more finely tuned.
The learning curve goes from the top left of a graph to the lower right and demonstrates how quickly unit costs can be reduced. The steeper the curve, the faster production costs can be lowered, at least initially (we learn more quickly at first, then the rate of learning diminishes). The idea is to get down the learning curve quickly, not to climb it.
But you’d hardly know it from how it’s often used.
Exhibit A: A well-known regional securities firm published a guide titled Helping Investors Climb the E-Learning Curve.
Exhibit B: From a highly visible wealth manager: “No matter how much you study and analyze, you cannot understand the market until you have money at risk. There are no fast or easy ways to get around the learning curve.”
Exhibit C: From the vaunted Harvard Business Review, in an article that coins the “sales learning curve”: “A large sales staff hinders more than it helps a company climb the [learning] curve.”
Are we splitting hairs? Not really. When it comes to wooing new investors, wealth management firms and advisors want to convey that they’re already well informed or quick studies, or both. They need to demonstrate that they’re well down the learning curve not good at climbing it. And in a highly regulated industry where every word and action is subject to scrutiny, managers can’t afford to err.