The importance of learning in organizations has been recognized since the early twentieth century. Organizational learning was implicitly applied by Henry Ford in developing the Model T. This work demonstrated the existence of learning curves, whereby the time and cost needed to assemble products decreased by a constant percentage—usually 20 to 30 percent—for every doubling of output.

The phenomenon of learning curves, also called experience curves, progress curves, or learning by doing, became very popular in the 1960s and 1970s. At that time, many managers were held up to (and fired for not reaching) the 80 percent mark, meaning, with each doubling of output, costs were expected to decrease to 80 percent of the prior cost level. This overly simplistic view of learning curves resulted in disgruntlement with them in the 1980s.

Modern scholars realize that, although the learning curve is present in many organizations, there is great...