strategy+business Winter 2013 : Page 21

essay technology nential curve, dubbed “the learning curve,” drops swiftly initially, but eventually flattens as the number of units required to double cumulative production grows large. In the 1960s, Bruce Hender-son, founder of the Boston Consult-ing Group, built on Wright’s idea with the concept of “the experience curve.” He argued that the expo-nential curve could be extended to a broader range of products if one focused on the total manufacturing cost per unit rather than merely the labor cost. Around the same time, Gordon Moore, director of research and development for Fairchild Semi-conductor Inc., made an observation based on his deep industry knowl-edge of computer chips. But Moore used time as his driving factor rather than cumulative production vol-ume. He asserted that the number of transistors per computer chip had doubled every year and would con-tinue to do so for another 10 years, sor industry; the latest generation of chips contain well over a billion transistors. Researchers continue to test and confirm the empirical validity of these tools even today. In a paper released in early 2013, a team of re-searchers from the Santa Fe Institute, a think tank dedicated to complex-ity science, collected and examined data sets on cost and production volumes for more than 60 technolo-gies over various time frames. One set covered integrated circuits from 1969 to 2005. The researchers found that the cost of a transistor in a chip dropped 43 percent with every dou-bling of cumulative volume and that the cumulative production doubled at a rate of every 1.2 years over the 37-year period. Their full data set shows that many technologies ex-hibit both a steady rate of volume doubling and a steady rate of cost decline (measured as the slope of the logarithmic curve), making Moore’s 1968. And freestanding gas ranges exhibited a much steeper cost curve than polystyrene, with a 32 percent reduction at each doubling, but cu-mulative volume doubled only once between 1947 and 1967. Therefore, to predict the cost curve of a new technology, we need to consider both the rate of volume growth and the rate of cost decline, also known as the slope of the expe-rience curve. The question becomes this: Will 3D printing behave like a microchip or a gas oven? The 3D Experience Curve 21 To predict the cost curve of a new technology, we need to consider both the rate of volume growth and the rate of cost decline. thereby reaching what seemed a mind-boggling total of 65,000 tran-sistors on a single chip. Revisiting the data in 1975, Moore—who by then had co-founded Intel Corporation—noted that his prediction proved correct but adjusted his future forecast to a doubling every two years. Despite ongoing debates about the limits of what has become known as “Moore’s Law,” a steady rate of improvement continues to drive the microproces-Law and Henderson’s experience curve effectively indistinguishable. However, they also found that the rate of change varies dramati-cally across technologies. For exam-ple, the evolution of hard disk drives between 1989 and 2007 revealed a 49 percent cost reduction with a doubling of cumulative volume ev-ery 1.1 years. Polystyrene, in con-trast, dropped at only a 16 percent rate and took 3.5 years to double in cumulative volume from 1944 to Although the $250 price point for hobby offerings of digital printing clearly demonstrates progress down the experience curve, the prod-uct remains in the nascent stage of growth. The relatively short history of 3D printing began with the intro-duction in 1986 of its foundational technology, stereo lithography, by Chuck Hull through his company 3D Systems. However, it took nearly a decade—and advances in solid-state lasers—before the technology captured a foothold as a true enabler of rapid prototyping. Consumer applications for 3D printing, which have more recently garnered considerable attention, face the traditional constraint of house-hold penetration. This limits the po-tential market size and accordingly affects the likely degree of volume doubling that is needed to drive the experience curve to rapid expansion. The case of similar technologies sug-gests caution; for example, we know that nearly a third of the households in the industrial world have mul-tiple televisions, but few have more than one stove. Personal computers offer another benchmark: Thirty years after the technology was intro-duced, more than 70 percent of the

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