Companies that grow achieve greater economies of scale. New, more efficient technologies are introduced. Lower-costs substitutes are found and integrated into the supply chain.
We can find similar examples in the non-profit world:
"We are much better at starting treatment projects for TB and HIV on the ground than we have ever been,” says Jim Yong Kim, a cofounder of the Bostin-based organization Partners in Health. “every time we do it, we’re more efficient and use resources much more effectively.” When Kim, Paul Farmer, and their colleguess at PIH’s Peruvian partner, Socios En Salud, began their first program attacking multi-drug resistant tuberculosis in Peru, the cost for just the medicines was roughly $25,000 per patient. By 2006, the organization had been able to cut the per-patient cost of medicines to as little as $1,500."1
The power of the experience curve comes in all shapes and size.
Notes:
1 – page 30 of The Breakthrough Imperative by Mark Gottfredson & Steve Schaubert