What is a Center of Excellence
Continuing a series of posts addressing some of the lessons and take aways from recent experience in establishing Centers of Excellence.
I’ve never really liked the term. Sounds so haughty. I prefer ‘Competency or Capability Center’ or pick any another term you like. But, ‘Center of Excellence’ seems to be what has stuck in the business world, so we’ll go with it here.
Definition: Whatever you call them, a Center of Excellence (CoE) should, at a most basic level consist of: A team of people that promote collaboration and using best practices around a specific focus area to drive business results. This team could be staffed with full- or part-time members.
Responsibilities: In my experience, CoEs should serve five basic needs:
- Support: For their area of focus, CoE’s should offer support to the business lines. This may be through services needed, or providing subject matter experts.
- Guidance: Standards, methodologies, tools and knowledge repositories are typical approaches to filling this need.
- Shared Learning: Training and certifications, skill assessments, team building and formalized roles are all ways to encourage shared learning.
- Measurements: CoEs should be able to demonstrate they are delivering the valued results that justified their creation through the use of output metrics.
- Governance: Allocating limited resources (money, people, etc.) across all their possible use is an important function of CoEs. They should ensure organizations invest in the most valuable projects and create economies of scale for their service offering. In addition, coordination across other corporate interests is needed to enable the CoE to deliver value.
Types: One organization I worked with defined 13 centers within just their IT department. While all of these are important competencies they need to develop within that department, I’m not sure all reach the threshold of a CoE. Some common examples of CoE’s I’ve seen are:
- Six Sigma – Perhaps six sigma is the most mature of the CoEs that some organizations have embraced. This type CoE was invented by Motorola and popularized by GE. Many companies have grown this into a strategic asset they use to differentiate themselves and drive competitiveness. It has formal roles (Champions, Sponsors, Black Belts), a well understood methodology (DMAIC), standard set of tools (Statistical control, etc.), a formal certification process (Green Belt, Black Belt, Master Black Belt) and an active community.
- Process – To me, this is the most strategic of all CoEs since all businesses are made up of processes. I’ve started to see a few companies establish this as a CoE. One I know of is currently creating a role for a ‘Global Business Improvement Executive.’ I love that. It allows for all the traditional focus of lean and six sigma as well as for creating new strategies and business capabilities. I’ll have more comments on this as a CoE in a later post (see Process Center of Excellence.)
- Project Management Office (PMO) – Many fail to think of themselves as a CoE and act as little more than a governance body, but the most successful PMOs grow beyond that single focus and take on a full CoE role around project management.
- Quality Assurance – Whether for new product or software development the complexity of the roles, tools and techniques needed for quality often get formalized into a CoE. This may be tied to a six sigma CoE or stand alone.
- Business Analysis – Some organizations have embraced the idea that getting business requirements, especially around software development, is a problem best addressed by a CoE. A certification for Business Analysts from the IIBA has further advanced this idea.
- Communications – Corporate communications, employee and customer relations are activities that are often supported by a centralized support process or function. At a basic level, their role is to support the line business around this focus area.
- Risk and Compliance – Many organizations have created this capability without formally calling it a CoE. Insurance and financial institutions without exception will have this function. Other verticals may also embrace it. They almost always have veto power on changes to business processes or external communications. In ideal cases, they will help deploy standards and facilitate understanding throughout the organization.
- Human Resources – Another “function” or support process many businesses have embraced at a strategic level that meets the definition of a CoE.
Hopefully, some of these bullet points get you thinking more broadly about what a CoE is. If I extrapolate this thought stream past its current use, CoEs can really refer to any of the support processes within an organization that complement the line businesses. Not all organizations will embrace all the CoE’s listed above, but most will have some support processes. Is product development a CoE? How about sales and marketing or finance? While I don’t think businesses are ready to broadly embrace this concept, I do think that having leaders of all support processes think like a CoE can improve their focus and the value they deliver.