When corporate excellence is not so excellent
March 4, 2021
As with most good ideas, Centers of Excellence (CoEs) started so well. Originating in the military sector, they began with a simple premise. Bring the best experts on a specific subject together to create a result better and faster than any could reach individually.
When the business sector adopted the CoE concept, it was to drive efficiencies and improvements across an organization at scale. It worked in the early days, especially in the supply chain area. CoEs do work, when designed and implemented correctly. For instance, recently a high-tech hardware/software company implemented a lean manufacturing excellence CoE. Leaders identified a select set of individuals and armed them with advanced automation, traditional lean processes and leading-class procedures in productivity, safety, and quality. Then, they sent this team on an enterprise-wide mission to assess, improve, track and monitor manufacturing facilities across the organization.
I liken results like this to orchestrating the perfect holiday dinner or family brunch. The best meal results from the best cooks working collaboratively in the kitchen while the rest of the bunch stays out of their way. I, for example, do not belong in any holiday kitchen. I tend to muck up the works. So, I typically exclude myself and instead gladly make polite conversation in the living room. If only we were all so sensible when orchestrating business excellence through CoEs.
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Pockets of unconnected activity
Centers of Excellence have proliferated throughout business organizations over the past several decades. And ironically, many are quashing the very excellence they are pursuing. Too many cooks in the corporate excellence kitchen equals not-so-excellent results. Why? Because too many CoEs, unconnected to one another, create pockets of siloed activity. These siloes usually end up overlapping at best and at worst, working at cross-purposes.
Let’s go with a real-world example. I recently worked with a company seeking to establish an analytics CoE within their IT organization. Prior to launch, we wisely conducted an enterprise-wide assessment of analytics capabilities.
Our findings were fairly typical. Two different business units already had analytics CoEs. Marketing, Finance and Corporate Development all also claimed they had dedicated teams of analytics experts focused on their individual needs. When we dug deeper, we found high levels of redundancy and overlap, as well as confusion amongst end users due to different data sources and output methodologies.
Going back to my family dinner analogy, we found the corporate equivalent of your Aunt Sally cooking an unnecessary and redundant side dish alone in the back pantry while other chefs do their own thing in their own kitchens. The result is not a masterpiece meal, but a hodgepodge of unrelated foods.
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WEF panel: The future of value creation
Frank Riemensperger, Accenture lead for Austria, Germany, Russia, and Switzerland, talks with Deutsche Bank's Chief Technology and Innovation Officer, Berndt Leukert and Professor Doctor Svenja Falk, Managing Director, Accenture Research. From the impacts of trade policy changes to supply chain analytics, they cover the gamut of new ambitions for value creation with digital. Watch on YouTube.
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A remedy for brilliant concept, flawed execution
Pocket CoEs destroy, rather than produce, value. The company I worked with realized their multiple CoEs were taking up managers’ precious time. With no standard for measurement, too much time was spent disputing results and clarifying multiple analyses. As a result, they were lacking the intelligent insights that could have come from an integrated CoE effort and would have allowed better managerial decision-making.
This company stopped the madness after its analysis. After doing an enterprise-wide scan that uncovered more than six analytics-related CoEs, they decided not to create another one for the IT function. Instead, the CIO’s team formulated a plan for an enterprise-wide analytics CoE, focused on end-to-end business services and outcomes.
How might they have avoided the wasted time and confusion that occurred prior to their enterprise-wide effort? They could have created a governing body for CoEs from the get-go. Without a lot of red tape, this governance would have required clarity for the outcomes any CoE is going to create, as well as its role in business analysis.
Most importantly, no individual functional leader should be given budget for a one-off team of experts to solve a problem. Executive-level oversight is essential to ensuring your CoEs don’t multiply unnecessarily and unproductively. That governance and oversight prevents redundant, conflicting outcomes that are narrower than they should be.
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Executive-level oversight is essential to ensuring your CoEs don’t multiply unnecessarily and unproductively.
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Let’s get back to our high-tech hardware/software company. The manufacturing excellence CoE reported results to the C-suite on a quarterly basis. They continuously tracked and monitored the results at each of their sites. This senior-level visibility allowed them to do their jobs thoroughly and without duplicative costs and process variation due to other shadow teams. Also, while companies usually seek external benchmarks, frequently the best leading practices are found within – and a CoE can take them from one site and bring it to the others.
That’s a straight path to enterprise-wide excellence and a true-to-purpose strategy for CoEs that any company can follow.
