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8 reasons to consider a COE (Part 1)

February 10, 2010

In my practice over the last year, I’ve been doing a lot of work helping clients create and manage centers of excellence (COEs). They’re not a new concept by any means; in one form or another and under a variety of names, they’ve been in use since at least the mid 1960s. But whether it’s due to the increasing pace of globalization, the growth of the virtualized workforce, or the complexity and speed of the marketplace today (or some combination of all three), lately I’m seeing renewed interest in COEs at my clients.

So at the risk of contributing to internet list mania—and incurring the wrath of the boys over at BMOC (see their take on numbered lists here)—I’ve decided to write a series of posts under the umbrella title of “8 Reasons to Consider a COE”, of which this post is the first of at least two, but no more than eight…

But before diving in to reason #1, let’s start with a quick overview of what exactly I mean by center of excellence, because the concept can mean different things depending on who you ask.

For my purposes here, a COE is a cross-functional body that brings together a group of people to focus on a single process area, business activity, or capability. Generally speaking, organizations establish COEs in order to achieve one or more of the following high-level goals:

  • Improve their maturity level in a process area, business activity, or capability
  • Reduce time to market for products and services related to a process area, business activity, or capability
  • Improve quality of products and services related to a process area, business activity, or capability
  • Create organizational linkages across functional areas, departments, or geographic locations

For example, an organization might create a COE around customer service, which would bring together employees from a range of functions, departments, and geo locations in order to share knowledge, develop best practices, and author policies and procedures relating to customer service activities, without, however, creating a new department or fundamentally altering official reporting lines.

So much for definitions—let’s move on to the first reason to consider a COE.

#1. To reduce knowledge management risk

Without splitting hairs over the definition of knowledge management (KM), the main KM risk organizations face boils down to this: at any organization, a large percentage of critical business information lives either exclusively in employees’ heads or in locations only they know about (or can access easily). This is a problem for two reasons:

  1. Employees who need a piece of critical business information may not know that it exists or who has access to it.
  2. Employees with critical business information may leave the organization or switch functions within it, taking the information (or access to it) with them.

Although organizations have always faced these two problems, the impending mass retirement of Baby Boomers combined with the increase in virtualized workers exacerbates them. When your most experienced workers begin retiring en masse and the rest of your employees are working more frequently from remote locations, the challenge of how to retain the knowledge about to walk out the door and share it with workers not in physical proximity to each other becomes almost intractable.

COEs help organizations address this challenge and reduce their KM risk in two ways. First, they foster knowledge sharing by dividing the responsibility for a particular process area, business activity, or capability among more than one person. Second, they encourage employees to document their knowledge and publish it to a wider audience in policies and procedures, process diagrams, best practices, etc.

There are of course limits to how effectively COEs can address KM risk on their own, because a given COE only reduces KM risk related to its process area, business activity, or capability, not the organization as a whole. So if Employee X is leaving the company after 25 years, any COEs they may have been a part of will help incrementally reduce the KM risk of Employee X’s departure, but the total KM risk their departure represents will always be larger than what COEs could address.

#2. To improve quality of service delivery

The quality of service delivery (whether to internal or external customers) can be negatively impacted by lots of factors, but some key ones are lack of a consistent process, unpredictable timeframes or costs, poor communication with customers, and lack of transparency. These factors are particularly relevant where multiple groups are responsible for a service that the customer experiences (or wishes to experience) as a seamless whole. For example, if a bank offers both checking accounts and credit cards, I expect that the account opening processes for both will be more similar than not, that I’ll be able to manage both accounts using the same tools, and that I’ll get the same level of customer service no matter what.

As we all likely know from experience, this is not always the case. Radically different account opening processes and documents, siloed customer service call centers, separate websites and log ins—unfortunately these are not uncommon problems even when dealing with large, market-leading organizations.

COEs can improve service delivery quality by encouraging and providing the mechanism for sharing knowledge, documentation, processes and procedures, data, resources, experience, and best practices relating to a process area, business activity, or capability across an organization.

In terms of the bank example above, a COE around account opening (AO) would allow groups responsible for AO on different products to work together to improve how they each (and ultimately, the bank as a whole) provide AO services to their customers. Process steps, tools, customer service protocols and SLAs, even the language and format of AO customer communications could be compared and, where possible and desirable, standardized across the bank. Furthermore, going forward, the AO COE could help ensure that AO processes for new products start off on the right foot, by having the benefit of the collective AO wisdom of the COE.

Again, it’s important to note that COEs are not a silver bullet to solve service delivery problems in and of themselves. A robust training program, continual process monitoring, and ongoing customer research are also foundational for delivering consistently excellent service to customers. But by encouraging employees from across the organization to work together on improving a process area, business activity, or capability, COEs can contribute significantly to raising delivery service quality at an organization.

Enough for now. In the next post, we’ll look at more reasons to consider a COE, beginning with #3: To develop a core competency in a strategic capability for the enterprise.

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