Leadership teams pursuing organizational transformation seek to institutionalize new knowledge and best practices across the organization. This is the primary value driver for a center of excellence (COE).
In part one of this series, we outlined the differences between a COE and shared service center (SSC) as they are often confused, which may adversely affect talent, productivity, reputation, and more. When considering an offshore COE, don’t just focus on lower wage costs or access to larger talent pools but seek excellence in R&D, thought leadership, driving global profitability, and improving EBITDA.
Expect the COE to bring together an ecosystem that ensures value to the company, its customers, and suppliers. And finally, a well-established COE has what it takes to be monetized as a standalone independent professional service offering upon maturity.
Here, we focus on evaluating the efficacy of your COE, based on 10 characteristics that go beyond standard metrics, such as ROI, KPIs, and SLAs.
Does your COE demonstrate these additional 10 characteristics? If it does, be sure to call it best-in-class.
1. Focuses on thought leadership
- COEs provide thought leadership at the company and in the contextual industry spectrum relative to peers.
2. Aligns its mission with the organizational needs of the enterprise
- Its mission is aligned to the organizational needs of the enterprise, corporate, and/or divisions including but not limited to, time horizons, economical, and transformative.
3. Services constituencies without prejudice
- COEs service all customer constituencies without bias thereby learning from all of them; in addition, they mediate differences among priorities across functions and/or lines of business.
4. Aggregates knowledge consistently across divisions
- Whether center-led or division-led, COEs strive for consistency and aggregation of knowledge across the enterprise, providing services at better KPIs than if they were performed independently by function/division.
5. Establishes and implements best practices
- Maintaining practitioners' guides, playbooks, actively disseminating knowledge, reporting on outcomes, and making users self-reliant is table stakes at a COE. Additionally, a COE must cross-proliferate best practices, and institutionalize repeatable processes that are simpler and faster to execute.
6. Provides a distinct advantage
- COEs excel in process maturity, time to market, and efficiency and are transformative (reimagined processes), additive (new value-add things to do), and preventive (eliminate wasteful activities).
7. De-risks enterprise investments
- COEs de-risk enterprise investments by deploying a rigorous review of alternative approaches to address the same problem and maintain a disciplined risk management approach including risk mitigation/escalation processes.
8. Sponsored by executive management
- COEs have executive sponsorship and the value premise is so compelling that it will survive the shuffle among immediate and executive leadership.
9. Focuses on the customer
- The recipients of COE services see a measurable and tangible improvement, and the COE is acknowledged as an “expert” by the customers it serves.
10. Creates and enhances overall value
- COE enhances the overall value of the parent company and if spun out as an independent entity at maturity, the COE could be monetized as a standalone unit.
A COE that has super ROI, meets or beats KPIs and SLAs, and exudes the qualities above will be the envy of its peers. In addition, it can be monetized at maturity and will be acknowledged by customers as “expert” - further indicators of a truly best-in-class COE.