Want FREE Templates on Strategy & Transformation? Download our FREE compilation of 50+ slides. This is an exclusive promotion being run on LinkedIn.

We have categorized 6 documents as Center of Excellence. All documents are displayed on this page.

When we think of establishing a sustainable competitive advantage, it brings to mind what Katsuaki Watanabe, the former President of Toyota, said about excellence: "There is no genius in our company. We just do whatever we believe is right, trying every day to improve every little bit and piece. But when 70 years of very small improvements accumulate, they become a revolution."




Trusted by over 10,000+ Client Organizations
Since 2012, we have provided best practices to over 10,000 businesses and organizations of all sizes, from startups and small businesses to the Fortune 100, in over 130 countries.
AT&T GE Cisco Intel IBM Coke Dell Toyota HP Nike Samsung Microsoft Astrazeneca JP Morgan KPMG Walgreens Walmart 3M Kaiser Oracle SAP Google E&Y Volvo Bosch Merck Fedex Shell Amgen Eli Lilly Roche AIG Abbott Amazon PwC T-Mobile Broadcom Bayer Pearson Titleist ConEd Pfizer NTT Data Schwab




Flevy Management Insights: Center of Excellence


When we think of establishing a sustainable competitive advantage, it brings to mind what Katsuaki Watanabe, the former President of Toyota, said about excellence: "There is no genius in our company. We just do whatever we believe is right, trying every day to improve every little bit and piece. But when 70 years of very small improvements accumulate, they become a revolution."

In the realm of business, a Center of Excellence (CoE), sometimes referred to as a competency or capability center, is a strategic approach to developing and nurturing internal competencies or capabilities to maintain a revolutionary edge. McKinsey points out that an effective CoE, when correctly built and run, can lead to a 10-15% improvement in efficiency and effectiveness.

The Case for Centers of Excellence

A CoE centralizes expertise and knowledge for a specific area—be it talent management, digital transformation, data analytics, or risk management—and spreads it across the organization. A CoE aims not only to foster Innovation and Learning among its team members but also to spread that knowledge and best practices throughout the company.

The detailed study by PwC on CoE reveals that top-performing organizations have leveraged the CoE framework. It emphasizes that 77% of finance leaders report a moderate to a high level of centralization in their processes, achieved by establishing a financial CoE.

Establishing a Center of Excellence

Given the potential benefits, many C-level executives might consider setting up a CoE. Here, we highlight key principles for creating a successful CoE:

Effectiveness of a Center of Excellence

Just establishing a CoE doesn't guarantee success. Leaders must also continually assess the CoE's effectiveness. Metrics should be tailored to the specific business unit or function—for instance, in a Procurement CoE, you'd be looking at cost reduction or contract compliance rates.

Metrics to analyze a CoE effectiveness are typically a mix of quantitative and qualitative measures. Quantitative metrics include key performance indicators (KPIs), performance against targets, and return on investment (ROI). Qualitative evaluation could involve assessing customer satisfaction or staff engagement levels.

Transforming Through the Center of Excellence

While CoEs are traditionally tied to operational functions, a new trend is emerging with the rise of Digital Transformation. Organizations are building CoEs focused on changing their business mode and operations. An example is the ‘growth CoE’, which focuses on driving sales and market share. In a recent survey by Gartner, it was found that over 50% of digital businesses have or plan to set up a digital CoE.

As transformations become increasingly complex, the role of CoEs is becoming more strategic. They are no longer about just sticking to best practices—they're about innovating, driving change, shaping company culture and future-proofing the business. If properly managed, a successful CoE can indeed be revolutionary, living up to Watanabe's words. As executives, it is our job to ensure that our Centers of Excellence are more than just a name—they should be a force for continuous improvement and sustainable growth.

For effective implementation, take a look at these Center of Excellence best practices:


Explore related management topics: Digital Transformation Risk Management Competitive Advantage Talent Management Continuous Improvement Customer Satisfaction Cost Reduction Key Performance Indicators Best Practices Data Analytics Return on Investment Kanban Board Cloud Proposal Template




Additional Flevy Management Insights

Download our FREE Strategy & Transformation Framework Templates

Download our free compilation of 50+ Strategy & Transformation slides and templates. Frameworks include McKinsey 7-S, Balanced Scorecard, Disruptive Innovation, BCG Curve, and many more.