If you’re thinking about creating an analytics Center of Excellence (CoE), I’d advise you to slow down and exercise extreme caution, because it can be a siren’s song -- many are the bodies of analysts smashed upon the rocks of the CoE.
On its face, the CoE has great appeal. After all, it has "excellence" in its name, and who wouldn’t want to be a part of that? And anyone who has spent time in analytics knows the issues that organizations struggle with as they mature in their analytic capabilities. A lack of process, no single version of the truth, minimal transparency, and an overlap of spend on analytic resources are common problems that the CoE is designed to address. But the CoE brings its own set of problems, while also exposing your company to considerable risk that comes from rearranging your decision-making infrastructure.
You must recognize that when you consolidate your company’s analytic resources, centralize your data, and create standard processes and best-practices, you are tampering with the language and culture your company uses to make decisions. This happens any time you change the way information flows within an organization, and the more radical the change, the greater this impact. And if there’s one thing that organizations don’t like, it’s change. They abhor it, they fight it, and they will work to defeat it. Even if they recognize that it’s good for them.
So you better be sure you know what problem you’re trying to solve with the CoE. You better have executive leadership to drive this change deep within your company. Your company better have the maturity and experience to navigate this complex and difficult transition. And you better design your CoE to be obsolete in a relatively short period of time.
When you know what problem you are trying to solve, you give clarity to yourself and your organization. So you must answer the question: What will we do differently as a result of this change? Do not dare ask your company to make this change if you can’t answer this question with precise clarity. Not only does answering this question give you focus, it also gives you the rallying cry for your organization to buy in to this cultural change.
But no matter how clearly and precisely you can answer this question, don’t ask your organization to make this change if you don’t have an executive sponsor eager to lead this effort. Don’t fool yourself that if you build a CoE then the rest of the company will fall in line. No matter how well you’ve designed your CoE, no matter how much sense it makes for your company, no matter how much money you’ll save, or how much you’ll improve your decisions, you won’t get anywhere without a very senior executive who is ready, willing, and able to expend political capital to inspire, cajole, nudge, poke, drag, and whatever else it takes to make your organization operate differently.
Ideally your executive sponsor is your CEO, or perhaps another C-level executive. Depending on your organization, you may be successful with a CoE sponsor who reports to a C-level executive. If your sponsor is any lower in the organization than that then its likely he or she won’t have the authority to effect the kind of change your CoE is intended to create.
But even clarity of purpose and an outstanding executive sponsor isn't enough to guarantee success. For that you also must have an honest assessment of whether your company has the maturity in its analytic capability to make use of a CoE. You need the basic building blocks in place, including some sort of data warehouse with multiple groups reasonably adept at analytics. In other words, if you’re living mostly in Excel and Access, you aren’t ready for a CoE. Having established analytic strength goes a long way in helping overcome the institutional inertia you are going to face. These silos of analytic expertise provide the individual success stories that will help sell your CoE to the rest of the organization. If you don’t have these, then don’t waste your time on a CoE -- you’re not ready. Instead, focus on building analytic strength in one or two silos.
If you are able to cross over all of these hurdles, then as you design your CoE, you should do so with a limited lifespan in mind. That’s right -- just like the replicants in Blade Runner, your CoE should shut down after a period of time (two or perhaps three years at most). That’s because the creation of a CoE in some sense disconnects decision making from decision makers.
If your company is going to have a true analytically-driven culture, the systematic use of data and analytics to drive decision making must in the long term become native to your company. Thus your CoE is merely a bridge between your current siloed state and your real goal of an analytically-driven culture. And so, while it may make sense to centralize your analytics in an incubator in which your analytic culture can be cultivated and grown while it matures, after a somewhat limited period of time this culture must become part and parcel of your company’s overall culture. Setting an expiration date for your CoE is a signal to the company of your long-term goal.
Lastly, should you reach the point where a CoE makes sense for your company, I beg you: Please don’t call it a Center of Excellence. It’s an amorphous term that can be considered arrogant and insulting. It implies that prior to the CoE, your company’s analysts were something other than excellent. And it presumes a certain level of performance that has yet to be proved. You’re starting on a journey with many headwinds, as you are sure to meet with much resistance from your company’s culture. For goodness sake, don’t make it any more difficult! Better to give yourself a name that provides more clarity about what your value is, and isn’t the equivalent of giving yourself a "gold star."
Have you built or attempted to build a CoE? Do my ideas resonate with you or are you more aligned with Sandra Gittlen's Counterpoint stance? Share your thoughts on the message board below.