Centres of Excellence explained

The term Centre of Excellence (CoE) is becoming a popular way of focusing attention in many organisations, but what exactly is a CoE? How can it be incorporated into an organisational structure? And, is it just another ‘excellence’ fad?

What is a ‘Centre of Excellence’?

A CoE can be described as a department that, in addition to performing its own routine work,has an additional role in improving its own expertise and knowledge resources so that in turn it can help other activity centres throughout the organisation to improve. The CoE may comprise a functional or cross-functional team looking both inside and outside the organisation to capture new knowledge and practices. It may be set up as a physical or virtual team, but it will have a permanent rather than just a project status. The defining feature of a CoE is knowledge management.

What does this say about ‘other’ centres?

We mean that it is easy to overuse the ‘excellence’ label. We are using it here to signify a sense of being different rather than necessarily better than operational units, but of course the objective is to help everyone to improve. For example, if there are ten customer service departments, then nine may be ‘routine’ (non-excellent) and one might operate as a CoE. This should not mean that workers in the non-excellent centres are somehow less worthy, or are offering a sub-standard level of service, rather that the CoE will have a further role in developing its methods and techniques to establish best practice and disseminate this to the other teams. But in practice ‘excellence’, does seem to be a wide ranging term. It does have different meanings to different people in different contexts, hence the need to define the CoE in terms of both its structure and the way that it relates to the rest of the organization. Let’s do this with an example:

Case study – Washco

Washco was established in the mid-1990s to import and sell high quality domestic washing machines via the internet to retail customers. In recent years, it has created a central sales team to sell a larger version of the basic machines to launderettes (multi-site) as well as a range of specialist laundry machines, mainly to the hotel trade. All the machines are relatively expensive in comparison to competitors’ products because they are made by a top European manufacturer and should have working lives approximately three times longer than normal.

From the outset, Washco’s business model was to offer better than average after-sales service using their own technicians. Initially, service calls were straightforward but, over time, the number of model variations in the field has grown significantly.

Over the years, as the number of field service technicians increased to around 1,000, a number of different structures have been tried.

At first a single central base worked fine, but eventually travelling time per visit increased. Moreover, training and personal supervision by the Director of Service became strained, especially as new models were introduced and the range of machines covered increased.

Next, three regional service divisions were set up, each relatively self-contained and able to service all machines (South, North and East). This worked well, but proved costly, moreover, the smaller North division had relatively few commercial machines and its technicians did not have the opportunity to get familiar with a sufficient range of the common problems. In the South division a higher proportion of launderettes created problems as these customers demanded faster response times (24 hours 7 days a week) and more ‘first-time’ fixes. Technicians were spending more time on launderette machine servicing at the expense of the retail customers, some of whom were quick to complain about what they saw as a deteriorating service even though it was mostly still within the four working days in the service agreement.

In response there was a move from the geographical format and three divisions based on customer type were created; retail, launderette, and hotels. This improved the first time fixes because technicians were servicing a smaller range of machines. Familiarity, with awkward faults increased and launderette response times improved with better focus on the issue. However, travelling time rose significantly and overall there was little in the way of achieved cost savings.

In 2005 the structure was changed again. This time a matrix style was adopted with three regional managers, based on the former regional bases (South, North and East) plus, three sector managers, (retail, launderette and hotels). Initially, service levels improved but, over time, there were ‘priority’ misunderstandings between the technicians and managers some of which escalated into full scale ‘boundary disputes’ between the managers. Eventually, the response times rose again and the rate of first-time fixes fell. A ‘post-mortem’ revealed that good results achieved were due to the call dispatch operators having access to the best of both worlds, skills

and location of technicians. However, over time repair success fell because there was not a sufficient focus on keeping up skill levels in the matrix structure. Training costs both money and time and it was difficult to justify training for any one individual as each technician slowly became just a part of a general pool.

The present approach based on the CoE model was recommended by another field service company (non-competing) who Washco’s founding director Lucy Garner met at a trade dinner. At first she was skeptical. Although, the CoE can be clearly shown in the organisation chart, the idea of technicians working in a co-operative way and sharing knowledge for the benefit of all, is to her a ‘soft’ rather than a ‘hard’ approach to organisation design. Past experience told her that most people are like her, driven and competitive. If they are not then they must be of the ‘other type’ which needs to be told what to do and be closely supervised. In her opinion, people have a reluctance to ‘give up’ what they know, unless it is worth their while. However, she accepted that something needed to be done as the other approaches had all proved to have some drawbacks and there were opportunities to increase new sales if a better standard of service could be guaranteed.

In response to Lucy’s insistence that any change should be based on clear objectives, and an understanding of how things will work in practice, the Service Director prepared the following commentary.

New Structure

From an analysis of one month’s service calls it is clear that as both the customer base and the range of the machines expands we are not learning fast enough as a company from the new situations that we are encountering. The objectives of the new structure are;

  1. To diagnose faults quicker and more reliably on site,
  2. Achieve more first time fixes and order the correct parts when a repeat visit is necessary.
  3. Reduce travelling time through better matching of skills with service calls and reduce technician training times.
  4. A specialist Technical centre which does not undertake service calls will be formed to look at recurrent reliability issues with manufacturers, design better training courses and improve technical support documentation especially as new machines are introduced. To better focus our expertise and create an environment of learning and co-operative working, a Centre of Excellence (CoE) will be created in the East division with a Centre of Expertise (CoEx) in the South Division as follows.

Centre of Excellence (CoE)

The CoE technicians will attend regular service calls but they will have wider experience, greater technical knowledge and some specialist tools and more advanced testing equipment. It is expected that they will be able to diagnose a higher percentage of faults on the first visit, and they will also be tasked with problematic jobs, say, those with recurring faults in any region at the discretion of the Service Director.

In addition to service visits, they will have a further role in identifying the root cause(s) of problems (perhaps in consultation with the Technical centre and the manufacturer), but the really significant difference is that they will ‘capture’ that experience for the future. This emerging knowledge will need to be made explicit wherever possible and disseminated across the firm, for example, by suggesting amendments to manuals through the Technical centre or through ‘frequently asked questions’ on the corporate intranet. However, some knowledge will be informal (tacit) by nature and will be better communicated verbally to other technicians

through training workshops, telephone calls whilst at service sites and perhaps through interdivisional secondments of technicians. The CoE workers will also be given a time allowance each week to explore recurring problems.

For the CoE, being effective is about having a different outlook together with a strong ability to explain and communicate. Centres of Competence (CoC) Washco, technicians have traditionally diagnosed around 85% of faults correctly on the first visit and been able to fix around 70%, although this has varied dependent on the structural imperatives at the time. The majority of technicians will be grouped into four CoCs with a target of diagnosing 95% of faults first time and repairing 80% of the diagnosed problems on the first visit (not all spares are carried by technicians). In the remaining cases, maybe because the machine model is new or the problem unusual or major spares are required, the technician will be expected to consult the CoE.

Centre of Expertise (CoEx)

In addition to the required core competencies, expert technicians will have additional

experience, knowledge, equipment and resources in a particular field. For example, individual technicians might specialise in certain types of visits or equipment, for example, hotel customers (as opposed to retail) or older domestic machines. Being able to identify likely service problems at the call dispatch stage, together with a clearer understanding of individual expertise on the part of the dispatch operators, will enable more efficient call allocation and also enable the specialist technicians to further their own knowledge. Travelling time for these expert technicians will likely increase per call but overall cost will be saved by sending the right person, first time.

These technicians will have specialist knowledge but their main focus is to fix the machines that are referred to them, and build up specialist knowledge within the team.

A more theoretical take on things

There is a lot of detail in the case example. Life is complicated, especially in field service situations and over simplification can leave important holes in one’s understanding. The final section looks at how Wasco’s new structure can be understood from a knowledge management perspective and as a Community of Practice.

What role does each part play in the new structure?

The matrix in Figure 2 shows how the four groups of technicians can be represented in terms of having a future or present outlook and the type of knowledge they use in their work. This helps us to understand the training and support individual technicians might need, and the aptitudes and skills to look for in recruitment and promotion decisions, for example;

  1. Field technicians in the CoCs need mainly to be able to follow a training course based on a ‘right-way’ of doing things. In the field, they need to be able to follow manuals and wiring diagrams to diagnose and fix problems fast. In other words, competent technicians will be focused on the present and use mainly articulated knowledge. As they develop they will be encouraged to attempt new or unusual faults by talking to co-workers and the technicians in the CoE. They will also be encouraged to feed back into the system recurring issues that need to be resolved for the future although this aspect is likely to remain a small part of their overall role.

These technicians will be very practical and process driven in nature. By making their front-line role more straightforward it will be easy to measure their performance.

  1. In the Technical centre, workers will need to absorb verbal (tacit) knowledge from the field and then codify this into articulated knowledge for the future. By amending the field documentation these technicians will be able to think in more abstract ways and be comfortable in dealing with large volumes of detailed articulated data.
  2. In the CoEx, technicians will be focused on solving more complex, technical and often situational problems (perhaps higher than normal humidity affecting the machines, inexperienced operators or different soap powder formulations). The technicians will be able to follow the manual but will also have a deeper understanding of the underlying mechanical and electronical properties of the machines that will allow them to effect ‘work-arounds’ on the machines. They will also have higher people skills necessary, say, to placate irate customers and to instruct operators in the correct/alternative way to operate the machines.
  3. The CoE technicians will have a broad range of technical and people skills, significant experience in the field and be comfortable with both practical and abstract aspects of the task. They will be able to fix machines efficiently in the normal course of events, but will also be on the look-out for underlying problems that need to be understood and/or fed back to the Technical centre and/or the manufacturers for correction in the future. They will be keen to share their experiences with colleagues in the CoE and with technicians in the CoCs and the CoEx. They will understand the importance of knowledge in field service and be able to make judgments about when to codify a problem/solution in the service manuals and when such information is best left to be explained verbally, as the need arises or on training courses. For example, there may me an intermittent type of noise that a certain type of machine makes under certain conditions. Perhaps, whilst it sounds mechanically abnormal, it is only of consequence in retail situations when customers might be worried by it. In hotels and laundrette environments customers need not be concerned once they are aware of the issue.

How does the CoE benefit the whole firm?

The CoE strategy is to implement structures, systems and a way of working that:

  1. Promotes communication and the sharing of problems.
  2. Helps to locate or generate solutions – thus creating new knowledge.
  3. Shares and disseminates new tacit and explicit knowledge.

How does it work?

Through the process of sharing problems, information and experiences, employees learn from each other, and have an opportunity to develop themselves and the organisation. This is what Wenger (1998) describes as a Community of Practice (CoP), which encourages communication and effective exchange of knowledge in solving new and difficult problems. Walker and Christenson (2005) argue that as people interact and share insights (such as within a CoP), they gain wisdom as well as redefine existing knowledge into new knowledge. The next article will explore the concepts behind why the CoP works.

Summary

It is easy to overuse the ‘excellence’ label, however the case study and frameworks in this article help us to identify the main characteristics of a CoE, the main feature being knowledge management.

Non-excellent centres are not less worthy, nor are they offering a sub-standard level of service, rather that the CoEs will have a role in developing their methods and techniques so that best practice can be disseminated to other teams.

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