Resource Management

Center of Excellence vs Community of Practice. How To Create an Effective Innovation Community?

Innovation Centers of Excellence (COEs) are quickly becoming a mainstream practice among innovation leading companies, but they still need to evolve in order to bring the real value.

The Peak Of Inflated Expectations

Innovation Centers of Excellence (COEs) are evolving as a critical framework in modern innovation management, aiming to centralize and streamline innovation activities by merging expertise and resources. These centers, managed by a team of experts, instill best practices, leadership, and training in vital processes or technologies that drive innovation. They can follow a centralized or decentralized model, though the latter may face issues with operational silos. The core value of COEs lies in fostering expertise, encouraging best practices, and enabling cross-organizational collaboration which in turn enhances resource efficiency, cuts costs, and nurtures innovation talent.

In the same time, COEs are currently designated by Gartner as Innovation Management trend currently at the peak of it's inflated expectations.

According to Gartner, COE benefit rating is high, with less then 2 years towards achieving the "Plateau of Productivity", meaning COEs are becoming a high impact, mainstream practice in Innovation Management.

Detailed Overview:

Defining Innovation Centers of Excellence

COEs have emerged as a significant trend in modern innovation management, presenting a structured approach that centralizes knowledge and dedicates resources towards nurturing innovation. Operated by groups of experts, these centers focus on:

  • Establishing best practices
  • Providing training
  • Cultivating leadership around crucial processes or technologies essential for driving innovation.

Structuring Models

COEs can be organized as centralized or decentralized entities, with a mix of dedicated and virtual experts. Nonetheless, decentralized COEs may face hurdles due to operational silos within an organization. The essence of a COE lies in:

  • Functioning as an expertise hub
  • Collating insights from varied sources across organizational boundaries
  • Encouraging a unified innovation approach, especially in highly distributed activities.

By transcending traditional organizational hierarchies, COEs facilitate communication and collaboration, broadening the availability of highly skilled individuals’ expertise within the organization.

Business Implications

COEs ensure efficient resource allocation, cost reduction by eliminating inefficiencies, and the enhancement of innovation skills. They serve as:

  • Focal points for innovation
  • Repositories of information
  • Conduits for leveraging expertise in innovation models and methodologies across the organization.

Operating as a lightweight approach, COEs support independent innovation initiatives and act as hubs collecting information on disjointed efforts across the organization, thus promoting a culture of knowledge-sharing, experimentation, and fostering collective innovation excellence.

Adoption Drivers

Companies embrace COEs for various reasons including:

  • Introducing, managing, and utilizing new technologies, such as AI,
  • Adapting and managing new concepts or skills,
  • Researching innovative products, services, and business models,
  • Attracting investors.

Reasons why companies adopt COEs is particularly

Encountered Hurdles

The journey towards successfully implementing a COE is littered with challenges such as:

  • Organizational complacency stemming from a "if it’s not broken, don’t fix it" mindset
  • Conservative adoption attitudes
  • Isolationist tendencies
  • Bureaucratic focus solely on tactical mechanics
  • Disconnection from business objectives.
  • Bad KPI / OKR management and setup

Challenges such as organizational resistance, complexity, conservatism, isolationism, bureaucracy, and a disconnect from business goals can impede COE effectiveness and implementation. The general framework doesn't focus on these issues as most companies try to implement community structures without addressing innovation barriers first. Copying the best practices is usually doesn't bring expected results and it definitely doesn't bring long-term effectiveness.

Structured Yet Stifled: The Concealed Fault Lines Within Centers of Excellence

In contemporary corporate realms where innovation is hailed as the cornerstone of enduring success, entities are zealously adopting mechanisms to fuel a milieu of perpetual learning and creativity. Among the bouquet of frameworks, Centers of Excellence (COE) have emerged as structured sanctuaries of innovation. However, on peeling back the layers, a stark inadequacy surfaces, hinting at a missing piece in the COE puzzle which could very well be the harbinger of stagnation rather than the touted innovation. This discourse aims to unravel the concealed lacunae within the COE framework, without getting entangled in direct comparisons.

Embracing the Iron Cage: The COE Paradigm

Heading a group effort to spark new ideas at a company is no small task. Leaders can't take it easy until they've seen the first couple of projects through to success. And it’s a big deal, as for many, this is the first taste of what teaming up to innovate can really do for their company and for themselves. They see that when people come together to think creatively, it changes how they work and interact. Change can be nerve-wracking, but it's part of the process.

At some point, the leader sees the team coming up with fresh, smart solutions to tough problems. They see their teammates stepping up, shaping and chasing ideas till they become real, with the backing of project supporters. Everyone's still standing—no one's lost a job or gotten hurt. Things are looking up. Life at work becomes more exciting, lively, and fulfilling—just what's needed to make strides in today’s fast-paced business world.

As interest in group creativity grows, so does the number of people involved. There are supporters, community managers, coaches, and others all diving into this collective effort. And then comes a thought—should we organize this effort in a more formal, structured way? If yes, what would that look like? And what goals should we set for this program, besides just gearing up for the next project? Well, most companies today would consider implementing a Center of Excellence.

Centers of Excellence propose a realm of structured innovation, centralizing expertise and resources under the umbrella of veteran savants. The espoused goals of COEs are quite straightforward:

  1. Forge and disseminate best practices across the organizational tapestry.
  2. Impart training in pivotal processes and avant-garde technologies.
  3. Offer a structured blueprint to navigate the turbulent waters of innovation challenges.

Clad in Shackles: The Straitjacket of Structure

While on the surface these structured conduits (COEs) promise a roadmap to innovation, they implicitly erect barricades to spontaneous cross-fertilization of ideas, a quintessence of groundbreaking creativity.

  1. Closed Collaboration: The tight reins of structure in COE often stifle open collaboration, an essential catalyst for brewing groundbreaking solutions. The hierarchical setup inadvertently eclipses the cross-pollination of ideas across departmental silos.
  2. Standardization over Adaptation: While a semblance of standardization is essential, the COE framework perhaps takes it a notch too high. In a rapidly mutating market landscape, the rigidity of standardization can morph into a straitjacket, stifling the spontaneous adaptation crucial for staying ahead of the curve.
  3. Resource Hoarding: Unlike other more organic setups, COEs operate on defined resource allocation, which while ensuring focused effort, often results in resource hoarding. This, in turn, could potentially starve other crucibles of innovation within the organization, leading to an overall innovation deficit.
  4. Leader-led Innovation: The defined leadership within COEs, though seemingly a boon, can sometimes morph into a bane. It can unwittingly suppress dissenting voices and novel ideas which often are the seeds of path-breaking innovations.

The Verdict: Missing Threads in the COE Fabric

The decision to anchor on the COE framework is often influenced by an organization's size, industry, and the innovation itinerary. However, the unseen portion of the iceberg here is the unaddressed need for a more fluid, organic, and collaborative milieu that allows for spontaneous idea generation, validation, and refinement across the organizational lattice.

The discourse unveils the missing threads in the fabric of Centers of Excellence which, while promising a structured pathway to innovation, may unwittingly be leading organizations into a mirage, veiling the stifled voices and untapped collaborative potential. The spotlight here is not to discredit the COE framework, but to unveil the concealed fissures that could potentially throttle the very essence of innovation it vows to nurture.

The necessity for a framework immune to operational silos and internal turf wars cannot be overstated. Operational silos, a result of rigid departmental boundaries, often choke the free flow of ideas, stifle cross-functional collaboration, and incubate a culture of territoriality rather than unity. Similarly, internal turf wars not only divert valuable resources and energy away from productive endeavors but also poison the organizational culture. A framework that transcends these traditional barriers is essential for fostering a holistic, collaborative, and innovative environment. The standard COE approach doesn't address this problem.

Embracing Evolution: The Shift from Centers of Excellence to Communities of Practice

As the corporate landscape continually morphs, so does the quest for innovation. Traditionally, organizations leaned on Centers of Excellence (COE) to funnel expertise and resources toward innovation. However, a new dawn heralds with the advent of Communities of Practice (CoP), embodying an evolved, more encompassing approach towards innovation. This piece unveils how CoP has taken the baton from COE, marking a pivotal shift in fostering organizational innovation, and explores the gaps that may arise should an entity decide to hang onto the conventional COE model.

Evolution in Motion: The Community of Practice

The concept of Communities of Practice (CoP) isn't merely an innovation; it's an evolution. CoP has embraced the essence of COE - centralizing expertise, resources, and best practices - and stretched it further to include a collaborative, cross-departmental ethos. It's like taking a well-oiled machine and adding wings to it. Here's how CoP has enhanced the COE model:

  • Cross-functional Collaboration: CoP breaks down the traditional silos, encouraging a flow of ideas across various departments, a feature starkly missing in the conventional COE model.
  • Decentralization of Expertise: Unlike the centralized expertise in COE, CoP decentralizes expertise, cultivating a culture where every member can be a mentor and a mentee.
  • Organic Innovation Flow: CoP fosters an organic, bottom-up flow of innovation, as opposed to the top-down, structured approach observed in COE.

The aim of the Community of Practice is to become a catalyst for all employee innovation ideas, that would never have an opportunity to get verified, and a filter to those innovation ideas that seek verification opportunity, but are out to the company interest (defined in the Investment Mandate). Diagram below shows the graphical idea of the CoP “catalyst” purpose.

Large organisations often have siloed business units and groups of interest that focus on narrow product development areas. While this structure can be effective for optimising the efficiency of specific product development areas, it can also limit the potential for innovation and collaboration across the organisation. A horizontal setup of the CoP can help break down these silos and create a culture of collaboration and innovation that spans across the entire organisation. That is why CoP’s governance independence and budget separation from BUs is necessary. It avoids the “Focus Area Dispersion”, where de-centralised initiative power points not only have a narrow field of view, but also narrow down their field of interest even further due to inner-BU individual interest.

CoP brings together employees from different BUs and departments to collaborate on innovation ideas that span across the organisation. This fosters cross-functional collaboration, which leads to more innovative ideas and solutions that might not have been possible within a siloed structure.

The Community Support Model

Central to the efficacy of CoP operations is the Community Support Model (CSM), meticulously designed to ensure the judicious management of innovation resources within the community. It's a framework that not only anchors the CoP but provides a clear trajectory for innovation.

The Community Support Model is encapsulated by several pivotal components:

  • C-Level Declaration of Support: This showcases high-level endorsement and backing, signaling the organization's commitment to fostering a culture of innovation.
  • Cross-Company Cooperation Agreement: This agreement sets the tone for inter-departmental collaboration, a cornerstone for cross-pollinating ideas and insights across the organizational spectrum.
  • Rules of Engagement: By defining the rules of engagement, the CSM ensures that interactions within the community are structured, respectful, and conducive to collaborative innovation.
  • Objectives: Clear objectives provide a defined aim, guiding the community’s efforts towards achieving the broader innovation agenda.
  • Processes: Well-articulated processes within the CSM ensure that the journey of innovation is organized, measurable, and aligned with organizational standards.
  • Performance Indicators (Key Results): These are the metrics that provide a clear gauge on the progress and impact of the community’s innovation efforts.
  • Risk Management Strategy: By having a robust risk management strategy, the CSM helps in foreseeing, evaluating, and mitigating risks that could impede the innovation pathway.
  • Innovation Resource Management System: This system ensures the optimal allocation and utilization of resources, a critical aspect in fueling sustainable innovation.

Beyond The Silos: Business Unit Relationship

The relationship between the CoP and the BUs is critical for innovation within the company. By establishing a clear process for evaluating initiatives, encouraging BU participation in the CoP, and fostering a culture of innovation, companies can ensure that they are effectively leveraging the expertise and creativity of their employees to drive innovation and growth.

Community of Practice (CoP) acts as a catalyst for all innovation ideas, it is important to establish a clear relationship between the CoP and the Business Units (BUs) in order to streamline the innovation process and ensure that all initiatives are properly evaluated and prioritised.

The CoP serves as a central hub for innovation within the company, bringing together individuals with a shared interest and experience in a specific area of innovation. Through the CoP, members can share knowledge, collaborate on projects, and propose new ideas for innovation. The CoP also serves as a gatekeeper for the Incubation Program, which is the formalised process for evaluating and incubating new ideas within the company.

The BUs, on the other hand, may have organisation-level initiatives that they are pursuing, as well as individual initiatives that are proposed by employees. These initiatives may be related to the CoP's focus areas or may be outside of them.

Unleashing Potential: The CoP Advantage

Holding onto the conventional COE model in the face of the evolved CoP could leave organizations grappling with several shortcomings:

  • Limited Cross-Pollination of Ideas: COEs tend to operate within defined frameworks, which could throttle the free exchange of ideas, a cornerstone of innovation.
  • Hierarchical Barriers: The structured nature of COE often erects hierarchical barriers, stifling the spontaneous interactions essential for fostering innovation.
  • Adaptability Deficit: COE's rigid structures may impede swift adaptation to rapidly evolving market dynamics, a hurdle CoP effortlessly overcomes with its flexible framework.
  • Accessibility to Expertise: In COEs, expertise is often holed up at the top echelons, making it a challenge for junior members to readily access knowledge.

The transition to CoP isn't merely a change; it's a substantial upgrade. By amalgamating the structured approach of COE with a collaborative, centralized framework, CoP offers organizations a runway to:

  • Cultivate a Rich Innovation Ecosystem: CoP fosters a conducive environment for innovation, blending structured expertise with open collaboration.
  • Harness Collective Intelligence: By breaking down hierarchical and departmental walls, CoP unleashes the collective intelligence of the organization, a vital fuel for innovation.
  • Navigate Market Dynamics: The flexible nature of CoP allows organizations to swiftly navigate the shifting sands of market dynamics, keeping the innovation engine humming.

Communities of Practice (CoP) represent a matured understanding of what propels organizational innovation. It's not just about centralizing expertise, as seen in COE, but creating a fertile ground where every idea, regardless of its origin, has the potential to sprout and flourish. As organizations gear towards fostering a rich culture of innovation, transitioning from the conventional COE to the more evolved, inclusive CoP model could be the game-changer in steering the innovation ship through today’s turbulent corporate waters.

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