A center of excellence (COE) is a collaboration; it doesn't touch just one part of an organization. To achieve this, an entire company needs to be activated, with participants being brought together with the goal of creating innovation to address a business outcome.

An example of a business outcome could be excellence in customer experience (see sidebar). This practice often is aligned with a business methodology such as Six Sigma, Business Process Re-Engineering, or LEAN.

While COEs can exist with specific start and end dates, most are intended to operate over a long period of time. The most critical factor determining the success of a COE is the clarity of its purpose and the importance of its mission. Given its nontraditional status in the organization, the COE does not have the luxury of a vague purpose and marginal mission. No organization should and most will not tolerate such a waste of time, resources, and money.

Unfortunately, in the home building industry, examples of existing COEs are scarce. Many companies put significant efforts into process improvement, measurement, and training. However, most of these efforts fall short of a center of excellence.

Reap the Rewards of the Concept

If there are so few examples in our industry, why should we care about the concept?

In short, the answer is because the reward is significant. This does not mean that it will be easy to accomplish. For example, home building tends to run relatively lean administrative and operating staffing levels compared with other industries. When the business is busy, it is almost impossible to involve the key people who are essential in developing and managing an effective center of excellence.

On the other hand, home building companies don't tend to solve problems in a cross-functional or process-driven fashion. Centers of excellence should be a catalyst for developing a process-driven culture that is focused on delivering world-class results. There are major changes in process regarding customer expectations, information technology, and tools that will require building companies to approach their concept of business in a different way—as an integrated set of horizontal business processes instead of as a set of vertical functions or departments. A company that successfully implements COEs into its organization will create a sustainable competitive advantage relative to its competitors.