A center of excellence that starts by advising operating units earns a growing share of their strategic decisions through the quality and ease of its work.
Borderline: whether this move is justified depends on the situation, and only the person in it can judge.
An example
When a building products manufacturer set up a pricing center of excellence, its head had a one-sentence mandate, a sponsor in the chief financial officer, and four analysts. The eleven business units set their own prices and saw no reason to change. She spent the first year doing their work for them: a discount analysis for the roofing unit that found two points of margin, a quoting template that cut a sales manager's preparation from a day to an hour, a weekly report nobody had asked for and everybody started reading. By the second year, nine units were sending her team every price change above five percent before it went out. She then asked the chief financial officer to write that review step into the pricing policy, and the executive committee approved it with two units' objections recorded.
Why it works
A good center makes deferring to it easier, because it takes on analysis the line manager would otherwise do alone and supplies ready templates and a defensible rationale. Over time, deciding without it starts to look worse: amateur, off-strategy, missing a mark of rigor. As its role grows, going around it gets costlier too. It depends on a senior sponsor who backs the center while its authority is still negotiable, technical competence that makes its advice worth having, and operating units busy enough to welcome the help.
The thinking behind it
Jeffrey Pfeffer Jeffrey Pfeffer's The External Control of Organizations: A Resource Dependence Perspective (1978) argues that whoever controls a critical, scarce resource gains power over those who depend on it. A center of excellence that supplies analysis and templates the units cannot easily produce becomes such a resource. The units' dependence is the source of its growing authority, and the reason they should keep its mandate in writing.
Richard H. Thaler Richard Thaler's Nudge: Improving Decisions About Health, Wealth, and Happiness (2008), written with Cass Sunstein, argues that defaults are the strongest feature of choice architecture, because what happens when people do nothing is what most people end up with. A center's template that is easiest to get approved becomes the default long before anyone requires it. That is how the center gains ground, and why moving from recommended to required needs a formal decision.
When it fits
Consider it for a capability done unevenly across units, where a central team with real expertise could do it better and faster, and where you have a senior sponsor for the first two years. It needs staff who are plainly good at the work. It suits poorly where units are strong, unhurried, and proud of the capability, or where your sponsor is weak.
How to use it well
Lead with service. In the first year, put almost everything into competence and into making the units' work easier; the center's authority will come from being useful.
- Do real work for the units, starting with those most likely to show quick results, and let them take the credit.
- Make your templates the easiest way to get a request approved, before anyone thinks of requiring them.
- Avoid self-promotion. Visible empire-building turns units against you faster than anything else.
- When use is broad, ask for the expanded role formally, through the body that sets decision rights, and record the objections.
Keep the original mandate visible, and keep the service level high after the authority arrives.
What it costs and where it backfires
A center that grows succeeds by taking decisions from people who used to own them, and some will resent it however well you serve them. Once your review step is required, slow or mediocre work will be blamed on you, and units will push for a carve-out. The line runs between earning the role and taking it. Expanding the mandate by drift, turning a recommended template into a required one without anyone deciding so, or using audit findings and exclusion from talent programs to punish units that go their own way all turn the center into an empire.
When it is used on you
Act early, while the center's authority is still negotiable, when charter language drifts from advising to reviewing with no formal redesign of authority or its templates become the required format for capital requests. Hold the group to its original mandate in writing and ask for a formal authority review whenever its role grows. Keep using it where it helps.