Understanding the fundamentals of surface decoration effects in phase-separation materials, such as lithium titanate (LTO), is important for optimizing the lithium-ion battery (LIB) performance. LTO polycrystalline thin-film electrodes with and without doped Al–ZnO (AZO) surface coating decoration are used as ideal models to gain insights into the mechanisms involved. Operando shear force modulation spectroscopy is used to observe for the first time the nanoscale dynamics of solid-electrolyte-interphase (SEI) formation on the electrode surfaces, confirming that the AZO coating is electrochemically converted into a stiff, homogenous SEI layer that protects the surface from the electrolyte-induced decomposition. This AZO layer and its resultant artificial SEI-layer have higher Li-ion transport rates than the unmodified surface. These layers can reduce barriers to surface nucleation and facilitate rapid redistribution of lithium-ions during the Li4Ti5O12 ⇄ Li7Ti5O12 phase separation, significantly inhabiting the orderly collective phase-separation behavior (electrochemical oscillation) in the LTO electrode. The suppressed voltage oscillations indicate more homogeneous local exchange current density and de/intercalation states with the decorated electrodes, thereby extending their battery efficiency and long-term cycling stability. This work highlights the ultimate importance of surface treatment for LIB materials for determining their interfacial chemistry and phase transition during the intercalation/deintercalation.