Digital processes are transforming how organizations serve their customers. However, models for leveraging digital technologies to create superior customer service performance are not apparent. Previous research demonstrates that many large organizations fail to harness the potential of digital technologies to enhance their customer service performance, and that the small increase in customer satisfaction (approximately 3-5 percent) is an increasingly important concern for firms. To address the concern, we examined the following research question: how may organizations leverage digital technologies for enhanced customer service performance?

The question is gaining heightened importance as economies across the world are continuing to invest heavily in digital technologies and customer well-being. With widespread digitization expected over the next few years in India and elsewhere in the world, it is important to understand how organizations may digitally transform customer-services to enhance customer satisfaction. Financial organizations, including Banks, are at the forefront of this transformation. For example, according to an estimate by McKinsey, Europe's retail banking operations were scheduled to spend €10 billion or more for modernizing local branches. With the Indian financial sector as the context, we studied our research question in a large Indian bank. Specifically, using data from 170 branches of the bank, we empirically test the effects of digital design on the performance of service systems by using a capability-building approach.

In general, organizational capabilities are core to contemporary business strategy. Notably, it has been argued that sense and respond capabilities are crucial determinants of performance in rapidly changing environments. Using this sense and respond perspective, we unravel two high-performing customer service capabilities -- customer orientation and customer response capabilities. These two capabilities build organizational ability to sense and respond to customer needs across local branches. Specifically, our findings show that the bank's branches realize greater customer service performance when they develop (a) customer orientation capability that builds a branch's propensity to strategize with a focus on customer needs, and (b) customer response capability that helps the branch respond quickly and effectively to customer needs.

Customer orientation capability helps branches enhance their preparedness, intent, awareness, orientation, or listening. Customer orientation represents a culture characterized by continuous monitoring of customer needs and enhancement of customer value. A branch that builds customer orientation capabilities creates a shared focus on fulfilling customer needs in an organization. In branches that build such routines, the business model is customer-centric, and enhancing customer satisfaction is the core goal. In such branches, strategies and business models are developed with an exclusive focus on routines that enhance an understanding of target customers. As firms use digital means to routinize customer orientation activities, their customer service performance increases.

However, merely creating customer orientation capabilities in a branch may not suffice as it represents only the intent of the local unit to meet customer needs. Responding in line with its intent requires that the branch possess customer response capability. Therefore, customer response capability helps branches to act, respond, move, enact, and conduct business quickly and effectively. Such a capability enables a quick and effective response to customer needs from the branch. In a fast-paced and competitive environment, quick and effective response is crucial for earning customer loyalty. Therefore, branches with advanced customer response capabilities realize better customer service performance, as they offer their services to customers when they want it, where they want it, and sometimes when customers do not even expect it. A pertinent example of exceeding customer expectations is Tesco (a leading UK retailer). The retailer offered coupons for toys, baby wipes, and beer to the families with newborn babies. While the toys and baby wipes were meant for the baby, beer coupons were for the fathers whose frequency of visiting bars reduced due to the newborn. In general, firms realize greater customer satisfaction within local operations when branches build superior response capabilities that help them respond quickly to events in their customers' lives, by identifying their latent needs. Besides offering unexpected customer service, customer response capability enables quick and effective response to customer grievances or complaints.

Focusing on these two capabilities, in our study, we unravel how firms realize superior service performance by leveraging digital technologies for building customer service capabilities. We focus on the branch's digital design as its ability to digitally provide high-quality customer service-related information to its managers. Previous research examines various forms of digital design, such as IT infrastructure, flexibility of IT infrastructure, and information systems service quality. We propose that good digital design manifests in the form of high-quality customer service information. Across branches, the quality of information may differ across various dimensions. However, based on previous research, we focus on four aspects of information quality-completeness, accuracy, format, and currency.

First, information quality differs in terms of completeness, which determines whether the employees have the required customer service information to perform their tasks. Completeness of customer information available to employees may vary across branches, due to differences in integration achieved by the branch between ATMs, Internet website, and physical visits to the unit. The second dimension of information quality is information accuracy. Accuracy reflects the correctness of customer information provided by the digital technologies in a branch. Differences in employee activities may lead to differences in the accuracy of available information. For example, inaccuracies in customer information may arise due to errors by an IS worker or inaccurate queries in a database. The format is the third characteristic of information quality. It indicates whether there is variance in ways an organizational unit presents customer information, leading to differences in the visual appeal. Finally, branches differ in terms of information currency, i.e. the recency and update frequency of customer information. For example, differences in the currency may be related to the customer's most recently reported transactions. Our study findings indicate that branches that have high information quality develop more advanced customer orientation and customer response capabilities.

Finally, we find that process sophistication influences the effects of information quality on the two customer service capabilities. In our study, we find that not all customer service processes were the same across the branches of the bank. Some of the branches had a more sophisticated process comprising more complex and information intense tasks, and these branches also built more advanced customer service capabilities. This association arises primarily because more sophisticated processes require greater coordination in an organizational unit, because of the increase in the degree of interconnectivity and complexity across tasks. Because of the increase in coordination requirements, greater information quality becomes important for enabling: i) strategic coordination to create and diffuse customer-oriented routines, and ii) operational coordination to offer a quick and effective response to customer needs and wants.

Our study was conducted using survey design methods. The data for the study was collected from a large Indian bank with several branches. Our chosen bank in India has several thousand branches across India and abroad, and has a presence in large US cities, as well. The chosen bank is broadly comparable with US banks in operations and performance. For example, the bank has revenue and profits like the mid-sized U.S. banks-such as Capital One-and the number of branches comparable to large U.S. banks-such as Wells Fargo. Following the global trends in operations, the bank has increased the use of digital technologies in its operations. The IS departments of the bank are largely decentralized, with each branch maintaining its own customer-facing service personnel who report to the branch manager and IS support service personnel who report to the IT manager in the branch. As the bank grew to become one of the top five banks in India, many branches of the bank came into existence through acquisitions spanning several years. Consequently, to some extent, these branches have retained their original culture and processes. Hence, the customer service processes examined in our study are locally specific to the branches of the bank.

Our sample consisted of 500 branches randomly selected by the bank for our data collection. In each branch, we collected data from three separate sources: branch managers who managed customer service processes within the branch, IS managers who managed development and use of IS resources within the customer service process of the branch, and actual customers who used the branch's services. We received 170 usable responses from the two set of matched respondents-branch managers and IS managers, representing a 34 percent response rate. Across all these 170 branches, we combined the data from the matched set of mangers with the archival data about the customer service performance collected from the archival records of customer responses.

In future works in the domain, we plan to focus on the use of technologies in retail. For example, my recent book Emotionalizing Retail has outlined more advanced dynamics related to the development of artificially intelligent ecosystems built by using contemporary advanced technologies. Further, we are now launching a Center for Digital Transformation at IIMA that will champion research related to customer-side outcomes, amongst other topics related to digital transformation and the use of advanced information technologies, such as those comprising artificially intelligent (AI) algorithms.

The detailed findings and study procedures were published in MIS Quarterly (Setia, P. Venkatesh, V., and Joglekar, S. 2013. Leveraging IS for Creating a Customer-Centric Organization: How Information Quality Leads to Localized Capabilities and Service Performance. MIS Quarterly, Vol. 37, Iss. 2 565 -590).