Today's economy is characterized by constant change, development and improvement, and these changes occur both
globally
and at the level of the individual company, everything is changing and improving: systems, processes, products,
strategies, business models, etc., and these changes are based on digital technology. So how does digital context
affect
a company's strategy? This question contains two key elements for businesses: strategy and digital technology.
First, we need to define what a good strategy is. A good strategy consists of two aspects. First, it is effective
choices about how the company will create value, how it will benefit customers, or how effectively the company
solves
their problems and meets their needs. The second aspect is differentiation, that is, how the company will
differentiate
itself from competitors in the marketplace. In a hyper-competitive environment, differentiation not only allows to
create value for customers, it allows to create it for a long time and benefit from it. In order to differentiate
itself
profitably and effectively, a company must be able to protect its differentiation, i.e. it must create a certain
barrier
from being copied by competitors and have a unique business model.
And now to the main question - the impact of digital technology on company strategy. The answer to this question
has two
important components. First of all, it is about what opportunities digital technology brings to the company, and
the
second aspect has to do with how the company should respond and what it should do in an exponential technological
growth
and competitive environment.
So what opportunities do digital technologies bring to business? Digital technology in this context is not seen as
something singular or local, i.e., it is not a separate process related to automation, for example, but as a
certain
totality, i.e. the Internet of Things, Predictive Analytics, Blockchain, Big Data, Cloud Technology, Artificial
Intelligence, etc., and business opportunities are driven by digitization and connectivity, which in turn are
transformed into data, and based on Artificial Intelligence models, Machine Learning, data is processed and used
to make
decisions, and this together fundamentally changes every aspect of the company, both internally and on the
market.
Digital technology encompasses three levels in which it brings changes to a company's strategy. The first level is
related to optimization, i.e. at this level companies, by introducing technology, optimize the processes they are
already implementing. At this level, the value proposition and differentiation do not change, but the existing
processes
are optimized. The next level is related to innovation, when the company already starts to bring something new,
increasing its competitiveness. The third level is related to transformation - market conditions change, new value
propositions appear, etc. - the company has to change its business model, strategy, and digital technologies serve
as
the foundation. Thus, the last two levels have a significant impact on customer value creation and
differentiation, and
consequently on the company's strategy.