Everything in today's economy is evolving and improving, both worldwide and at the level of the individual organization. Systems, processes, products, strategies, business models, and so on are all changing and improving, and these changes are all dependent on digital technology. So, how does a company's strategy change as a result of its digital context? For enterprises, this question comprises two crucial elements: strategy and digital technology.

First, we must define what constitutes a good strategy. A good approach has two components. For starters, it's making wise decisions about how the firm will produce value, how it will benefit customers, and how well it will solve their problems and meet their demands. The second consideration is differentiation, or how the company will set itself apart from its competitors in the marketplace. In a hyper-competitive climate, distinction not only allows for the creation of value for customers, but also for the long-term benefit of that value. A company must be able to protect its differentiation in order to differentiate itself commercially and successfully, which means it must be able to construct a barrier against competitors copying it and have a unique business model.

Now we'll get to the meat of the matter: the impact of digital technology on business strategy. There are two crucial components to the solution to this issue. The first component is about the opportunity that digital technology provides for the firm, and the second is about how the company should respond and what it should do in an environment of exponential technological innovation and competition.

What are the benefits of digital technology for business? Digital technologies in this context are understood not as something independent or separate, that is, it is not some isolated process related to, for example, automation, but as a set, for example, the Internet of Things, Predictive Analytics, Blockchain, Big Data, Cloud Technology, Artificial Intelligence, etc., and the business opportunity is driven by digitization and connectivity, which in turn is transformed into data, and based on AI models, Machine Learning, the data is processed and used to make decisions, and all this together fundamentally changes every element of the company's activities, both within the company and in the market.

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Digital technology covers three levels in which it makes changes to a company's strategy. The first level is associated with optimization, i.e., this level is where companies, by implementing technology, optimize the processes they are already executing. This level does not change the value proposition and differentiation, but optimizes the current processes. The next level is associated with innovation, where a company is beginning to bring something new, enhancing its competitiveness. The third level is associated with transformation - market environment changes, new value propositions emerge, etc. - the company has to change its business model, its strategy, and the digital technology serves as the basis. Thus, the last two levels have a strong impact on the creation of customer value and differentiation, and consequently on the company's strategy.

by Lena Shadrina