A digital strategy is the application of digital technologies to business models to create new capabilities that differentiate the business. In the future, a digital strategy will be all business strategy
The digital strategy focuses on the use of technology to improve business performance, whether that means creating new products or re-imagining current processes. It specifies the direction an organization will take with technology to create new competitive advantages, as well as the tactics it will use to make those changes happen. This usually includes changes to business models, as new technology allows innovative firms to deliver services that were not previously possible.
Today, more than hardware or software, technology has integrated with business to become something. As digital technology becomes more pervasive and businesses move on in the digital transformation journey, the same thing will be the digital strategy and business strategy. Use of the term "digital strategy" to focus the effort behind digital initiatives is still useful for now.
It is important to note that digital strategy is both an idea and a reality — that is, a digital strategy will lead to a clear plan or roadmap being drawn up. Although the particular strategies you have chosen to follow will continue to evolve, there should always be a strong commitment to your interpretation of what digital means to your business.
Say your digital strategy (ultimate goal) as an example is to monetize the simple productivity tools your company has already built and is using internally. At first, you lay out a strategy (plan) for packaging it as a mobile app and selling it to users. Later, you realize that if you sell it to companies to incorporate it into their mobile apps, it will be of greater value. Your (ultimate goal) strategy didn't change, but your (plan) strategy did. Changing your digital strategy's guiding idea should amount to a big shift or reorientation for your business, but ideally, the concrete steps are flexible enough to allow you to pivot as needed.
There is a tendency to talk to the digital strategy about digital transformation interchangeably. Both terms are closely related but vary in scope. Digital transformation drives change in three areas: customer experience, business models and operational processes. The digital transformation process requires coordination across the entire organization and involves changes in the business culture.
Digital strategy, on the other hand, fixates on technology, not culture. A digital strategy is most pertinent to alterations in business models and uses technology to engender the capabilities a company needs to become a digital business. Setting down a strategy is a key component of the transformation process, and ensures that technology is being implemented in a way that supports the business objectives.