Strategy

I think the first step is to define strategy. The Cambridge Dictionary defines it like this: Strategy is a detailed plan for achieving success in situations such as war, politics, business, industry, or sport. 

Their definition is pretty simple, but personally, I feel it lacks some details. So, this is how I would describe it: Strategy is a detailed plan that takes into account risks and opportunities relevant to the available resources for achieving a challenging and well-defined outcome.

The reason why I like to be more specific is because everybody can write a detailed plan for achieving success. That’s not hard. Why am I saying this? Well, success means different things for different people. Similarly, details mean different things for different people. So if I make a plan for this week about how to increase my speed by 0.2 km/h in cycling, is that a strategy? According to Cambridge Dictionary, it is. According to me, it’s not. 

Is a 0.2 km/h increase too much or too little? Well, it depends on multiple factors:

What did my last week look like? Did I even get on the bike?

Or is it safe to push my health limit further, or am I already at my peak performance?

Will I use the same routes for cycling, or will there be a different surface, altitude, weather, and so on? Details are critical, some more and some less important, but if you don’t know them, it’s hard to decide whether your strategy is appropriate or not.

Business strategy

Alright, so we have defined strategy. Let’s go to the next term: business strategy. I will add just one word to the previous definition. Look: Business strategy is a detailed plan that takes into account risks and opportunities relevant to the available resources for achieving a challenging and well-defined business outcome.

So the word I added is "business," and that narrows down the outcome. So when we are talking about business outcomes, there are 2 categories:

The category that focuses on some kind of growth: profits, revenue, ROI, etc.

The category that focuses on some kind of saving: cutting operational costs, making more efficient processes, decreasing supply costs, etc. 

Alright, business strategy clarified, let’s take a look at digital transformation strategy.

Digital Transformation Strategy

Here we need more adjustments to the definition:

Digital transformation strategy is a detailed plan that takes into account risks and opportunities relevant to the available resources for transforming an existing traditional business model into a digital business model that has a challenging and well-defined business outcome.

Oh, this sounds complex, right? Let me simplify the meaning of it with an example.

Imagine there is a bank that does its operations with its clients physically. So people need to visit a branch when they want to open an account or when they want to do a certain type of action, e.g., negotiate exchange rates. The bank realizes that it is losing customers because people don’t like to spend time visiting the branches anymore. Thus, the bank requires a digital transformation strategy, that is, a detailed plan on how they can create a similar or better experience as in the branch but in the digital world, saving time for both their customers and their internal team. That strategy will define the tools, assets, and resources they need to create their digital services. 

So that’s what a digital transformation strategy stands for. Of course, this is a very simplified example. Ok, now that it is clear what digital transformation strategy means, let’s go to our final term: digital strategy. 

Is digital strategy the same as digital transformation strategy? No. They are not the same thing.

Digital Strategy

Digital strategy is a detailed plan that takes into account risks and opportunities relevant to the available resources for achieving a challenging and well-defined digital business outcome.

Again, let me explain this with an example. Not all brands need to transform digitally. Some were born as digital-first businesses like Revolut. Some have already transformed, like Netflix, which started with DVDs, but now their business model is 100% digital. They don’t need physical products to maintain their business growth. However, these companies need and have digital strategies that define their digital activities, like what technology they use, how they communicate on social media, how they appear in Google, how they increase user retention by a better user experience on their mobile or web apps, and so on.

Why Knowing the Difference Matters

Understanding the nuances between strategy, business strategy, digital strategy, and digital transformation strategy isn't just a matter of semantics; it's a matter of success. Each type of strategy serves a specific purpose, tailored to different stages of a company’s journey and different kinds of challenges.

By distinguishing these terms and applying them appropriately, leaders and teams can align their vision with actionable plans, allocate resources more efficiently, and ultimately deliver better results.