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Based on applied economics and from the perspective of an innovator seeking to develop a new digital business, this textbook is aimed at MBA and advanced undergraduate audiences interested in innovation strategy and competition in digital industries. Step-by-step, the book guides innovators through a dynamic market analysis and business model design, leading to an assessment of the future evolution of the market and the broader innovation ecosystem, and what the innovator can do to position the innovation for continued success. Each chapter defines and provides references for key concepts that can be further explored through suggested readings and study questions. Real-world case studies further facilitate forming a comprehensive view on how to resolve strategic challenges of digital innovation. The topics covered in this text are essential for a broad range of managers, consultants, entrepreneurs, technologists, and analysts to understand in depth.