The right approach, on the other hand, can mean striking gold by understanding how the markets view value, developing strategies and allocating resources accordingly, setting the markets' expectations appropriately and then delivering against them. FutureWealth expectations helps focus decisionmakers on the two key sources of value. To build a FutureWealth company, management must understand not only how to approach valuation, but also how to approach management. The longer the status quo prevails, the more valuable the business becomes. Their value can be further increased by achieving efficiencies.
Uncertainty generally decreases their value.
In the traditional model, current financial performance is a fairly good indicator for future performance. By contrast, future growth options hinge on change. To the extent that they reduce flexibility for experimentation and innovation, they can destroy value. In our FutureWealth model, current financial performance says little or nothing about growth options. Being a FutureWealth company, then, means managing the balance between the need to maximize the value of current business, on the one hand, and the value of future growth options, on the other.