FUTURE VALUE: THE $7 TRILLION CHALLENGE |
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| Authors: | John J. Ballow,Robert J. Thomas,Gö ran Roos |
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| Affiliation: | Partner in the Accenture Strategy &Business Architecture service line. He specializes in economic value analysis, value management, finance operations, and strategy and corporate financial management. Mr. Ballow has more than 25 years of experience as a corporate financial officer, advisor, and strategist in financial management.;Executive director of the Accenture High Performance Business Institute. Dr. Thomas is a leading authority in the area of leadership and transformational change. He has been published widely, including in Harvard Business Review;and The Wall Street Journal, and has been heard on National Public Radio. His most recent work (coauthored with Warren Bemis), Geeks and Geezers: How Era, Values and Defining Moments Shape Leaders, was cited by BusinessWeek as one of 2002's best business sellers. One of the pioneers in modern intellectual capital science. Mr. Roos is cofounder of AssetEconomics, an organization focused on measuring and managing intangibles for shareholder value. Mr. Roos has written numerous books and articles on intellectual capital and strategy, and was named one of our century's most influential thinkers by the Spanish business journal Dirección y Progreso;. |
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| Abstract: | As of May 2003, $7.6 trillion (or 58%) of the aggregate value of the U.S. stock market represented "future value"–that portion of value that does not depend on current operating performance but rather on anticipated growth. This concept of future growth value is especially important in newer industry sectors and among companies whose value is based heavily on intangible assets, such as brand and proprietary knowledge. But traditional accounting remains focused on tangible assets. And because most executives rely on accounting- based financial data to run their businesses, they end up focusing on current operating results when they should be investing in strategies that optimize future growth. In short, many of the assets that are most responsible for creating value in today's economy are not managed as well as they could be.
As part of its high-performance business initiative, Accenture has developed a comprehensive research database and a set of tools for examining the components and drivers of future value, along with a methodology for applying this research on a companyspecific basis. Accenture's futurevalue analytics can determine the portion of a company's market value that is attributable to future growth, and can help identify the drivers of that future growth value. The development of a viable operational framework will enable executives to translate corporate intangibles into manageable market value. |
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