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Future Value Managementâ„¢ Methodology

Although the business reality has been steadily shifting from value chain to value shop or network, most companies are still stuck with the management tools, processes and mentality of a traditional manufacturer.

Executives leading high-performance businesses need a methodology that gives future value and current value equal billing, that gives side-by-side consideration to monetary and physical resources and relational, organizational and human resources, and that does not subordinate newer business models to older business models. The Future Value Management™ (FVM™) methodology has been created to meet these needs. First, we put in the very center of the model the complete set of resources—monetary, physical, relational, organizational and human—and tie them to the key attributes that stakeholders value. Second, because the model does not share the traditional bias towards monetary and physical resources, it is not biased toward the logic of the value chain—it provides insights regardless of how one’s company is organized. Finally, because our aim is the sustainable creation of shareholder value and does not have a predetermined disposition towards whether it comes from current or future value, the model does not skew managerial attention away from the future to the present.

The model begins with perceptions and ends with actions. We start with stakeholder perceptions, tracing them to measurable attributes and then to resources. Using scenario analysis and sensitivity testing, we then predict the consequences of different combinations of resources, value drivers and transformations. Finally, we trace back out suggested changes in resource allocation and management to measurable attributes and stakeholder perceptions, and then to the effect on total shareholder value. We are thus able to plan and make business cases knowing what resources affect what attributes, and what attributes affect what stakeholders, as well as the tradeoffs that might improve overall shareholder value performance.