It used to be easy to tell what a company was worth. In an industrial economy based on such tangible assets as factories and inventories, a company's value was a reflection of future cash flows that could be generated over the lifetime of those assets.

So-called intangible assets such as brand imago, intellectual capital, corporate culture and patents, etc. - were important, but lacking the substance necessary to build them objectively into the valuation scale. Tangible assets can produce cash flows can be valued with reasonably well, since these assets have a known historic price and can be traded on the open market.

Intangible assets, however are today as much a part of a company's market value than tangibles do. Particularly when we consider the phenomenal high market capitalisation of new economy.

Tangible assets amount to just a fraction of the value of the S&P 500 companies. Less than 25% of their market capitalisation is backed by cash flows to be derived over the next 5 years. More than 75% of their value must be derived from future cash flows, even they cannot specify business plans or goals or even future budgets plans.

Value of a company has shifted from past performance to future performance. Companies have shift their focus from being exclusively concerned with their past financial performance to the value of future options. This requires a creation of intangible assets and growing them.

The right mix of tangibles and intangibles, current and future performance varies from industry to industry and from company to company. The faster the rate of change in the industry, the greater the focus on future options must be. The capital markets, through investors, value companies based on expected future cash flow, and for many companies the best indicators for these are intangible assets.

The value of intangibles will continue to grow and the cap between market values and traditional measurements of earnings will continue to widen. The pace of change continues, forcing a shortening of planning horizons. Cash flows and excellent financial performance do not necessary translate into higher stock prices.

In this volatile market environment, a company's growth options have become the most important indicator for value. Substantial premiums have been placed on companies that have the flexibility, management and employee talent, and innovation to create these options. Lower interest technology-driven productivity gains rates, and a more dynamic risk capital market have driven some of the increases in market value. Earnings still matter and expectations must be realised, but actions and decisions matter even more.

Good understanding how the markets view value means everything. Understand the markets' expectations appropriately and deliver results accordingly. This virtual circle of managing future expectations creates powerful financial brands, that attracts talents, capital and alliance partners.

To build a wealthy company, management must understand how to approach valuation and management.The value can be further increased by achieving efficiencies. Also the less certain the future, the larger the upside potential becomes. Too much of cost savings and efficiency reduce flexibility and innovation, they can even destroy value of a company.

Being a wealthy company in the future, means managing the balance between the need to maximise the value of current business, and the value of future growth options.