The book of the month: “Future Wealth” by Stan Davis and Christopher Meyer

News categories: enterprise and business strategy, human capital management, managing intangibles / intellectual capital

Intangible assets, the portion of a corporation’s market value which can not be explained through it’s financial reports and do not appear in the firm’s balance sheet have grown in the US from 1982 from an average of 38% to 85% of total market share in 1998. So it is not surprising, that the topic of intangibles is gaining growing interest in the business communities worldwide.

“Future Wealth” is a business book which - unlike most business books which just describe something that has been going on for some time – takes existing trends and information and comes up with a new concept and approach to management of intangibles:

The two authors first provide a clear analysis of the fundamental difference of the risk management approach involved in real business transactions (producing and consuming goods - trying to avoid risk) and of the risk management approach tied to financial transactions (bearing, trading and managing risk). According to Davis and Meyer, wealth creation in the Information Age will be based more and more on conscious risk exposure by trading risks in intangibles financially through “securitization” for example of human capital, which will represent the wealth creation factor of the future.

Davis and Meyer offer a compelling vision of a world in the not-so-distant future in which we will trade everything of value – including human capital, talent, and other intangibles in efficient markets. Wealth accumulation is shifting from earned income (salaries) to unearned (investments) and control of wealth is shifting from institutions to individuals. Companies will begin to invest literally in their employees, not indirectly through training and development, and to treat business units as units of financial risk whose worth equals the quality of their intellectual capital. Individuals will think less about jobs and more about investing in their own human capital. As average citizens gain more knowledge about investments, they will begin to accept higher risk for the potential higher rewards, turning the concept of risk from threat to opportunity. But future wealth will depend not merely on a healthy appetite for risk, but also on stronger social safety nets designed to balance new individual freedoms with commensurate order.

Stan Davis is an independent author and speaker based in Brookline, Massachusetts / USA, and the Senior Research Fellow at the Ernst & Young Center for Business Innovation in Cambridge, Massachusetts. Christopher Meyer is the Director of the Center for Business Innovation, a Partner in Ernst & Young, and President of Bios GP, a venture applying complexity theory to business. Future Wealth is seen as the companion volume to the author’s best-selling book “Blur”, with which they already started to describe the more intangible nature of today’s business in a connected economy.

‘Future Wealth’ by Stan Davis and Christopher Meyer is the most visionary but also convincing book about how companies and individuals will treat intangibles and the underlying opportunities and risks in the future.

Future Wealth
by Stan Davis and Christopher Meyer
Hardcover - 224 pages (March 2000)
Harvard Business School Press; ISBN: 1578511941

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