Chapter 040　Where Future Value Theory Is Headed

Volumes III and IV have taken nineteen chapters to take Future Value Theory apart. The definition of Future Value, its difference from present value, the index, the management practice, Purpose, brand, intangible assets, expectation, the capital market. The parts are all on the table. The question that remains is not about parts. What was this theory built in order to change? This chapter states the theory’s own destination. Where it is going, what it is misread as, the conditions under which it can be judged right, and the blanks that are still unfilled — in that order.

1 The question — why we ask a theory’s purpose last

There are two kinds of management theory. One explains. It states why the world is as it is. The other seeks to change. It contains a view of how the world ought to be. The first is descriptive; the second carries a norm. Future Value Theory contains the second. When we say that Future Value comes before enterprise value, we are not stating a fact alone. We are saying that management should run in that order. A theory that carries a norm incurs an obligation: it must say what it wants to change. A theory that speaks in norms while concealing its purpose becomes etiquette rather than thought. Etiquette has no answer when asked why it is done that way. Everything in these two volumes so far has handled the parts of the theory. There were definitions, indicators, equations, and a management practice. But an account of parts does not, by itself, state a purpose. However thoroughly you describe a set of tools, nothing tells you what is going to be built. So we place this question at the close of the volume. Vol. II, Ch. 020 also dealt with the future. What it looked at, however, was the destination of the practice of management. That was a chapter about the environment. This chapter looks at the intent of the theory. Who is trying to change what, and in what order. Stating an intent has a price. State it, and you will be asked whether it was achieved. If it was not, the theory was wrong. We accept being asked that way. A theory that refuses the question can stay right forever. A theory that is right forever is, in fact, asserting nothing. Conventional answers and their limits — the misreadings the theory attracts When a theory spreads, misreadings spread with it. Certain readings have come back to the chapters of this series again and again. We take up three, state each accurately, and then show why it is wrong. Misreading 1 — “this theory denies profit” The most common reading. Purpose is placed first and Financial Value is placed at the bottom. The theory is therefore taken to hold profit in low regard. But the three layers are not a ranking of worth. They are an order of causation. Financial Value sits at the bottom, and it sits there not because it is light. It sits there because it is an outcome. Profit is the condition of an enterprise’s continued existence. Lose the condition and the very agent that creates Future Value disappears. A company that went bankrupt holding up a purpose has realized nothing. What we deny is not profit. It is placing profit in the position of purpose. Profit put in that position turns into the grounds for cutting investment in the future. First Principle 1 states it: Purpose Precedes Profit. Purpose precedes profit — profit is the result of a purpose society has embraced. What comes first and what stands above are different things. This theory placed profit behind. It did not place profit below. Misreading 2 — “this theory is a critique of capitalism” The second arises from the talk of societal challenges and trust. It gets read as one more argument asking companies to be more social. The claim runs the other way. We want capital to work in a way that is more like capital, not less. The original function of capital is to bet on possibilities that do not yet exist. It is not to preserve income that already exists. First Principle 3 states it: Capital Exists to Create Possibility. Capital exists to create possibility, not merely to maximize return. Capital allocated on the evidence of past results alone is not performing that function. That is not capitalism carried through. It is capitalism in retreat. This theory therefore asks no philanthropy of enterprises. It reframes societal challenges as unmet demand — nothing more. The term Future Resource names that reframing. First Principle 7 does not sit in the column marked ethics. It sits in the column marked opportunity. Misreading 3 — “this theory is a position on AI” The third is the attempt to sort the theory into praise for AI or alarm about it. It is neither. In this theory AI is one term in an equation. It appears as a term in the Future Economy Formula and as a term in the Future Capital Equation. It is neither the center nor the threat. The treatment is deliberate. An argument that puts a technology in the subject position ages with each generation of the technology. Placed as a term, the structure survives however many generations of models pass. The position that praises AI assumes that stretching the AI term stretches the whole. A multiplicative model denies this. If the other terms sit near zero, no amount of stretching in AI moves the product. The position that fears AI tries to keep the AI term small. A multiplicative model denies this too. Suppress one term deliberately and the product shrinks by exactly that much. AI makes the supply of capability cheap. Capability that has become cheap stops being a competitive advantage. As a consequence of that structure, the relative value of the power to decide what should be created rises. First Principle 4 states it: AI Optimizes. Humans Define. AI optimizes; humans define value, purpose, and direction. This is a description of a division of labor, not a value judgment. What the three misreadings share All three translate the theory into a binary. Profit or purpose. The company or society. AI or people. Future Value Theory is not a theory of binaries. It is a theory of order and of products. The question is not which side to pick. It is which comes first, and which term is missing. Read as opposition, the theory looks like a declaration of allegiance. Read as order, it looks like an instrument for designing management. What we are offering is the second.

3 Redefinition — the three things the theory wants to

change, and their order So what does this theory want to change? There are three answers. The behavior of enterprises, the flow of capital, and the expectations of society. And the three have an order. That is the central claim of this chapter. The final destination has a name. It is the Future Value Economy. What counts as valuable activity, where capital goes, and what gets called success — the state in which those criteria have moved from past results to the capability to create the future. But that is only the name of the destination. Holding up a name means nothing without a route to it. The route is this three-stage order.

3.1 The first thing to change is the behavior of enterprises

The starting point is neither the capital market nor the institution. It is the decision-making of individual enterprises. The reason is simple. Only enterprises can create Future Value. Markets can assess enterprise value. Markets cannot create Future Value. Assessment works only on what has been created. Concretely, what has to change? Three things. The agenda of the executive meeting, the criteria for capital allocation, and the definition of success and failure. A changed agenda means less time on reporting and confirmation, and time given instead to the question of which future we want to bring into existence. Changed capital allocation means the center of gravity of the budget moving from the preservation of past success toward unresolved territory. A changed definition of success means that a judgment which built future capability is rated above a judgment that protected this year’s number. None of the three requires anyone’s permission. All three can start tomorrow, without waiting for an institution to change. First Principle 9 states it: Leadership Means Designing the Future. Leadership means designing the future — the right questions and systems rather than the right answers.

3.2 The second thing to change is the flow of capital

Once the behavior of enterprises changes, the flow of capital moves next. The order cannot be reversed. Why not? Because capital goes only where something can be observed. An investor may wish to assess Future Value, but nothing happens if there is no object of assessment. Only when enterprises that are accumulating Future Value actually appear, and the manner of that accumulation is set out in an explicable form, can capital react. An indicator such as the VURA Future Index (VFI) also acquires meaning only once there is something to measure. What matters here is the speed at which the flow of capital changes. Enterprise behavior changes on the decision of an executive. The flow of capital moves only when the practice of many participants changes. It is therefore slow. But the effect, when it moves, is large. Once the axis on which capital is assessed changes, pressure to change enterprise behavior arrives from outside. Enterprises that began voluntarily at the first stage are rewarded at the second. Whether that connection occurs decides whether the theory succeeds.

3.3 The third thing to change is what society expects

The last thing to change is what society expects of enterprises. What is a company for? What makes a company a good company? Shared understanding on these questions moves later than law and later than accounting standards. Institutions merely write the understanding down after the fact. But what comes last is strongest. Once society’s expectations change, enterprise behavior and the flow of capital are pulled into alignment without being pushed. Conversely, if expectations do not move, the enterprises that went first carry the burden of explaining themselves indefinitely. First Principle 10 points at this final stage. Future Value Is the Highest Purpose of Enterprise. Future Value is the highest purpose of the enterprise; everything else follows. The state in which that is common understanding rather than a minority declaration is the Future Value Economy. One caution. We cannot specify when society’s expectations will change. Institutional change is slower than technological change, and the speed differs by region. Periods of reversal are possible. We do not assert a timetable.

3.4 The order is not one-directional

We have described three stages, but this is not a single straight line traveled once. As the Future Value Cycle shows, value increases in a circle. Purpose is born from societal challenges, purpose produces Future Value, Future Value becomes enterprise value, and enterprise value calls capital. The capital it calls goes toward the next challenge. When society’s expectations move, they change enterprise behavior on the next turn. Treat the three stages as one turn of a spiral. The first push, however, always comes from the enterprise side. Someone moves first, at a stage where no reward is guaranteed. That first push is what the theory most wants to reach.

4 Structure — the formula for the economy, and the Ten

First Principles as a whole Restate the theory’s destination in the language of structure.

4.1 The Future Economy Formula

Future Value Theory places one equation at the level of the economy. Future Economy = Purpose × Future Capital × AI × Human Creativity × Trust We call this the Future Economy Formula. Like the other equations it is multiplicative, not additive. If any single term is zero, the whole product is zero. No term compensates for another. Read as a blueprint for the destination, what does the formula give us? Three readings. First, it shows who can move which term. Purpose and Human Creativity can be moved directly by enterprises and by individuals. AI can be procured from the market. Future Capital and Trust depend on both the effort of enterprises and the design of institutions. Second, it shows which term is moving least. As of August 2026, the AI term is growing fast. Institutional design that works on Purpose and Trust is, by comparison, barely started. Where the theory should put its weight is not the term that is already growing. Third, it yields the conclusion that AI alone will not grow the economy. This is not pessimism. It is the property of a product. Multiply the AI term by ten while the Trust term falls to a tenth, and the product returns to where it began.

4.2 The Ten First Principles form a hierarchy

Ten First Principles were set out at the opening of this library. They look like a flat list. They are not. Read backward from the theory’s destination, they fall into four layers. The foundation layer is Principles 1 through 3. Purpose Precedes Profit. / Future Value Precedes Enterprise Value. / Capital Exists to Create Possibility. What is handled here is order. Until what comes first is settled, nothing else can be assembled. The capability layer is Principles 4 through 6. AI Optimizes. Humans Define. / Learning Is the Ultimate Competitive Advantage. / Enterprise Exists to Redefine Itself. Once the order is settled, these state what has to be possible for it to be executed. The relational layer is Principles 7 through 9. Social Challenges Are Future Opportunities. / Trust Compounds Faster Than Capital. / Leadership Means Designing the Future. These state that an enterprise does not stand alone. And Principle 10 stands as the consequence. Future Value Is the Highest Purpose of Enterprise. The four layers correspond to the three stages of Section 3. The foundation and capability layers act on enterprise behavior. The relational layer acts on the flow of capital and on society’s expectations. Principle 10 is the name of the state in which all three stages are in place.

4.3 Time as a term

One further equation is indispensable in describing the destination. Future Value = Future Time × Future Capability This is the Future Time Equation, and it too is a product. Capability may be present, but if the time directed at the future is zero, Future Value is zero. The equation applies to the theory’s destination as well. Enterprise behavior, the flow of capital, and society’s expectations all require time. Because trust can only be grown through time, a stage remains that cannot be compressed. The future this theory aims at is not a place reached in a few years. That is our reading. But the speed of arrival depends on how institutions and technology unfold, so it can only be spoken of as a range. We do not assert a date.

5 What it looks like in practice — what would prove it

right, and what is still blank A theory carrying a norm has a duty to state its own test. Here we set out, in observable form, the state in which this theory could be called correct.

5.1 Five states that would show the theory was right

First, indicators of Future Value creation capability are used in practice. A state in which one of investment decisions, credit assessment, or personnel evaluation refers to such an indicator alongside financial measures. The indicator need not be the VFI. It is enough that the assumption “financial statements alone are insufficient” has settled into practice. Second, among groups of companies with equivalent financial metrics, the ones higher in Future Value outperform over the long run. A state in which a statistically confirmable difference is observed over a decade or more. If no difference is observed, the theory’s first claim does not hold. Third, enterprises that put Purpose first are rewarded in their cost of capital. The clearer the purpose, the better the terms of funding. At present this has not been adequately verified. The evidence is not yet available. Fourth, intangible investment stops being treated only as a single-year expense. A state in which investment in learning, trust, ecosystems, and AI infrastructure is no longer first in line to be cut in internal decisions. Fifth, the vocabulary of executives changes. Medium-term plans carry a description of which future the enterprise wants to bring into existence, weighted equally with market share. This is the easiest to observe and also the most superficial. We should state the conditions for refutation at the same time. If groups of companies claiming to have accumulated Future Value are systematically behind ten years later, the theory is wrong. Or it is enough to show that the causation runs the other way — that only companies with slack can invest in Future Value, rather than Future Value producing slack.

5.2 Three blanks to be filled

The theory has territory still unfilled. Three, in order of priority. First, the refinement of measurement. Attempts to put a number on the capability to create Future Value are under way, and their precision is nowhere near that of financial metrics. Comparability is the hardest part. Line up companies from different industries on the same scale and it is not settled what the number means. What cannot be measured cannot change the flow of capital. This is the rate-limiting step of the second stage. Second, empirical research. Most of the present support rests on cases and on logic. What is needed is verification against longrun panel data. There is a structural difficulty here. The time horizon over which the theory’s claims appear is long, and both the companies and the environment change within it. We do not promise to resolve that difficulty. We can only say we will keep looking for ways to reduce it. Third, application by industry. Regulated industries, the public sector, capital-intensive industries, small businesses. Which parts of the theory bite hard and which bite weakly must differ across them. That map has not been drawn. A general theory, left general, fits nobody’s actual situation. Of the three, the third is filled in part in the later volumes of this series. The first and the second cannot be filled by us alone.

5.3 The theory will not be completed

Here is the most important point. This theory will not be completed. This is not modesty. It follows from the theory’s own claim. We have argued that an enterprise is not a finished form. That an enterprise exists in order to redefine itself. When assumptions change, an enterprise must change shape. A theory that makes that claim while presenting itself as finished contains a contradiction. A theory is also an object that learns and is redefined. The order of the Future Value Chain applies to the theory itself. Purpose → Learning → Redefinition → Creation → Enterprise Value The theory has a Purpose. Learning occurs through use. Where it does not fit, Redefinition occurs. From that, new understanding is created. What we ask of readers is therefore not belief. It is use and refutation. Use it inside your own enterprise, find where it does not fit, and say where that is. An unfinished theory has one advantage. Refutation does not break it. What breaks is only a theory that declared itself finished.

6 Questions for the executive — and on to Volume V

We have set out the theory’s destination. Now connect it to tomorrow’s decisions. Three questions. Question 1 — Of the three stages, which one can your enterprise change? Enterprise behavior, the flow of capital, society’s expectations. Of these, the one your own will can move is the first. It must not be made to wait on the second and third. The explanation “we cannot move because the market will not reward us” has the order backward. Question 2 — Is your enterprise in a state where it could be judged at any moment? Of the five states listed in Section 5, how many apply to you? Do you hold an indicator? Is intangible investment first in line to be cut? Does your plan contain a description of the future? This inspection is more practical than the question of whether you believe the theory. Question 3 — Where would your own theory be refuted? This may be an unfamiliar question for an executive. Among the hypotheses your business plan assumes, can you write the condition under which each would be shown wrong? A hypothesis you cannot write that for survives without ever being tested. An error that survives is the most expensive kind. On to Volume V Volumes III and IV have laid out the system of Future Value Theory in full. What decides value. How to measure it. How investors see it. Where the theory is headed. But theory does not move management. Practice moves management. Volumes V and VI (Chapters 041–060) take up the practical system of Enterprise Redefinition. What does an enterprise redefine, and in what order? The seven-stage process that begins with Recognize. The six capabilities that make up Enterprise Redefinition Capability, a meta-capability. And how to locate your own position using the Enterprise Redefinition Maturity Model (ERMM). Three things travel with that model and are stated at the outset. Progression through it is not linear: organizations frequently display characteristics from several levels at once. Maturity is assessed across all five dimensions in balance, so exceptional technology with weak leadership redesign cannot reach a higher level. And Level 5 is not a target to be reached as rapidly as possible, because different industries may require different levels of adaptability. What these volumes handle is procedure, not thought. Volumes VII and VIII (Chapters 061–080) move on to the measurement of enterprise value. How far can trust, people, and intangible assets be spoken of as value? The measurement problems these two volumes could not exhaust are taken head on. Volumes IX and X (Chapters 081–100) examine cases of real enterprises. The work of confirming, from public information, whether the theory explains reality. There will be moments where the theory is the side forced to revise. If Volumes III and IV handled what, everything from Volume V on handles how. The point of this chapter, in one line. What Future Value Theory aims at is a future in which enterprise behavior changes, the flow of capital follows, and society’s expectations catch up last. Name that future and it is the Future Value Economy. But a name is only a marker for a destination. It guarantees no arrival. We admit that this theory will not be completed. The measurement is rough, the empirical work is thin, and the map by industry is blank. We put the theory into the world anyway, because waiting will not cause anyone else to fill those blanks. A theory is corrected only by being used. Only once corrected is it of use to the next person. Future Value is the highest purpose of the enterprise. We are working toward the day when that single line stops being a special claim.

In brief

What the theory aims at is a future in which enterprise behavior, the flow of capital, and society’s expectations change in that order.
The order cannot be moved. Capital goes only where something can be observed, and society’s expectations catch up last.
The first push always comes from the enterprise side. Someone moves first, at a stage where no reward is guaranteed.
The theory will not be completed. The blanks are the refinement of measurement, empirical research, and application by industry.

Key concepts

Future Value Economy / Future Value Cycle / Future Value / Enterprise Redefinition / Future Value Chain

The chain of ideas

Purpose → enterprise behavior → the flow of capital → society’s expectations → Future Value Economy

Related first principles

Principle 10 — Future Value Is the Highest Purpose of Enterprise. Principle 1 — Purpose Precedes Profit. Principle 2 — Future Value Precedes Enterprise Value. Principle 9 — Leadership Means Designing the Future.

Related chapters

Vol. III, Ch. 021 “What Is Future Value Theory?” — return to the starting point and read the whole again
Vol. IV, Ch. 038 “Future Value Theory: Q&A” — the grounds for the blanks named here
Vol. IV, Ch. 039 “Future Value Theory and the Capital Market” — the conditions under which the second stage moves
Vol. V, Ch. 041 “What Is Enterprise Redefinition?” — the entrance to the next volume, from thought to procedure

Papers and companion volumes

Kadowaki, N. (2026a). Future Value Theory: A Management Framework for Enterprise, Capital, and Society in the Age of AI. VURA Working Paper Series. SSRN: https://ssrn.com/abstract=7120980 / Zenodo: https://doi.org/10.5281/zenodo. 21255662
Kadowaki, N. (2026b). Enterprise Redefinition: Toward an Enterprise Evolution Theory for the Age of AI. VURA Working Paper Series. (Published on Zenodo; under review at SSRN)
100 Questions on Management in the Age of AI, #100 “What Future Will You Create in the Age of AI?” / #095 “Will Future Value Change Society in the Age of AI?”

Chapter 040 Where Future Value Theory Is Headed