Inthisarticleweintroducetheconceptofthirdgenerationperformancemeasurement systems. First generation measurement systems were basedon the assumption that financially biased measurement systems should besupplemented with non-financial indicators, including intangibles. Whilstthis was a valuable development, the problem with these first generationapproaches was that they were static and failed to illustrate adequatelythe linkages between different performance measures. Second generationmeasurement systems addressed this issue by using strategy and/or suc-cess maps to take into account the dynamic nature of performance andthe transformation processes linking objectives and resources. Third gener-ation measurement systems will build on these developments and seek tolink explicitly the non-financial and intangible dimensions of businessperformance to the generation of free cash flow.
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