In business performance management, a third-generation balanced scorecard is a version of the traditional balanced scorecard, a structured report, supported by design methods and automated tools, that can be used by managers to keep track of the execution of activities by the staff within their control, and to monitor the consequences arising from these actions.
[1] The third-generation version was developed in the late 1990s to address design problems inherent to earlier generations.
The process begins with the development of a 'destination or Vision statement' to build management consensus on longer term strategic goals; this document is then used to build a 'strategic linkage model', describing the shorter term management priorities, both the strategic activities to complete and the strategic outcomes to achieve.
The main improvements with this third generation of balanced scorecard relate to the improved "ownership" of the objectives by managers, because objectives, goals and outcomes are refined by the responsible managers themselves.
All measures and targets must be reviewed to ensure that they are interconnected (dependencies identifies) and congruent (appropriately prioritised and support one another).