A cash flow modelling approach to reduce complexity in performance management

Technology management is a complex activity and is becoming more so in response to the demands of the "new economy". Traditional process modelling and performance evaluation techniques have in-built limitations simply because of their reliance on a restricted number of dimensions that can be modelled or measured at any one time. Solutions to the complexity issue that use the balanced scorecard approach and system dynamics have been developed by consultants and researchers. These have been evaluated and compared with an alternative solution that has been developed using cash flow modelling and discrete event simulation. The model facilitates performance management by using cash as the common measurement between processes, between plants and between divisions. The enablers of cash flow are described as cash flow drivers. Cash flow drivers and the way the model allows the user to assess their impact on cash flow are described. Examples of the model's application in a real firm are drawn from the areas of market strategy, technology strategy, knowledge strategy and performance management. The outcomes of these applications are discussed in the context of generic technology management processes.