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2 Chapter 1

Introduction

The ability to manage knowledge is crucial in today ’ s knowledge economy. The cre-
ation and diffusion of knowledge have become increasingly important factors in
competitiveness. More and more, knowledge is being thought of as a valuable com-
modity that is embedded in products (especially high-technology products) and
embedded in the tacit knowledge of highly mobile employees. While knowledge is
increasingly being viewed as a commodity or intellectual asset, there are some para-
doxical characteristics of knowledge that are radically different from other valuable
commodities. These knowledge characteristics include the following:
• Using knowledge does not consume it.
• Transferring knowledge does not result in losing it.
• Knowledge is abundant, but the ability to use it is scarce.
• Much of an organization ’ s valuable knowledge walks out the door at the end of the
day.
The advent of the Internet, the World Wide Web, has made unlimited sources of
knowledge available to us all. Pundits are heralding the dawn of the Knowledge Age
supplanting the Industrial Era. Forty-fi ve years ago, nearly half of all workers in
industrialized countries were making or helping to make things . By the year 2000,
only 20 percent of workers were devoted to industrial work — the rest was knowledge
work ( Drucker 1994 ; Barth 2000 ). Davenport (2005, p. 5) says about knowledge
workers that “ at a minimum, they comprise a quarter of the U.S. workforce, and at
a maximum about half. ” Labor-intensive manufacturing with a large pool of relatively
cheap, relatively homogenous labor and hierarchical management has given way to
knowledge-based organizations. There are fewer people who need to do more work.
Organizational hierarchies are being put aside as knowledge work calls for more col-
laboration. A fi rm only gains sustainable advances from what it collectively knows,
how effi ciently it uses what it knows, and how quickly it acquires and uses new
knowledge ( Davenport and Prusak 1998 ). An organization in the Knowledge Age is
one that learns, remembers, and acts based on the best available information, knowl-
edge, and know-how.
All of these developments have created a strong need for a deliberate and systematic
approach to cultivating and sharing a company ’ s knowledge base — one populated
with valid and valuable lessons learned and best practices. In other words, in order to
be successful in today ’ s challenging organizational environment, companies need to
learn from their past errors and not reinvent the wheel. Organizational knowledge is