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Introduction to Knowledge Management 3

not intended to replace individual knowledge but to complement it by making it
stronger, more coherent, and more broadly applied. Knowledge management repre-
sents a deliberate and systematic approach to ensure the full utilization of the
organization ’ s knowledge base, coupled with the potential of individual skills, com-
petencies, thoughts, innovations, and ideas to create a more effi cient and effective
organization.
Increasingly, companies will differentiate themselves on the basis of what they know. A relevant
variation on Sidney Winter’s defi nition of a business fi rm as an organization that knows how to do
things would defi ne a business fi rm that thrives over the next decade as an organization that knows
how to do new things well and quickly . ( Davenport and Prusak 1998 , 13)
Knowledge management was initially defi ned as the process of applying a system-
atic approach to the capture, structuring, management, and dissemination of knowl-
edge throughout an organization to work faster, reuse best practices, and reduce costly
rework from project to project (Nonaka and Takeuchi, 1995; Pasternack and Viscio
1998; Pfeffer and Sutton, 1999; Ruggles and Holtshouse, 1999). KM is often character-
ized by a pack rat approach to content: “ save it, it may prove useful some time in the
future. ” Many documents tend to be warehoused, sophisticated search engines are
then used to try to retrieve some of this content, and fairly large-scale and costly KM
systems are built. Knowledge management solutions have proven to be most successful
in the capture, storage, and subsequent dissemination of knowledge that has been
rendered explicit — particularly lessons learned and best practices.
The focus of intellectual capital management (ICM), on the other hand, is on those
pieces of knowledge that are of business value to the organization — referred to as intel-
lectual capital or assets. Stewart (1997) defi nes intellectual capital as “ organized knowl-
edge that can be used to produce wealth. ” While some of these assets are more visible
(e.g., patents, intellectual property), the majority consists of know-how, know-why,
experience, and expertise that tends to reside within the head of one or a few employ-
ees ( Klein 1998 ; Stewart 1997 ). ICM is characterized less by content — because content
is fi ltered and judged, and only the best ideas re inventoried (the top ten for example).
ICM content tends to be more representative of the real thinking of individuals (con-
textual information, opinions, stories) because of its focus on actionable knowledge
and know-how. The outcome is less costly endeavors and a focus on learning (at the
individual, community, and organizational levels) rather than on the building of
systems.
A good defi nition of knowledge management would incorporate both the capturing
and storing of knowledge perspective, together with the valuing of intellectual assets.
For example: