In times of economic change it is important for companies to remain flexible and adapt in order to be sustainable. New theories of management have developed to tap into a company’s core competencies and give it the ability to shift its product offerings and stay competitive. One theory that has gained popularity is Knowledge Management. A 1997 survey of 200 large US firms found that 80% of corporations had initiated knowledge programs of management. Both corporations and non-profit entities have adopted knowledge management practices - Monsanto, Hewlett-Packard and BP as well as the Army, Navy and the World Bank. As Peter Drucker, who coined the term “Knowledge Worker”, wrote in his Managing in a Time of Great Change, “Knowledge has become the key economic resource and the dominant – and perhaps the only – source of competitive advantage.”
Knowledge management is the main element of a business strategy that will allow an organization to increase the rate that it is able to handle new market challenges and opportunities. It does this by leveraging its most valuable resources; collective know-how, wisdom, talent and experience, or, intellectual capital. It gives the organization increased ability to find innovative solutions, compete and connect with its customers. This is the type intangible asset that pushes the value of the company beyond just its net worth. Microsoft is not valued so much for its current products and market share, but for its potential to leverage its stockpile intellectual resources – the experience and know-how it has accumulated over the years.
This experience and know-how of intellectual capital must be extracted and made available otherwise innovation is hindered. Knowledge management represents a means by which to capture and monitor the bodies of intellectual capital. To do so requires a culture that fosters faith in collectively sharing and thinking, one that will avoid knowledge hoarding by...