Literature on knowledge management is rapidly proliferating, and so are knowledge sites and activities on the Web. The first ever knowledge professorship, sponsored by Xerox and Fuji-Xerox, has been established at the University of California, Berkeley, and Japan's eminent knowledge scholar, Dr. Ikujiro Nonaka, has been appointed as the world's first knowledge professor.

The growing focus on knowledge and its productivity is hardly surprising in increasingly knowledge-intensive economies. The economic value of knowledge consists of how it creates sustained superior performance: measured foremost by admiration and profitability. Knowledge does this by the contribution it makes to winning innovations and operational excellence. It yields significant short-term value, and it is essential to seizing future opportunities.

Knowledge capital comprises two interactive components: human capital and information. Human capital is the totality of human competence determined by imagination, intuition, education, skills, and experience, as influenced by emotional and volitional attributes (e.g., motivation). This kind of knowledge can be difficult to document, communicate, and transfer. Information, on the other hand, comprises the documented experiences and achievements of humankind. The contents of books, papers, studies, reports, software, databases, CDs, and patents are all examples of information

Once documented and communicated, information becomes independent of its creators; it survives them and can be tested objectively for reliability and validity. It can be improved, readily transferred, and used, simultaneously if need be, by any number of people and in many applications. For example, a new engineering design can be copied and used time and again in many places and by many people. Because the value of information is collectively appropriable, capturing, documenting, and transferring individual knowledge within an organization and tapping external sources of information and are critical to effective knowledge management.

Knowledge management derives its power by achieving a synthesis of human capital, information, and technology. In so doing it enables investments in human capital development, information capital formation, and technology design to yield maximum returns. A recent report by Deloitte and Touche Consulting Group concludes that while investment in information technology is fast rising, there is little correlation between spending and benefit. There has been a growing disillusionment with information technology, but it can be turned into great satisfaction when technology is managed as a tool of knowledge management.

Markets reward the innovation potential of companies by pricing them significantly higher than their book values. To win at innovation, companies must design and implement an innovation dynamic that enables them to unlock the potential of knowledge.