I was challenged recently by someome who said that KM is all theoretical and academic, and not very practical. I had to admit that this, unfortunately, is quite true . . . if you hold a traditional view of how organisations work. To understand the importance of KM, we have to break down our understanding and learn to see things in a different way.
Most people still have a Tayloristic view of organisations. Also called Scientific Management, it was developed around the turn of the last century, and viewed companies as machines that could be tweaked and optimised for maximum efficiency. In some sense this view is correct, we can look at the flow of information and work through the company and maximise the efficiency of that flow. However, with work becoming more intellectual and knowledge based, and especially with the attitiudes of the younger generations, seeing people as interchangable "cogs" in a machine is no longer a viable metaphor.
We know and understand that a community is a group of people spending a lot of time together and interacting with each other such as in a club, church or sports team, but most fail to see that a company (or other organisation) is also a group of people who spend more than a 1/3 of their day together and interact together (mostly in meetings!). Viewing an organisation as a community, not only gives the employees dignity as individual human beings, but also requires leaders to use a different set of rules to manage these people. This is where KM comes into it's own, because knowledge is retained in the individual, and managing them requires not only scientific rules, but social ones as well.