Why are management gurus and IT folks turning knowledge management into the latest launching pad for boosting careers, pitching software and selling conferences? There are reasons for every trend, and the reasons for this one are clear. Just follow the money.

Money Clue No. 1: The exuberant stock market. We are living during the largest stock market price bubble in history. According to my calculations, at the end of last year, the total stock valuation of 6,153 U.S. firms was $13.7 trillion. Because the median financial capital worth (e.g., book assets) of the top-ranking 25% of corporations accounts for only 14% of their market worth, the remaining 86% must be rationalized somehow. "Knowledge capital" offers a handy answer. To keep those stock valuations rising indefinitely, the experts recommend the art of managing knowledge. For a fee, consultants will happily help firms boost their knowledge assets. Some say knowledge management could increase the Dow Jones industrial average tenfold and make Bill Gates the first trillionaire -- just check out the September issue of Wired magazine or the popular recent book entitled Dow 100,000: Fact or Fiction?

Money Clue No. 2: The rediscovery of data management. For all practical purposes, there are hardly any profits left in selling PCs. Enterprise resource planning rescue missions have become economic liabilities. So what can computer vendors do? They'd love to launch the next trillion-dollar wave of new systems. But the problem is that CEOs haven't gotten over the lack of verifiable evidence that the last IT investment cycles boosted profits or delivered on promised gains.

Knowledge management to the rescue. Vendors know data management has always been a CIO's job. Point-of-sale devices, Internet visitations and e-commerce transactions are spewing data at gigabyte-per-second rates. With knowledge management, proponents of new spending can argue that making employees smarter is the next big thing, and managing all that data naturally falls to the CIO. Increasing a firm's intellectual assets is hard to argue against and offers an attractive platform from which to refloat shelved projects.

Money Clue No. 3: Attracting conference attendance. Conference prices are an indicator of the perceived worth of a newfangled topic. Conference organizers find it lucrative to promote knowledge management to eager MBAs seeking the executive suite. Last time I saw anything comparable was at the height of the re-engineering craze. So I was intrigued to see that "nuke them" re-engineering guru Michael Hammer -- who once called for eliminating middle managers despite the knowledge they've accumulated -- is holding knowledge management conferences. A two-day seminar costs $2,400, or about $300 per hour per person. These prices and the "if it costs that much, it must be worth it" mentality that justifies them also legitimize knowledge management.

Management implications

Before you are swayed by the vendors and the hawkers, keep your sense of balance about such investments; don't be easily swayed. Insist that any "knowledge management" system produce verifiable gains in your company's earning capacity. That's the only way to distinguish between a passing utopia and the capacity to deliver increased economic value.