Refers to capturing, organizing, storing, and disseminating the knowledge and experiences of individual groups within an organization. Building upon the ideas that "knowledge is power" and that information is the basis for a successful company, KM is the process of breaking down knowledge (and other human assets) and turning it into a business advantage.
It started as document imaging. Then gave way to document management, which in turn gave way to content management. It now has evolved into Knowledge Management. It's an organization's ability to "manage" its "knowledge." Primarily this is done by pumping as much company information into a database (or databases) and developing a system that keeps track of it all. Supposedly, this allows everyone is the organization to take advantage of the collective knowledge of the company.
For example, if a national corporation analyzes one sector of its operations and passes the results to another sector, it is believed to be fostering greater unity overall (which for the company translates into a competitive benefit and higher morale). This kind of practice then enables product managers (in New York, Miami, and Los Angeles, for example) to share information more efficiently (via the company intranet, for example), so they do not duplicate each other's efforts.
Sometimes, KM refers to the team that manages knowledge workers, but this is a misnomer. As a technical term, it refers to a system that captures and retains data from data warehouses, e-mail, and the Web.