Knowledge management and competition in the consulting industry

This article analyzes how Knowledge Management (KM) is likely to affect com petition in the management consulting industry. KM represents a fundamental and qualitative change in this industry's basic production technology. Bec ause management consultants acquire information directly from their custome rs, for these firms, KM technology exhibits increasing returns to scale. As such, although KM clearly represents an opportunity for some consultants t o build a sustainable competitive advantage, it is likely to lead to a shak e-out. Based on the industry's early experience with KM systems, this artic le describes a number of possible future outcomes as well as strategies tha t consultants can follow.