Just like people, companies in today's economy find that their primary source of competitive advantage increasingly lies in the unique proprietary knowledge they possess. Companies and individuals may have equal talent and access to public knowledge, but the special value that comes with unique understanding provides a real edge. The bond trader who is the first to understand an opportunity to arbitrage securities across two different markets can earn extraordinary returns until other traders figure out the secret. A company thoroughly familiar with how to compete in a particular geographic market—China, say—has huge advantages over competitors lacking that familiarity.

Put simply, there is great value in sharing, across a whole company, proprietary insights into customers, competitors, products, production techniques, emerging research, and the like. In practice, of course, companies find it far more difficult than do individuals to take advantage of all this knowledge. An individual's knowledge is self-contained, always available. But in companies—including small ones—it can be hard to exploit the valuable knowledge in the heads of even a few hundred employees, particularly if they are scattered in different locations. In a large, diverse company, the task expands to cover thousands of highly educated professionals and managers spread...