Kai stands for "change" and "Zen" stands for "good" in Japanese. The philosophy behind Kaizen is that everything can be improved and thus all organisations must operate on the basis that all processes have room for improvement.

An essential part of KM is, of course, knowledge. For several hundred years there has been a constant search for a unified definition of knowledge, albeit, no formal definition has been found. In literature, knowledge is strongly differentiated from information and data. Meaning, that having knowledge implies that it can be exercised to solve a problem, whereas having information does not carry the same connotation. While data, information and knowledge can all be viewed as assets of an organization, knowledge provides a higher level of meaning about data and information. Knowledge is information that is contextual, relevant and actionable. Knowledge conveys meaning and hence tends to be much more valuable. Another way to define knowledge is to make a distinction between tacit and explicit knowledge. Nonaka and Takeuchi define these two concepts as following:

• Explicit knowledge is documented and public; structured, fixed-content, externalised, and conscious. Explicit knowledge is what can be captured and shared through information technology.
• Tacit knowledge resides in the human mind, behaviour, and perception. Tacit knowledge evolves from people's interactions and requires skill and practice.

In summary knowledge can be seen as the interaction between explicit and tacit knowledge.