Th e paper concerns innovative changes in the modern knowledge management and knowledge-based organizations. Th e necessity of innovative management in rapid development of the market competitiveness is substantiated in this article. Th e infl uence of technological changes, information technology and communication on methods and forms of modern management is presented. Furthermore, there are conditions shown which knowledge based organization must meet. Its characteristic features, principles and concepts were underlined as well. Th ere were examples of knowledge-based organization provided: net, fractal and virtual. Th e necessity of changes in the management of organizations which aspire to gaining success and competitive advantage on the market. In this article there are important factors presented for modern management as well as the role and tasks of management in this range. Th e article presents the functions and instruments of knowledge-based organization system. Th e role of the progress leader and knowledge workers in creating positive image of organization is emphasized. Th e importance of creativeness and innovativeness in facilitating management is discussed. Th e author presents dependence of the success of organization on creative and initiative workers and active managers. In the centre of attention are advantage of innovation in management and diffi culties in their introduction into life. Th ere is the comparison between traditional management and innovation based management too.