There are already some great comments here.  For 10 years I worked for a large mining company, and although we tried really hard, we also found that the term KM was toxic.  In cases like this I don't think there is much point in trying to make the term acceptable, and I agree that it's best to find a compromise.  The choice of terminology will really depend on what resonates most closely with corporate culture and management beliefs - it's not a case of right or wrong - pragmatism is the order of the day.  I think it's a bit like the old adage of "Marketing 101" - you don't sell a product, you sell the benefits.

In summary, there were words that have worked really well for me, both of which have already been mentioned, but I'd like to emphasise the point that we had considerable success when the language was changed - no more flogging of dead horses!  The term "collaboration" worked really well, especially when the qualification was added "we don't collaborate for collaboration's sake, we collaborate to create business improvement".  This was helped further when I started talking about Knowledge Transfer rather than Knowledge Management.  There were so many advantages: for example I found you didn't need to constantly explain to people what KM meant, somehow the value proposition of Knowledge Transfer was self evident, and of course one way of achieving Knowledge Transfer is by collaboration.  The other thing I really like about KT is that it is very obvious to people what the action verb is, whereas "management" can be very threatening to people, particularly senior people!

I realise that for some practitioners, KT is too limiting in its implied scope, but for me pragmatism wins out.  Once people were happy with the objective and actions required to achieve Knowledge Transfer, we didn't get caught up in a protracted debate about whether this excludes new knowledge being created - I would argue that most new knowledge is created by collaboration, so we had that aspect covered.  

By the way, another point I'd like to make that I never pushed for the establishment of a formal Knowledge Transfer Programme; again for some companies I know from experience that people can get very tired of new Programmes or initiatives - they've seen it all before, and "change fatigue" is a powerful barrier to action.  Instead I created and stewarded a portfolio of some 50+ Communities of Practice involving over 15,000 people, which had the explicit objectives (amongst others) of Knowledge Transfer and collaboration.  This is a subtle distinction, but in my view a very important one.  It made the scope very targeted and specific, rather than a broadly based KM Programme of which CoPs are one component.

For me, the key lesson is that one size does not fit all, and one set of terminology will not work for all organisations.  It was simply a case of applied pragmatism: finding out what worked, and doing more of it!

Best of luck, and please feel free to contact me directly if you would like more details.

Cheers

Mark