This paper presents a managerial perspective on the ongoing transformation from new public management (NPM) to new public governance (NPG) in local government and studies the role of strategic knowledge management in governing the change in organizations’ knowledge processes. Despite the abundant literature on NPM and NPG (Billis, 2010; Hood, 1995; Osborne, 2006; Pollitt and Summa, 1997; Pollitt et al., 2007; Sanderson, 2001; van Helden et al., 2008), a research gap exists regarding their impact on managerial knowledge needs. The aim of this paper is to bridge this gap by applying a qualitative case study approach and answering the following research question: What are the key elements of strategic knowledge management when a local government organization is undergoing a transformation from NPM to NPG? The knowledge management literature proposes two ways of seeing the strategic role of knowledge in organizations. The wider perspective takes knowledge-based value creation into consideration and aims at understanding how knowledge as a strategic resource makes a difference in a competitive sense (Grant, 1996; Spender, 1996). The narrower approach focuses on decision-making and reflects an attempt to rationalize organizations’ decision-making processes. Although the wider perspective may be a more appropriate approach in the public sector, where political and administrative interests meet, it seems that, at least in Finland, the dominant approach is actually the narrower approach. This is illustrated by a program initiated by the government of former Prime Minister Jyrki Katainen. In 2011, it was stated that “Productivity in the public sector will be boosted through better utilisation of business intelligence, more compatible information systems, and by bringing together information management data and procurement resources data in public administration. Shared use of public administration information will be facilitated” (Valtioneuvosto, 2011, pp. 137-138). As this quotation indicates, there was a strong political will to increase the use of advanced knowledge management approaches and to improve the decision-making capacity and performance of the Finnish public sector. By following the dominant public discussion in Finland, this paper first illustrates how the City of Tampere as one of the forerunners in the area has responded to the political call and improved its decision-making. The City of Tampere has also implemented one of the most radical reforms in Finnish municipal administration so far (see Section 3.1), which makes it an interesting case study. After the empirical investigation, the main contribution of the paper will arise from a discussion of the weaknesses inherent in the dominant narrow perspective. This approach easily over-rationalizes public decision-making processes and does not take full advantage of the knowledge management approach.