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Karl McFaul and the organizational innovation

Innovation Explorer 2023: Karl McFaul Interview.

Interviewer: Peter Neftelimov

Karl McFaul has been pioneering the frontline of innovation since he as a child prodigy in the 80s was contracted to produce the new wave of elite artists in the Swedish music industry. This was a good training ground for entrepreneurial leadership, team building psychology and technological skills that led him further into multidisciplinary work and studies in new media at Chalmers University of Technology, top-ranked by MIT as one of the worlds leading engineering universities.

Today, Karl McFaul consult organisations, cities and EU in building regenerative ecosystems for innovation with his methodology for developing structural capital as a key to success in the 21st century global economy. Structural capital enables human and relational capital to function: The organisational models, methods, systems and innovation concepts with strategy, tactics and operations to mobilise resources, build capabilities and generate economic prosperity as a result of customer, employee and investor attraction.

Karl’s work takes place in the intersection between citizens, public and private sector governance, academia and the digital society. His mission is always to make the organisation a leading example in how modern, intelligent and sustainable enterprises contribute to societal and individual wellbeing and productivity.

As a member of the European Commission high-level expert groups, Karl has developed a new framework for policy innovation and is published internationally in scientific works. He is an elected member of New Club of Paris, Future Center Alliance and has lead work on the development of strategy, digital platforms and management systems for the European Spallation Source (ESS) in the city of Lund, Sweden, now constructing the world’s most powerful scientific infrastructure for materials research.

Karl holds an Executive MBA specialised on digital platform economics from Lund University School of Economics and Management, an MFA from University of Gothenburg, is a certified coach from the Agile Business Consortium and a pioneer in Industry 4.0 from Chalmers University of Technology.

Karl McFaul will be a speaker at Innovation Explorer 2023. The event will be held on February 23, 2023 in the John Atanasov Hall in Sofia Tech Park, Bulgaria. is a media partner.

1. How can everyone reveal their full potential?

Since everyone is quite different and unique in their personality, physiology, cognition, learning and work styles, it requires innovation and individualisation in educational systems, societal systems and work life. The knowledge society requires a shift away from the “one size fits all” economic thinking we’ve inherited from past ages of traditional line-organisation and bureaucracy in industrialisation and mass-production. Simple systems which couldn’t deal with complexity very well.

People need to be able to navigate to their ideal place for learning, work and life. Therefore, I’ve invented the role “Future Navigator” together with a couple of colleagues developing services and tools for future navigation. It requires mobility, both when it comes to a person’s “inner journey”, a person’s self-awareness and mental models, as well as the “outer journey” in a world of opportunities. We can as a society, as institutions and families encourage and support this inner and outer journey for people to develop and navigate to their ideal place.

Place matters, and Place Innovation. It’s not necessarily the case, that the place you were born, or where you live, is the ideal place matching your personal preferences, needs and aspirations. To be in your right element, where you can thrive. It’s fascinating how, still in the 21st century, so much of society is stuck in past thinking and structures working against change and modernisation. To quote William Gibson: “The future is already here, it’s just unevenly distributed”. But people are more willing and able to relocate today. We see mobility and mass-migration on a scale we’ve never seen before. To change cities, to change jobs, to change homes and lives, in a lifetime. In this new era, we also have digital nomadism and the new wave of entrepreneurialism. Work from anywhere, anytime, during your personal peak hours, bring your own device etc. Today’s computing power, the Internet, cloud services and IoT, makes this individualisation and customisation in mass-collaboration manageable and possible in a way it has never been before in human history. From a historical perspective, we invent technology to make us more powerful, free and flexible.

When it comes to work as a place, R&D as a job for example, doesn’t and should not follow the same processes, procedures and measures that administration does (where the latter is by the way routiniseable and as such already being subject to automisation by computers). Managers need to learn about the new business agility and how to create the variation in an organisation that can make it benefit from individual differences and work styles, to better compete, collaborate and regenerate in a world in constant motion and change.

Then we have the online world as a place, becoming Web 3.0, with decentralisation of power and an artificially intelligent Internet. This is the new place for learning. I see a future, not too distant, where interactive computer gaming combined with methodology, pedagogy and AI will individualise, democratise and revolutionise learning. Life-long learning. The traditional teacher role, schools and universities are becoming obsolete and new types of jobs will emerge on top of this: Inspirational event makers for social and cultural activities AFK (away from keyboard), crafting, hiking in nature, sports, psychology and well-being.

Finally, society in a world of automation, robotisation and digitalisation, will need to shift capital from centralised administration, used to control and steer people (“one size fits all”), to solutions like universal basic income which allows for individual and collective growth in a decentralised, self-organised manner, bottom-up. From where the individual and local knowledge is, which is something much more natural, effective and economical compared to traditional centralised top-down governance. Certain regulations top-down are of course still needed in a system to make a free-market economy remain free. To ensure fair play, democracy, transparency and avoid monopoly formation. But still, so much of politics, public sector and business is lagging far behind.

2. What lies behind structural capital for us to understand?

Structural Capital is the set of procedures, processes and internal structures, the information and the digital platforms, that contribute to the implementation of the objectives of an organisation. It includes capabilities, routines, procedures, the brand, the IPR and the methodologies embedded in organisation. It the supportive non-physical infrastructure that enable Human and Relational Capital to function (all together, a company’s Intellectual Capital). It can be seen as the “operating system”, or a “platform” on which Human Capital performs and Relational Capital interacts, in order to produce value. It is thus the key to make things work smoothly and attract talent, interest and financial capital. It has a multiplier effect on good (or bad) performance of an organisation. Structural Capital is also what remains, works and produce value over geography and different time zones even when the Human Capital (employees) is off from work or sleeping.

3. In what way does the structural capital help innovations?

Since the content, the tools and the configuration or design of the Structural Capital either prevents or facilitates Human and Relational Capital to function, it has of course a fundamental effect on an individual or an organisation’s ability to innovate. Innovation always emerge “on the fringe”, in the frontline, by “scanning signals in the periphery”. It can emerge from the “value zone at the bottom of the pyramid” where most people work with production, sales, and meet the customers who feed the organisation hopefully with their enthusiasm, trust and money.

Wise organisations develop a Structural Capital that can channel feedback, manage the complexity of an organisation’s internal and external reality, inspire to creativity, continuously build organisational knowledge and regenerate and revitalise itself into new cycles of innovation.

4. Based on your practice, what can prevent the companies from being innovative? How can they overcome this obstacle?

Mindset and culture are most often the main blocker or “showstopper”. People who do not “see” the reality or future for various reasons. Pride, and even success, can lead to ignorance if one is not self-aware. It can be about upholding traditions, established systems, norms and technologies because of past efforts, negotiations, agreements, investments and prestige, even if it’s dysfunctional. We call this “path dependency”.

It can be about the business philosophy, management and leadership styles. You can achieve high-performing teams by making people scared for a while. Management by fear. People will perform out of fear and then leave or slack off when the engagement plummets. Research shows that absence will go up, errors and accidents too, while creativity will sink like a ship filled with hearts of stone while the birds stop tweeting in the raving storm. What kind of leaders are we following? What kind of leaders do we want?

It can be about the design of the system. Is it a centralised, decentralised, or a distributed system? We can see throughout history how centralisation of assets, authority and power, without democratic influence and renewal in leadership, makes a system aged, vulnerable, less intelligent, leads to corruption and produces dysfunctional unattractive workplaces or societies. People quit such workplaces and escape such societies.

It can be about the processes in a system. Are we going to produce something we already know how to produce? Or are we going to create something new? This is where industrial mass-production of similar units is fine and mostly effective with traditional line-organisation, top-down command and control. Because the innovation phase is already done. There is a best practice in place. A manual. Up-front planning to manage the predictable. But if we need to innovate? Then it requires a completely different process. To navigate, rather than manage, the unpredictable. No up-front planning. There is no best practice. There is an emergent practice. We need to develop and capture new knowledge as the process evolves. This is where we use agile methodologies. Flat organisations. Iterative development involving different stakeholders in the innovation ecosystem, for collective intelligence.

It can also be about the tools, how design meets function. The user experience, when interacting with computers, production or communication tools in the system.

Change comes with a cost, with a risk, but also a possible new necessary solution and a greater reward. The first step on the path to change, is about mindset and culture. This require transformational leaders who have the courage and competence to be different and initiate things. Then to mobilise changemakers in the organisation or in the city. They can be found anywhere. On any level or in any sector. But they are fewer in a population and a bit spread out. Mobilising internal and external changemakers to inspire, influence, educate and involve the early majority, the late majority and even the more sceptical laggards, in the change process. This creates “buy-in”, engagement and motivation by “co-creation” and “co-ownership”. To be part of something great. So it always starts with the “Why”. To bring consensus about “Why should we do this”. Involving different parts of the organisation in developing the new strategy (the Why & What on a macrolevel), tactics (the How) and operations (the What & Who & When on a microlevel). Working on a two-way street, bottom-up and top-down in combination. Feedback loops. That is what defines an innovation ecosystem. This approach makes it much easier to get people productive, creative and implement the new way of working and learning, together. It then also becomes easier to introduce new processes, procedures, methods, tools and technologies at work. Starting in the opposite way, or by forcing top-down instead of motivating and co-creating, will lead to confusion and sooner or later a lack of commitment, even protests, perhaps revolution and eventually decline phase, poverty and bankruptcy.

5. What can we expect from you at Innovation Explorer 2023?

You can expect joy, inspiration and dialogue in learning something new together. I will present insights and useful tools from my work with future navigation and building innovation ecosystems in public and private sector in Europe and beyond. I will be interested to meet and talk with people and discover ways to support development in Bulgaria.