"Shadow innovation" in big companies: embracing good ideas from dark places

You probably know the concept of “shadow IT”, which refers to the technology that gets used unofficially, in the shadows, within big corporates. But today, I want to introduce you to its lesser-known cousin - what I've come to know as “shadow innovation”.

Both shadow IT and shadow innovation grow out of the state of slowness and rigidity that tends to manifest itself in every large organisation. A large organisation needs to control and contain itself and its thousands of employees. This must happen top-down, through rules, regulations, policies and other control mechanisms. Both shadow IT and shadow innovation are bottom-up responses to such top-down control mechanisms.

Shadow IT is a bottom-up response to top-down control of which tools are allowed to be used to get a job done. It can take the form of...

• A secret Slack channel that gets set up because someone has had enough of Microsoft Teams’ ridiculous UX.
• A bunch of shared Dropbox folders that get used because they “just work” when someone needs to share a big file.
• The marketing executive who refuses to use anything else than a Mac, despite company policy and constant shaming from the IT department.

Shadow innovation is a bottom-up response to top-down control of which ideas to believe in, and which initiatives to bet on. It can take the form of...

• A junior business developer who has an idea and spends her weekends hacking away at some janky MVP, long before her idea has “gone through the internal innovation funnel” or received even the tiniest drop of funding or encouragement.
• Three guys in a tech team who realise that an internal tool they’ve built might be turned into a SaaS product and sold to others, and then set up 10 customer interviews to learn more about the opportunity without consulting their manager (nor their manager’s manager’s manager).
• A designer who thinks of a product improvement which, if successful, could improve customer experience dramatically – and then completely disregards the focus of her quarterly “supersprint” to instead spend 3 days testing her improvement idea.

The people who engage in shadow IT drive the IT department nuts. They use non-compatible devices, non-compliant software, pose security threats and generally make life more difficult for the IT-folks around the house.

But visionary, ambitious IT department leaders should indeed be grateful for the existence of shadow IT within their organisation. Why? Because shadow IT is a healthy sign of rebellion. It’s a sign of someone who dares and cares enough to seek better ways of doing things in the name of efficiency and better ways of working.

Nada shadow IT often means there’s nada technological challengers and change makers to be found. Which means nada impulses to change and improve how things are done IT-wise around here. Which is the recipe for technological stagnation, and a path, ultimately, to organisational outdatedness at best or utter irrelevance at worst.

Shadow innovation is a healthy sign of rebellion too. It’s a sign of someone who dares and cares enough to seek better ways of doing things in the name of exploration and value creation.

Nada shadow innovation often means there’s abysmally low levels of entrepreneurial spirit and drive among the employees in the organisation (assuming, of course, that there isn’t a wild amount of innovation happening outside of the shadows in your organisation either, in which case you wouldn’t be reading this post). The entrepreneurial people who presumably once were there have either left or been beaten into submission and now simply “do their job” instead of also tinkering with new ideas and exploring opportunities that lay outside the scope of their job description. No shadow innovation is often a proxy for no innovation at all, which indeed also ultimately leads to outdatedness or irrelevance of the business model, aka the gradual suicide of the organisation's economic engine.

One big difference between IT and innovation is that the former can be centrally, top-down controlled to a much bigger degree than the latter. After all, centrally controlled IT probably won’t kill your org, it will only make it slower. Centrally controlled innovation, on the other hand, rarely works at all. Board-level decisions to “become more innovative” have abysmally low success rates, and tightly structured innovation funnel processes kill every single idea (including the brilliant ones) long before it reaches that infamous decision gate named “funding approved”.

The reason is that good ideas are emergent properties which are inherently unpredictable and uncontrollable.

You cannot force a good idea to emerge in the middle of Q2, regardless of how convenient that would be because that’s when you decide what to focus on in your next sprint cycle. You can’t guarantee that X dollars invested in an innovation team will yield Y new business opportunities and Z new income streams. Innovation and good ideas simply don’t work like that. 

Instead, create the conditions in which innovation and good ideas naturally tend to emerge. If your organisation isn’t ready to do so out in the open, at least let innovation run its course in the shadows if you’re lucky enough to have an entrepreneurially minded employee or two lurking in the dark. After all, it doesn’t matter where or how innovation happens, so long as someone, somewhere, dares and cares enough to make it happen at all.