Underground innovation

john bessant
11 min readApr 25, 2023

How giving people space can make a big difference to your innovation profile

If you’d snuck up behind me last weekend you’d have caught me in the act of painting walls. Not the most exciting of pursuits but it needed to be done so that now I can sit here and write in a freshly-painted room. And importantly one where even my clumsy brushwork doesn’t show in unsightly streaks and overruns. I am amongst millions of painters, professional and otherwise who regularly mutter small votes of thanks to Richard Drew and his invaluable contribution to the world of painting and decorating — masking tape.

This humble but essential innovation is getting on in years but still turns a profit for the company which originated it way back in 1925–3M. But it would never have seen the light of day if company strategy and official policy had prevailed. It exists because of Drew’s late night and unofficial efforts in direct defiance of his boss’s orders.

Drew was working as a technical salesman, dealing with some of the copmpany’s biggest customers for their core product — sandpaper. He spent a lot of time visiting car factories in that newly-growing industry, and in particular the paint shops where sandpaper was used to prepare metal surfaces for painting.

The paint crews were well aware of the good old days when Henry Ford had simplified their job — in 1909 he’d outlined a strategy for his company, which concentrated on a single model (the Model T) which could be built in high volume at low price. Doing this involved a number of trade-offs, not least in terms of massively editing down the choices available to customers. It was at this strategy meeting that he reputedly said ‘Any customer can have a car painted any colour that he wants so long as it is black.’

That decision helped establish the Model T as ‘a car for Everyman at a price every man can afford’, bringing the price down by 75% and putting it within the reach of many people. But it didn’t satisfy the market for long. People wanted more choice in models, styles — and colour schemes. All of which made life more difficult for the skilled craftsmen in the paint shops, trying to deliver ever more exotic paint jobs without slowing down production.

The problem is that when you want to paint with more than one colour then you need to cover up the area you don’t want painted. Which is a clumsy fussy business; early attempts involved using rags, newspapers and scraps of cardboard but then they had to be held in place, making a one-man job into a two-man job. Attempts to solve this by using sticky tape to hold the mask in place also failed; the solvents in the paint dissolved the adhesive on the tape making the whole mask slip and slide all over the surface.

Which is where Richard Drew came in, trying to sell a new kind of sandpaper which 3M had launched which offered to cut down the dust created when preparing a metal surface for painting. Hearing some choice language coming from one corner of the shop he walked over to ask what the problem was — to be given an expletive filled tutorial in how not to mask up a paint job. What was needed — he was told in no uncertain terms — was a better adhesive tape which would actually stick and stay stuck!

He went back to his office and began to tinker around with various formulations to try and make something suitable. His boss wasn’t too pleased, ordering him to get back to his main job of selling sandpaper — but he kept on with the quest.

It took him two years and involved a variety of vegetable oils, chicle, linseed, various resins, glue, glycerine and treated crepe paper. What he eventually came up with was a tape strong enough to stick to the surfaces but easy enough to peel off without leaving any scars on the paintwork. Despite its promise his boss wouldn’t allow him to buy the machinery he needed to produce it in quantity — so Drew turned his innovative skills to the problem of financing capital equipment. He bought his machinery in small pieces, each of which cost less than the $99 he was permitted to spend on an item of equipment., and then assembled the machine himself.

This last act finally convinced his boss to let him go ahead — and also provided a lesson which became a company mantra. The boss in question was William McKnight and he made a key policy out of the experience. “If you have the right person on the right project, and they are absolutely dedicated to finding a solution — leave them alone. Tolerate their initiative and trust them.”

And so 3M’s ‘bootlegging’ approach was born, and it persists today embodied now in formal company policy. Give people permission to play around, don’t control them too tightly and let their natural creativity and entrepreneurship do the rest. Their 15% policy (allowing employees to spend up to 15% of their time in pursuit of their own ideas and hunches) has been responsible for thousands of product and process innovations, a few of which (like PostIt Notes) have gone on to be breakthrough radical innovations.

The masking tape story is a classic example of innovation happening below the radar screen (except the radar wasn’t invented in 1925!). We know today that smart companies who care about innovation invest in the capacity for innovation — R&D and market research, future scoping, etc. Organized innovation, buying themselves options on the future. All good — but maybe only focusing on the formal means potentially missing out on what might be happening underground. Because by their nature people are innovators, prone to experiment and tinker around, frustrated with aspects of their work which they think a little hacking around the edges might help them with. Why not tap into this as another source of innovation?

(Especially since it’s actually not that expensive in terms of lost productive time. The origin of the 15% figure at 3M was McKnight’s the observation that this was the time people spent on coffee breaks and on lunch breaks and so on, times when they could do some of this unofficial innovation).

It’s not just the benefits in terms of the possible product and process innovations which it might lead to. It’s also a powerful motivator, something which can help retain and inspire employees. Allowing people time and space to explore communicates a core company value — — it’s an invitation to tinker to hack things, to play around. And it has certainly paid off for 3M and other companies; consider these examples:

  • The Sony PlayStation started as a bootleg project by Ken Kutaragi, an engineer who secretly worked on a video game console with Nintendo without Sony’s approval.
  • The HP DeskJet printer was originally developed by a group of HP engineers who wanted to create a low-cost inkjet printer for personal use. They used bootleg parts and software to build their first prototype, which they hid under a tablecloth when not in use.
  • The first spreadsheet software was created by two programmers Dan Bricklin and Bob Frankston, who worked on their project without any formal support or funding from their employers. They went on to found their own company, Visicalc, which for a while was the market leader in the field.
  • Google’s 20% allowing employees time to spend on personal projects led to several innovations including Google Maps, Google News and Gmail.
  • Toshiba’s pioneering notebook computer was developed by a team of engineers who worked on it covertly for four years. They used their own laptops and software tools to create a prototype that featured innovative elements such as a lightweight design, a long battery life and a high-performance processor. The project was initially rejected by the management, but later accepted after some modifications. Introduced in 1985 it became a global leader in the portable computer market.
  • BMW has a long history of bootleg innovations which have gone on to become success stories. For example the Z1 roadster was developed by a small team of engineers who worked on it secretly for four years. They used their own time and resources to create a prototype that featured innovative elements such as a plastic body, retractable doors and a modular design. The project was eventually discovered by the top management and approved for production in 1986. And the iDrive was developed by a team of engineers who worked on it without any formal mandate or budget, using their own laptops and software tools. They also conducted user tests with their own cars and friends. The project was initially rejected by the management, but later became a standard feature in many BMW models. These projects helped legitimise what the company now calls ‘U-boat’ projects , recognising the value of the bootlegging approach.

Peter Augsdorfer made a classic study of the phenomenon, reported it in his wonderful book ‘Forbidden fruit’ in which he highlights many examples of such ‘bootlegging’ approaches. (The term originated during the 1920s when the US government banned the manufacture and sale of hard liquor; the measure didn’t have the desired effect of wiping out the industry and sobering up the country. Instead it triggered a wave of illegal but at times highly innovative ways around the problem, essentially driving innovation underground and out of sight . This included hiding illicit liquor down the inside of boots).

Augsdorfer argues that bootlegging can be seen as a form of learning under uncertainty, where employees experiment with new ideas and technologies without formal approval or support. In other words it’s an unofficial extension of the R&D/exploration work which companies need to do anyway.

Importantly it’s an approach which can have other positive benefits for organizations beyond the innovations which its employees create, such as enhancing motivation and employee retention and fostering a culture of internal entrepreneurship. But it has its ‘dark side’; there are negative outcomes including wasting time and resources, violating ethical norms and — a big challenge for those trying to ‘manage’ it — undermining organizational control and co-ordination frameworks.

Augsdorfer orginally wrote about this 25 years ago but a recent article in the Sloan Management Review reminds us that such underground innovation is alive and well. It’s not a case of ‘one size fits all’ and their article highlights a number of different approaches. It also usefully identifies three key archetypes of characters who may be innovators of this kind. They call them ‘missionaries’, ‘users’ and ‘explorers’.

Missionaries have a particular interest in the development of the company; their self-adopted ‘mission’ is to improve things. Characters like Richard Drew would fall into this category, seeing their own progress as being tied up with the fortunes of the company they work for and tapping into its resources to help them achieve their goals.

User innovators are essentially frustrated in what they are doing — they develop hacks and work arounds to solve problems particularly in the area of process innovation and their ideas can often be surfaced through suggestion schemes and other mechanisms.

And explorers are concerned with pushing the frontiers of what they do, sometimes going in directions which the company does not believe is possible. The risk here is that they pursue their ideas too far, detracting from their mainstream work and official company strategy.

So what makes underground innovation work? It’s not simply waving a magic wand, Harry Potter style, and casting the ‘Innovate!’ spell. Instead a number of things need to come together:

  • Allowing space — time, access to resources, etc. The exact amount — 15, 20 or even higher percentages of time — is irrelevant. It’s the signal that matters, communicating that it is OK to experiment around the edges and that there won’t be negative consequences for such action. What often happens is that this small amount of investment encourages employees to spend much more of their own time and initiative, often working long unpaid hours in pursuit of their ideas. At the limit (as Paula Criscuouolo and her colleagues point out) there are good examples of bootlegging arising from contexts in which there is no formal space or time allocation but an underlying perception that it is still OK to ‘dig around a little’.
  • Giving boundaries — defining the space within which innovation is possible and permission to explore there. For example we don’t necessarily want bootleg innovation in the formulation of pharmaceutical products but that leaves plenty of scope for other ideas, particularly in process innovation.
  • Establishing a development pathway to pick up on bootleg ideas. There’s no point stimulating lots of bootlegging behaviour if employees have nowhere to channel their ideas once they start to develop. In the case of 3M there’s a clear pathway which allows employees to take bright ideas and pitch for varying amounts of internal funding and other resources to grow and scale their innovations. Such functionality is increasingly built into innovation collaboration platforms and many companies — such as Liberty Global with their Spark programme — have established employee entrepreneurship pathways in parallel to their suggestion schemes.
  • Communicate trust as a core value — allowing bootleggers to feel a sense of psychological safety about what they are doing and that they will not be penalised for their activities.
  • Reward and recognise — it’s no coincidence that one of the things about 3M is that the people who have been involved in developing bootleg projects to fruition are then rewarded not just with resources and money but also with the opportunity to carry their venture forward. One of the two people involved in the development of Post it notes was Art Fry who moved on to run the division for 3M. The originator of the laptop computer within Toshiba similarly went on to run that division of their business.
  • Encourage intelligent failure — the down-side of allowing people to take initiative is that they will make mistakes. Importantly one of McKnight’s famous comments was that Management that is destructively critical when mistakes are made kills initiative. And it’s essential that we have many people with initiative if we are to continue to grow.’

Underground innovation has a lot to offer -but as the above suggests it isn’t a simple matter of mimicking Google or 3M, allocating a percentage of time and then waiting for the magic to happen. Successful organizations make employee involvement a key plank in building their innovation culture; something William Mcknight learned from his experience as Richard Drew’s manager. By 1929 he was running the entire 3M company and he pulled together some of the core principles through which their culture developed — including what he called his ‘Basic rule of management’. It’s deceptively simple and it serves well as a motto for anyone interested in tapping into underground innovation:

“delegate responsibility and encourage men and women to exercise their initiative.”

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john bessant

Innovation teacher/coach/researcher and these days trying to write songs, sketches and explore other ways to tell stories