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Case Aims: To illustrate how unofficial activities can enhance innovation within organisations.

Bootlegging is an entrepreneurial process whereby employees seek to bypass corporate systems to engage in underground projects. For example within BMW, the 12-cylinder engine was developed over a period of five years by a group of motor aficionados without management approval. The engine was a success and contributed significantly to BMW's brand image of innovative automobile excellence. The BMW series 3 touring car also emerged from a similar process and contributes significantly to BMW's total profits (Anon. 2006).

Augsdorfer (2008) posited bootleg entrepreneurs usually do not care whether bootlegging is permitted or not, or if the firm expects open communication about the activity. At Becton Dickinson, total transparency is perceived by senior management as an unrealistic demand and driven by wishful thinking. When managers know about bootleg projects, questions tend to be asked, thereby reducing the researcher's sense of freedom. On the basis of available data, Augsdorfer proposed that the dilemmas faced by bootleggers include:

  • 1. Creative people need an outlet for their creative energy and curiosity. Most formal organisations fail to provide sufficient space for people with ideas outside the main stream.
  • 2. Decisions that concern innovations are important, but often have to be taken under conditions of high technical and market uncertainty. They must be based on careful analysis, with uncertainties reduced to a


minimum. Hence the bootlegger may face in a chicken-and-egg situation. Research is required to get an idea accepted. However, how can research commence without approval? The bootlegger must be willing to engage in unapproved informal research, because it formal approval is unlikely.

3. R&D budgets need to be planned. Usually this happens annually when objectives are linked to budgets. But great ideas often occur between planning periods.

These dilemmas can be overcome by resorting to underground activity. Serendipity, spin-offs from current research or other unforeseen events are important in unleashing creative ideas. Dissatisfaction with a manager's decision or rising personal interest in a current topic are more such triggers.

It is common to spend some hours bootlegging on a regular basis. Friday afternoons or weekends are specially favoured as they provide a quieter environment compared to the rest of the week. In most cases however, researchers bootleg over shorter but continuous periods of time Augsdorfer (2005). Most bootleg projects were accepted by the firm after disclosure because they met the firm's business needs. Radical innovation depends on good ideas emerging from individual minds. Typically these new ideas come from the same individuals in the organisation (Pinochet 1988). On average, only 5-10 % of R&D laboratory personnel can be described as being truly creative (Augsdorfer 1996). Augsdorfer (2008) opined that bootleggers can be considered creative because they think in a divergent way, opening up opportunities for the firm. Equipped with very special personalities, they are easily identified within the firm. They are often intellectually restless and stand out as unconventional and nonconformist. Their behaviour seems to be fuelled by a basic need and intrinsic curiosity for studying interesting problems and discovering new solutions.

While underground research requires financial resources, in most cases the lack of resources appears to be a minor obstacle. This is because demonstrating feasibility rarely needs a large budget and researchers show imagination in getting the resources they need. Typically, equipment and tools are already available in the laboratory. The expenses for materials are usually small, especially because bootleg researchers seem to be masters of improvisation. It is not unusual to find materials acquired by mutual favour from inside or outside the company. Bootleggers do have a definite need for intrinsic cross-fertilisation across different projects.

Augsdorfer proposed that only occasionally do underground ideas create radical breakthroughs. Most companies interviewed characterised the usual bootleg idea as leading to a technological improvement. The technology of existing products is improved either by adding functionality or replacing


technological imperfections with specific refinements. One concern expressed by respondents is that bootleg research is aimed at working up an idea so that an individual researcher can leave the company to set up his own venture. On the basis of his research, Augsdorfer believes this fear is unfounded. This is because self-employment is rarely of appeal to such individuals, because it is perceived as demanding administrative activities and a more disciplined approach to work than is acceptable to most maverick researchers.

Although bootleg entrepreneurs work outside any formal procedures, they are in fact controlled by friends, colleagues and on occasion by customers. Criticism by others is useful for distilling and refining the quality of the idea. Despite concerns senior management may have over their lack of control, bootlegging can provide an important catalyst for organisational creativity. This is because most outstanding new ideas typically emerge from a few creative individuals within an organisation who often question mainstream approaches. Hence to ban or block bootlegging is likely to significantly reduce the innovative capabilities within an organisation.

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