Employees have long found ways to use software tools to get the job done, even when those tools are not approved. It’s called Shadow IT, but ever since generative Artificial Intelligence hit the scene in 2022, employees have adopted a new version: Shadow AI. The company approves Microsoft Co-Pilot, but employees opt to use their smartphones or personal laptops, along with their personal accounts with ChatGPT, Gemini, Claude, Midjourney, or whatever best suits their needs.

For most companies, this is a problem that needs to be addressed through repeated policy announcements and vigorous crackdowns. One company, though, took a different approach. In this short, midweek FIR episode, Neville and Shel outline what the company did and how communicators might advocate for a version of this approach to aiding in AI adoption and speeding up productivity gains.

Links from this episode:

The next monthly, long-form episode of FIR will drop on Monday, April 27.

We host a Communicators Zoom Chat most Thursdays at 1 p.m. ET. To obtain the credentials needed to participate, contact Shel or Neville directly, request them in our Facebook group, or email fircomments@gmail.com.

Special thanks to Jay Moonah for the opening and closing music.

You can find the stories from which Shel’s FIR content is selected at Shel’s Link Blog. You can catch up with both co-hosts on Neville’s blog and Shel’s blog.

Disclaimer: The opinions expressed in this podcast are Shel’s and Neville’s and do not reflect the views of their employers and/or clients.

Raw Transcript

Shel Holtz: Hi everybody, and welcome to episode number 510 of For Immediate Release. I’m Shel Holtz.

Neville Hobson: And I’m Neville Hobson. There’s a quiet tension playing out inside many organizations right now. On one side you have leadership teams, IT, legal, and compliance, all trying to put structure, governance, and control around how artificial intelligence is used at work. On the other side you have employees who’ve already moved on. They’re not waiting for official tools. They’re not sitting through pilot programs. They’re not asking permission. They’re opening ChatGPT on their phones. They’re using Claude in a browser tab. They’re experimenting quietly, often invisibly, finding ways to make their work faster, easier, and sometimes better. And in many organizations, this shadow AI behavior is still being treated as a problem — something to restrict, monitor, or shut down. It’s a topic Shel and I discussed on this very podcast in episode 419 nearly two years ago, and it hasn’t gone away.

Neville Hobson: In fact, recent data suggests it’s accelerating. A study last November by Blackfog and Sapio Research found that nearly half of employees surveyed in the UK and US are using unsanctioned AI tools. Even more striking, 60% said they would take security risks with those tools if it meant meeting a deadline. So this isn’t fringe behavior — it’s become normal. An article in the Harvard Business Review this month argues that instead of treating unauthorized AI use as a compliance issue, organizations should see it as a signal — a sign that people are already finding value in these tools, even if the organization hasn’t caught up. We’ll explore that idea in just a moment.

Neville Hobson: The article calls this the hidden demand for AI inside your company. And when you look at it through that lens, the picture changes quite dramatically. Because instead of asking, “How do we stop this?” you start asking, “What are we missing?” The piece goes further than theory. It looks at what one organization actually did when it recognized this dynamic: BBVA, a Spanish multinational financial services company with more than 125,000 employees. Rather than clamping down on shadow AI use, they moved quickly to provide a secure enterprise environment. But more importantly, they didn’t try to control everything from the center. They took a different approach. They identified and empowered what they call “champions” and “wizards” — the people already experimenting, already curious, already building things. They created a network, a community of practice, a way for ideas, use cases, and practical solutions to spread peer to peer across the organization.

Neville Hobson: And the results, at least as reported, are striking: thousands of employees actively using AI tools, thousands of internally created applications, and measurable time savings of hours per person every week. But perhaps the most interesting part isn’t the numbers — it’s the philosophy behind it. The idea that successful AI adoption doesn’t start with a perfectly designed top-down strategy. It starts by recognizing that innovation is already happening, just not where leadership expects it. So the question becomes: do you try to control that energy, or do you find a way to harness it? And that opens up a much broader conversation, one that goes well beyond technology. It touches on leadership, trust, and culture — on how change actually happens inside organizations. And, importantly for communicators, on how you surface, legitimize, and guide behavior that may already be happening under the radar.

Neville Hobson: Because if employees are already using these tools — and most evidence suggests they are — then silence or restriction alone isn’t really a strategy; it’s a gap. So in this conversation, we want to explore that gap. What shadow AI really tells us about organizations today, whether the BBVA approach is something others can realistically replicate, and where the risks still sit, because they have not disappeared. And we should be clear: BBVA may be an outlier. It’s a highly data-mature organization with strong leadership alignment. Many organizations don’t have that foundation. So the question isn’t just whether this works — it’s whether it can work anywhere else. And what that means for the future of work, and for the role communicators play in shaping that future. Shel?

Shel Holtz: Well, a few thoughts, starting with the fact that BBVA has the financial resources to provide a secure environment for those tools that employees are using. There are many organizations whose IT budgets are razor thin and don’t have those resources, so they would need to figure something else out. But I think there’s a caution here worth raising. The numbers from Blackfog are real, even if the framing from the Harvard Business Review is optimistic: 34% of employees using free versions of tools when paid, approved versions exist; 58% of unsanctioned users on free tiers with no enterprise protections. The reframing from threat to signal doesn’t eliminate the exfiltration risk — it reframes how we need to respond to it.

Shel Holtz: Communicators should be careful not to let the BBVA-style narrative become an excuse to ignore governance. The right frame is: harness the demand, don’t suppress it, and build the governance at the same time. Employees using unsanctioned tools and putting secure data and company information into them — that’s a governance risk, and I don’t think we can ignore it. I mean, I think what BBVA did is great, and I think they baked it into some governance while looking at a new approach they could afford to take. But for many organizations, governance is still a requirement.

Neville Hobson: Well, I agree. It’s important and it’s not to ignore by any means. I think, Shel, you fleshed out a little bit the survey that I mentioned, which is actually useful to have that level of detail. But the big question for me is: if this is the picture in many organizations, according to that survey — compared to data previously — this is getting worse, or rather, it’s happening more frequently. People are just going ahead and using what works for them as opposed to what’s the official thing. What is that a symptom of? Maybe a lack of trust? It’s probably a mix of things. And to me, the communicator’s role here seems to be to try and help people on the one hand understand what the tools can do for them, and on the other hand to help the organization understand that we need to address this issue. People aren’t using the approved ones. They’re doing stuff on their own, and that isn’t good.

Neville Hobson: You mentioned security risks. The Harvard article goes into some detail about that, as indeed do the people ...

FIR #510: Should Companies Embrace Shadow AI?