My two cents
What is innovation theatre
Innovation theatre, or Service Design theatre, is the moment when we play as if we're doing innovation and Service Design, but in fact, we're just faking it.
The weird thing is that you're not always doing innovation theatre because of a machiavellian choice. Sometimes, we slowly slip into it.
An example of innovation theatre
For example, in a workshop, it's the moment when you ask people to generate ideas, but you don't think they'll come up with anything good. You're just doing it so that people have a lovely team-building moment. And you think: "We're gonna fix it after the workshop".
Questions that help me avoid it
So here are a few questions that we can keep in the back of our mind to verify that we're doing the work for good reasons:
Am I doing this because it's nice for the client or because it serves the project?
Is the result of what I'm doing team building, or does it also lead to new insights?
Am I doing this to impress or because it's needed?
Are the people who will benefit from the service or work done participating or not?
What the experts say
Tanya Snook, a user experience designer who builds citizen and employee experiences in the Government of Canada, has created some great resources that explain this notion of UX/Innovation/Service Design Theatre in more depth.
She has for example, created a poster that helps you spot moments where you're shifting to the more theatre side than the real work side.