Intrapreneurship: should organisations embrace the on-the-clock pet-project approach?

In a business, pet-projects are small-scale projects of individual employees, under their full personal control, carried out within the organisation, often using resources of the organisation.

'Luminous idea' by Tiago Daniel
under a CC license

Pet-projects have gained visibility through the successful practices of companies such as Google, HP, 3M, Genetech, IBM and others. There, employees have been given the flexibility - and have even been encouraged - to allocate a percentage of their normal working time between 15 and 20% to a personal project of theirs that may be (and usually is) different to and independent from their ongoing work tasks.

But is the policy of allowing employee pet-projects worth it or is it just a (persistent but limited) hype?