Google (googl) is famous for allowing employees to spend 20% of their time on side projects, but in reality many have said there simply isn’t enough time to do that. Dale Katechis, founder of the Oskar Blues beer company, has made the approach integral to his strategy. It started when someone stole his mountain bike five years ago. He told marketing director Chad Melis, a former bike racer who yearned to build mountain bikes, to “make it happen.” Melis created Reeb Cycles, a tiny but profitable venture that also helps market Oskar Blues to lovers of the outdoors.
This sort of resourcefulness is easier in a small company, says Beth Altringer, a Harvard professor of design and behavioral sciences. Katechis says he keeps good people by letting them explore their ideas. He says Oskar Blues boosted its revenue from $100 million to $120 million through side projects, including a device to make to-go cans for draft beer, using beer cans to package coffee beans, and starting a cattle farm that uses spent grains from the brewery to feed cattle used for beef at the company’s restaurants.
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Employees who run the ventures get equity on top of their regular salary. “People don’t want a boss,” Katechis says. “So you give them the room to be their own boss, and the good ones appreciate it and own it.”
A version of this article appears in the June 1, 2016 issue of Fortune with the headline "Success on the Side."