I always thought gmail was an example of an employee coming up with an idea, and having automatic-permission to explore it due to Google’s 20% time.  It is constantly referenced in articles about the policy.

But there is some nuance here.  It turns out Larry Page asked Paul Buchheit to explore email:

Larry Page assigned the project to me. He said, “Build some kind of email something” and chose me because I had an interest in email. I tried to create a web-based email service in 1996, shortly before Hotmail, but didn’t complete it.

Interesting.  This takes away one powerful piece of evidence often used to justify policies that enable employees to pursue their own innovative ideas on company time.  In this case there was an executive sponsor right from the beginning.

[update 10/19/2018]  Paul Buccheit addressed this again:

As Google grew, did you keep the freedom to hack on things you found interesting? Was creating Gmail part of that?

Around 2001, Larry got frustrated that each group was setting their own priorities and not working on what he thought were the most strategically important things for the company. His fix was to eliminate management and organize engineering around specific projects. He and Wayne Rosing, who was the VP of Engineering at the time, would sit down with engineers and give them projects. When they sat down with me they said, “we want you to build an email something.” That was all the specification I got! So I went off to build something with email, which became Gmail.