It's a well-established principle that people need slack time to work through their ideas. Companies like 3M and Google have given innovation "time off" to their scientists and engineers. But perhaps your company struggles to justify that level of slack, or you aren't confident that your employees would use such time effectively. A more focused approach is to get people working together on a specified challenge. Take a group of volunteers away from the office for a week to see if they can make progress on a specific product. Or, once a year, ask everyone to put his or her normal routine work on hold for a week and commit to doing something new or a bit risky. These kinds of activities provide the necessary time out for employees, but with a reasonable degree of focus and discipline.
Source: Today's Management Tip was adapted from "Taming Your Company's Most Elusive Beast" by Julian Birkinshaw.