Slim: The one clear distinction about anybody working on a side project is it does not happen during working hours. That's something very, very clearly that I believe that you never want to do for any reason.
The managers who have the thought you mention assume, first of all, that you can actually control how an individual is choosing to manage their life outside of work. You can't tell somebody what hobbies they have to have. Another assumption is that productivity and value that's created by employees is just based on the numbers of hours in which they're working on a project. I do not see any correlation whatsoever, and actually many studies that have been done about productivity show that it has nothing to do with that.
I think the people who are the most valuable to organizations are those that are connected to the outside world, that are not just focused inside on what they're doing, and especially within a developer community or within IT. I've many, many clients--software engineers and developers--that have shown me there is tremendous sharing that happens in outsourcing projects that they might do together. Working on some open source, cool projects or developing apps, the amount of learning that happens when they're connected on a small project leads to epiphanies and ideas and different ways of looking at something. This, I think, far outweighs just making sure that employees are spending the max amount of hours within their day job.
These assumptions are dangerous and awkward in two ways. One is that you think you can control what it is that people are doing, and second, sometimes the more that you restrict, it actually increases the urge of people to want to rebel against it. Besides saying, "You are responsible for meeting your work objectives, and if you want to be here and you want to have a career, that is your responsibility as a professional," I think people want to do well. I think they want to do a great job.
There have to be clear parameters for people that their side hustle should not be doing something directly competing with the company. It makes sense to have very clear guidelines in terms of what side projects can be. But if everybody is adult, let them manage things, if it makes them more creative. We can look at companies like Google who very actively encourage people to be pursuing other projects and working on interesting things. And we've seen what the results can be in terms of innovation in a company. So to ask for innovation but to say, "You must be innovative between these hours and only focus on our job and never look at anything else outside" is very contradictory. And I don't think it's effective at all.