He didn't - IIRC - talk about "20% time" specifically, but Tom DeMarco wrote a whole book about the importance of "slack" time at work. One point he makes is that if everyone is too busy doing the routine stuff 100% of the time, then the firm can't adapt quickly, because nobody has time to learn anything new, do exploratory / speculative work, etc.

His book Slack is a fascinating read, and I'd recommend it to any HN'er who hasn't read it yet:

http://www.amazon.com/Slack-Getting-Burnout-Busywork-Efficie...