Skunk Works

Slang (used with a sing. verb) A small, loosely structured corporate research and development unit or subsidiary formed to foster innovation.
After Big Barnsmell's Skonk Works, where the bootleg Kickapoo JoyJuice was brewed, in the comic strip Li'l Abner by Al Capp.

And from
PLURAL NOUN: A skunkworks is a group of people who, in order to achieve unusual results, work on a project in a way that is outside the usual rules. A skunkworks is often a small team that assumes or is given responsibility for developing something in a short time with minimal management constraints. Typically, a skunkworks has a small number of members in order to reduce communications overhead. A skunkworks is sometimes used to spearhead a product design that thereafter will be developed according to the usual process. A skunkworks project may be secret.

As for the term's origin, we like what Harry Newton says in Newton's Telecom Dictionary: "Term for usually-secret high-pressure/high-tech research group in a company or government, often populated by people who don't see much sunlight or soap. Hence the name, skunkworks." The name of the animal itself was derived by early American settlers from the Algonquin Indian seganku.

And from
Made famous perhaps by Lockheed in the 1940's, a skunk works is essentially an informal, quasi-legal, off-line entity set up to create and pilot new ideas and products without the restraining and cold hand of bureaucracy. The very name, connoting smelly, down-home, good old boys, implies much of the meaning.

A skunk works is never on the main site, is not subject to normal rules of behaviour, reporting or control, is usually under-funded so that its members have to make do and mend, has often a temporary existence and is protected from the bureaucrats by a powerful champion. The Lockheed skunk works was responsible for most of that company's airplane innovation in the 40's and 50's.

A parallel example from Rutgers Advanced Projects Group

Historical summaries of Lockheed S.W. from General History of the Skunk Works

Perhaps one of the most frequently asked questions about the Skunk Works is the meaning of its name. Its name originated from cartoonist Al Capp's L'il Abner comic strip, featuring an outdoor still called "the skonk works" in which "Kickapoo joy juice" was produced from old shoes and dead skunks. Johnson's elite engineering group was originally housed in a rented circus tent adjacent to a smelly plastics factory. One day an aircraft designer answered the phone and said, "skonk works." The name stuck, and later became today's Skunk Works -- a registered trademark. However, the formal name of the Skunk Works is "Lockheed Martin Advanced Development Program."
and a cached Lockheed site:
The contract for the first U. S. operational jet aircraft was the impetus for Lockheed management to allow Kelly to start a research and development department that became the now famous Skunk Works.

Kelly was given the nod to head up the project because he was very interested in the jet engine as a propulsion device for aircraft and he had the organizational skills necessary to pull it all together. Kelly's basic concept to getting things done was to cut all the red tape that so commonly plagues large organizations and create a direct relationship between the design engineers and the manufacturing side of the house. The engineer was responsible for all facets of his design including procurement of material, overseeing the machining parts to functionally testing his design. These rules were set down and later became a blueprint for Kelly's 14 rules of Skunk Works operations. The skunk works operation was kept at the highest security level possible and this of course led to some problems. The first Skunk Works building was far from being state-of-the-art but was in fact a temporary building framed from salvaged lumber with a circus tent acting as a roof. It was located adjacent to the B-1 wind tunnel and lacked all the things we think of as necessary today, air-conditioning, sufficient lighting and adequate space. The weather in Brbank often reaches over 100(F in the summer so it was miserable until they installed some cooling equipment. During this time since secrecy was at a very high level surrounding their work even in a defense plant many people had a natural curiosity of what was going on. All they knew was that something was brewing in that area over by the wind tunnel. So the group got tagged with the name Skonk Works derived from the Al Capp cartoon strip Snuffy Smith where the main character made moonshine with skonks (skunks), and other miscellaneous ingredients in the woods where the revenuers couldn't find them. The name Skonk Works stuck until Al Capp complained and then it was changed to Skunk Works.

A nice exposition of another take on the metaphor by ERNIE NEUFELD