Google is a polarising company that touts both monumental achievements and colossal failures. If you want to encourage new ideas, you not only have to have both, you have to reward both.
In an interview with the BBC, one of the employees in the Google X lab — the part of Google responsible for really crazy stuff like self-driving cars and Google Glass — explains how rewarding failure instead of punishing it encourages people to take risks they wouldn't otherwise take:
You must reward people for failing, he says. If not, they won't take risks and make breakthroughs. If you don't reward failure, people will hang on to a doomed idea for fear of the consequences. That wastes time and saps an organisation's spirit.
Finding new transformational ideas is like sending out a team of scouts to explore uncharted terrain for new mountains to climb, he says.
"If you shame them when they come back, if you tell them that they've failed you because they didn't find a mountain, no matter how diligently they looked for or how cleverly they looked for it, those scouts will quit your company."
The other advantage, as Teller points out, is that by allowing failure to be a normal part of operations, you don't encourage people to commit to an idea longer than they should just because they're afraid to admit defeat. Of course, not every company needs to come up with world-changing ideas. If your field requires people to continually generate new ideas, however, encouraging the long shots and potential failure instead of punishing it can keep the creative juices flowing.
Secret Google lab 'rewards staff for failure' [BBC Technology]