Astro Teller: Celebrating Failure Fuels Moonshots [Entire Talk]

TL;DR

Innovation becomes systematic when incentives make emotionally difficult behavior, such as exposing flaws and ending weak projects, personally and socially rewarding. At X, teams choose goals with roughly a 10 percent chance of success, report results publicly, and may receive applause, bonuses, vacation, and new opportunities for ending projects when doing so advances innovation.

Transcript

(applause) - So I wanted to start by telling you something that happened six days ago at X. Which was a little bit unusual, and then maybe we can go back a little bit and unpack how something like that happened. So we have these audacious goals awards. Once a quarter, we get together, and everyone presents how they're doing, and there's a trophy. T... Read More

Key Insights

• Cultural engineering is the process of aligning emotionally attractive behavior with the actions an organization says it values. Employees tend to follow paths of least emotional resistance, so stated principles produce little change when incentives, status, and consequences point in another direction.
• Traditional objective setting can become a bargaining contest between managers and employees. Employees may lower proposed targets to protect themselves, while managers push targets upward, producing a compromise that neither side believes in and that managers later use as an accountability weapon.
• An audacious goal is a self-selected objective that has roughly a 10 percent chance of success. A goal that is certain to fail will not inspire a serious attempt, while a goal that is likely to succeed is not sufficiently audacious.
• Public commitments create accountability without requiring constant managerial pressure. At X, teams present their quarterly goals, disclose their results, and state their next goals before the wider community, allowing managers to act as coaches and mentors instead of enforcing negotiated targets.
• Strong culture becomes self-reinforcing when employees internalize its standards. A representative of an award-winning team returned X's audacious goals trophy because the group believed it had not been bold enough, even though the trophy had not been awarded for a year.
• Failing fast requires tangible rewards rather than verbal encouragement. Employees will hesitate to end projects if they expect dismissal, reduced responsibility, lost compensation, or weaker promotion prospects, regardless of how often leaders publicly praise experimentation and rapid learning.
• Project termination can be treated as a contribution to innovation when a team identifies sufficient reasons to stop. X brings such teams onstage, applauds them, gives them bonuses and vacation, and lets returning members choose another project or begin something new.
• Social norms become powerful through repetition. Publicly celebrating teams that end projects can initially seem unfair to colleagues whose projects continue, but repeated ceremonies make applause and respect for responsible termination feel normal throughout the organization.

Questions & Answers

Q: How can a company create a culture that supports innovation?

A company can support innovation by aligning incentives, social recognition, and career consequences with the behaviors it wants. Teller calls this cultural engineering. If leaders want transparency, ambitious experimentation, and rapid project termination, employees must experience those actions as emotionally and professionally rewarding. Speeches and business principles are insufficient when compensation, status, promotion opportunities, or team size encourage safer behavior.

Q: What is cultural engineering in an organization?

Cultural engineering is the deliberate effort to make the paths of least emotional resistance match an organization's desired behavior. People may understand instructions about creativity, transparency, and failing fast yet still avoid those actions because they fear embarrassment, lost compensation, reduced responsibility, or dismissal. Culture changes when norms and incentives make the desired choices feel socially accepted and personally beneficial.

Q: Why can traditional OKRs discourage innovation?

Traditional objectives and key results can discourage innovation when they become a negotiation between a manager and an employee. The employee pushes the target lower to avoid future punishment, while the manager pushes it higher to demand more. The resulting compromise may belong to neither person. It then becomes a stick used to pressure performance instead of a goal that encourages ownership, creativity, and ambitious experimentation.

Q: How should an audacious goal be chosen?

An audacious goal should be selected by the person or team responsible for pursuing it, without a manager bargaining over the target. Teller says the goal should have roughly a 10 percent chance of success. If success is impossible, people will not genuinely try. If success appears likely, the objective is not audacious. The target should therefore be extremely difficult but still plausibly achievable.

Q: How do public goals create accountability?

Public goals create accountability by asking teams to state what they chose to attempt, report how they performed, and identify what they will pursue next. At X, this happens quarterly before the broader community. Because teams own their goals, accountability comes from personal commitment and the desire to earn community respect. Managers can consequently provide coaching and mentorship rather than repeatedly threatening employees with imposed metrics.

Q: Why should companies reward teams for ending projects?

Companies should reward project termination when ending a weak effort contributes more to innovation than continuing it. Without visible rewards, employees may keep projects alive because they fear losing their positions, teams, bonuses, or promotion opportunities. X counters those fears by celebrating teams onstage, awarding bonuses and vacation, and allowing members to start another project or join one that appears promising after they return.

Q: How do social norms influence innovative behavior?

Social norms influence what employees consider respectable, safe, and worth imitating. Teller argues that norms can produce destructive behavior or encourage innovation, creativity, expression, and transparency. Public celebrations of project termination may initially seem unfair to employees whose projects remain active. After the ceremony is repeated enough times, applauding the courage to stop becomes normal, and leaders no longer need to request that response.

Q: What does returning the audacious goals trophy reveal about culture?

Returning the trophy shows that employees can internalize a cultural standard deeply enough to enforce it on themselves. After the award had gone unclaimed for a year, a representative accepted it before hundreds of colleagues but then returned it because the team believed it had not been audacious enough. Teller presents this response as evidence that the culture's flywheel was beginning to accelerate without continual managerial pressure.

Summary

In this video, the speaker discusses the importance of audacious goals and systematizing innovation. He shares examples of how X, a subsidiary of Alphabet, encourages learning from failures and creating a culture that aligns with the values and goals of the organization.

Questions & Answers

Q: What happened during the audacious goals award ceremony at X?

During the ceremony, three different teams merited the trophy, which hadn't been awarded in a year. The star chamber had to decide which team deserved the trophy and awarded it at the end of the all hands. However, the person who accepted the award felt they hadn't been audacious enough and handed it back.

Q: What excites the speaker the most?

The speaker is most excited about trying to systematize innovation rather than specific projects like self-driving cars or contact lenses. He wants to bridge the gap between what is expected and what is actually done by creating cultural norms that align with desired actions.

Q: How does X encourage audacious goals?

X encourages audacious goals by allowing each team to set their own goals, without haggling or negotiation. The goals should be challenging enough that they have a 10% chance of success but not so impossible that they aren't worth attempting. The team holds themselves accountable and presents their progress every quarter.

Q: How does X promote a culture of learning from failure?

X promotes a culture of learning by rewarding teams that end their projects. When a project is ended, the team is celebrated for their effort and given bonuses. This creates an environment where failure is seen as a learning opportunity rather than a negative outcome.

Q: How does X encourage failing fast?

X encourages failing fast by creating social norms and mechanisms that support learning from failure. They have a pre-mortem process where teams discuss potential failures before they happen. They also prioritize learning over traditional success metrics and celebrate efforts even if they don't achieve the desired outcomes.

Q: What is the role of the rapid eval team and the foundry at X?

The rapid eval team takes ideas from various sources and aims to quickly determine if they are viable or not. They focus on technical de-risking and building prototypes. If an idea passes this stage, it moves to the foundry, where more focus is placed on market viability and impact. However, most projects are still expected to be killed at the foundry stage.

Q: What are the potential failure modes for X as part of a larger entity like Alphabet?

One potential failure mode is being too tightly coupled to the larger organization's needs and constraints. This can lead to being pulled in different directions and losing focus on audacious goals. Another potential failure mode is not having the right time horizon. Short-term thinking may not align with X's focus on long-term innovation.

Q: How does X handle ideas that don't score evenly on pushing boundaries and market reception?

The speaker explains that the focus is on learning and innovation, so ideas that push boundaries but do not have immediate market viability are still valuable. They prioritize the potential for learning and progress rather than trying to predict success or market reception in a specific timeframe.

Q: Can you give an example of an impressive proposal that came to X?

The speaker emphasizes that he doesn't judge proposals based on impressiveness or novelty. However, he shares examples such as harnessing energy from avalanches or using Earth's magnetic flux to generate electricity. These ideas demonstrate the creativity and potential for innovative solutions.

Q: What is the cost of false positives and false negatives at X?

The speaker believes that false positives, thinking something is a great idea when it's not, are a much higher cost than false negatives, thinking something is not a great idea when it is. X focuses on avoiding false positives as the cost of investing time and resources in the wrong idea is high. There is no shortage of problems to solve, so false negatives have a relatively low cost.

Q: How does X handle concerns raised in pre-mortems with multiple people in agreement?

X takes concerns raised in pre-mortems seriously and investigates them further. Depending on the nature of the concern, they may involve specific individuals or teams responsible for those areas. It is important to address the concern in a meaningful way and follow up with the appropriate actions.

Takeaways

X promotes a culture of audacious goals, learning from failure, and systematizing innovation. They encourage teams to set their own goals without negotiation, celebrate efforts even if they fail, and prioritize learning over traditional success metrics. X also values creativity and pushes for out-of-the-box thinking. The company aims to address potential failure modes by avoiding excessive coupling to the larger organization and considering the appropriate time horizons. False positives are seen as a higher cost than false negatives, and X focuses on continuous learning, innovation, and problem-solving.

Summary & Key Takeaways

• Astro Teller describes cultural engineering as aligning employees' paths of least emotional resistance with the behaviors an organization wants. Business advice alone does not create innovation because people respond to social norms, accountability, compensation, promotion prospects, and personal consequences more strongly than they respond to slogans about creativity, transparency, or rapid failure.

• Traditional objectives and key results can become negotiated compromises that neither managers nor employees truly own. X instead lets teams choose quarterly audacious goals that should be achievable roughly one time in ten. Teams publicly explain their goals, report their results, and announce what they intend to pursue during the following quarter.

• X reinforces rapid learning by publicly honoring teams that end projects. Teller tells employees that ending the right project can contribute more to innovation than continuing other work, then supports that message with bonuses, vacation, and opportunities to join or start another project. Repeated ceremonies turn this initially surprising treatment into a social norm.