Failing up? What's with that?

Failing up is the term for utterly botching an assigned task, and yet somehow managing to get a substantial promotion as thanks for the miserable failure. Here’s a good explanation of the phenomenon, citing a recent example.

It seems like the polar opposite of the Peter Principle, which states that, “Employees tend to rise to their level of incompetence.” What’s behind the idea some organizations seem to have that failure just means you haven’t been promoted high enough? Do they rationalize that bosses work less and less as their pay-grade rises, so top honchos are best selected from those who never do anything meaningful to help their organization succeed? Is our business climate today so driven by the “size matters” approach to marketing that really big organizations think that they are best served by fossilized leaders? Help me understand failing up. If I can catch on to how it’s played, I am destined for greatness.