In 1838, a division of the British Army invaded Afghanistan. They marched in, captured Kabul without much of a fight, and set up camp outside the city.
Several years later, the Afghans began launching guerrilla attacks. It was December, and the army was running low on supplies. Should they retreat through the mountain passes? Hole up inside the city? Negotiate?
The commander, General Elphinstone, was an elderly man crippled by gout. He decided to do none of these. In fact, he soon stopped issuing orders at all, and since he was a beloved old general, no one else was allowed to take command. By the time the army started to retreat, it had ceased to function effectively. A panicked mass of soldiers, civilians, and Indian sepoys tried to limp through the mountains, under fire all the way. All but one were killed.
Some leaders are smart and well-organized. Their groups usually do well. Others are lazy, and this forces someone else to step in and fill the gap. But the worst place to be is in the middle – the “uncanny valley”, where a leader can’t do anything himself, but has enough power to stop anyone else from doing anything either.
Hierarchy is the same way. With no hierarchy, people will cooperate naturally (well, at least some of the time). With a strict, disciplined hierarchy, people cooperate because they are forced to. But in between – where managers can’t make their underlings do stuff, but can still block them from doing anything independently – nothing gets accomplished and the organization falls apart.