And two, it saves on the costs of finding and training new employees. It also lessens the likelihood of employees taking secrets to a competitor.
Lateral moves allow organizations to place personnel where they're needed.
In an organization with few top slots available, these changes allow the company to give employees new challenges without promoting them. In organizations where the leadership emphasizes the importance of new challenges and ongoing skill development, it doesn't seem strange at all. In fact, lateral moves are welcomed as the energizing challenges they can be. In organizations still tainted with vestiges of military hierarchy, it probably doesn't go down well. But then again those places aren't doing well in a lot of ways these days.