Been all of an engineer, a manager, and a founder/CEO, and I enjoy analyzing organizational dysfunction.

The difference between an engineer and a manager's perspective usually comes down to their job description. An engineer is hired to get the engineering right; the reason the company pays them is for their ability to marry reality to organizational goals. The reason the company hires a manager is to set those organizational goals and ensure that everybody is marching toward them. This split is explicit for a reason: it ensures that when disagreements arise, they are explicitly negotiated. Most people are bad at making complex tradeoffs, and when they have to do so, their execution velocity suffers. Indeed, the job description for someone who is hired to make complex tradeoffs is called "executive", and they purposefully have to do no real work so that their decision-making functions only in terms of cost estimates that management bubbles up, not the personal pain that will result from those decisions.

Dysfunction arises from a few major sources:

1. There's a power imbalance between management and engineering. An engineer usually only has one project; if it fails, it often means their job, even if the outcome reality dictates is that it should fail. That gives them a strong incentive to send good news up the chain even if the project is going to fail. Good management gets around this by never penalizing bad news or good-faith project failure, but good management is actually really counterintuitive, because your natural reaction is to react to negative news with negative emotions.

2. Information is lost with every explicit communication up the chain. The information an engineer provides to management is a summary of the actual state of reality; if they passed along everything, it'd require that management become an engineer. Likewise recursively along the management chain. It's not always possible to predict which information is critical to an executive's decision, and so sometimes this gets lost as the management chain plays telephone.

3. Executives and policy-makers, by definition, are the least reality-informed people in the system, but they have the final say on all the decisions. They naturally tend to overweight the things that they are informed on, like "Will we lose the contract?" or "Will we miss earnings this quarter?"

All that said, the fact that most companies have a corporate hierarchy and they largely outcompete employee-owned or founder-owned cooperatives in the marketplace tends to suggest that even with the pitfalls, this is a more efficient system. The velocity penalty from having to both make the complex decisions and execute on them outweighs all the information loss. I experienced this with my startup: the failure mode was that I'd emotionally second-guess my executive decisions, which meant that I executed slowly on them, which meant that I didn't get enough iterations or enough feedback from the market to find product/market fit. This is also why startups that do succeed tend to be ones where the idea is obvious (to the founder at least, but not necessarily to the general public). They don't need to spend much time on complex positioning decisions, and can spend that time executing, and then eventually grow the company within the niche they know well.