the reason your encouraged approach tends to produce poor results, is that you increase the distance between the decisions that need to be made and the people who understand how to make the decision or whether a decision is even valuable to make.

it is basically an unsustainable structure. there's not much value to replacing one structure which you might think is unsustainable with something equally or less sustainable that also produces worse results anyway.

another issue is that it can dilute responsibility and someone will take more assertive control anyway which further reduces the quality of decision making. someone still has to enact and enforce the decisions, so whoever does the enacting has to obey and whoever does the enforcing has to enforce the right thing. it's easy to end up with a bunch of people influencing things for their own reasons which have nothing to do with maximizing the production of good results.