It really isn't. It's great for quick bad decision making, but so is rolling a die. It takes so much time and effort for information to flow up and down the hierarchy that it takes a long time for informed decisions to get made, let alone good ones.
Most businesses do not do this. They rely entirely on decisions from higher up, which are often uninformed about small-picture things, even if they understand the big picture.
If the business has solid fundamentals and basically needs to keep making incremental improvements and watch the money roll in, almost any management structure will do it.
But if a business has needs exit a market with poor fundamentals, and that requires them to close factories, end product lines and fire people? The people getting fired won't be happy about that. So if your management structure requires their consent, you're going to have a bad time.
> They rely entirely on decisions from higher up, which are often uninformed about small-picture things, even if they understand the big picture.
That's the thing.... you can't really understand the big picture without understanding the small one. We lionize Bill Gates because he often knew more about about the details of software decisions than the low-level employees who presented plans to him.
Maybe people are defending hierarchy because it's worked reasonably well in many different parts of their lives? Are there any large, successful businesses that aren't hierarchical? What about large governments?