I will not be surprised if this implies a transition from leadership by authority to leadership by democracy. I will also not be surprised if natural leaders emerge and small factions start to form around them.
Another benefit of this system is that it allows for the natural evolution of teams and leaders. A good leader may not always want to lead. A good leader may want to follow sometimes. A system like this allows for that. And yet, it also allows for new leaders to mature and grow on their pace, without needing an official title such as "manager of X".
I'm curious on the kinds of hurdles they'll face. Old managers simply become new PMs? How will "boring" projects get done?