As with most things, it works great with the design ideal person in the key positions. All organizational structures can work fabulously well when all you have are good managers and employees[1]. The question then is how does the organizational structure/guidelines deal with bad actors? All management structures include some sort of performance management, both for individual contributors and managers. Generally there is an incentive plan, a retention plan, and an attrition plan. You provide incentives to encourage people to perform beyond their own expectations, you provide a retention plan to keep the people who are delivering day to day, and you provide an attrition plan for helping people who aren't working out into a position somewhere else where they have a chance of being more successful. This is just management 101, the trick though is forced attrition and grain level boundaries (outlines of various attrition pools).

Forced attrition plans set up the dynamic that you find yourself in a pool of peers and you know that no matter what, every year one of you is going to get let go. You don't want it to be you, you know that you can be meeting all of the objectives of the organization and still be "the guy (or gal)" because no matter what, someone is going to get picked. My assertion is that bad managers, ones who embrace behaviors that good managers do not, can find ways to protect themselves at the expense of the good managers. It isn't good for the company of course, but the dynamic is already launched into motion. Given a very small epsilon that bad (in this case unprincipled) managers are probabilistically slightly less likely to lose their jobs, the system will slowly over time select for effective, but morally ambiguous managers. This is a very common evolutionary experiment folks run in simulation all the time. The smaller the epsilon the longer it takes, but it always happens.

[1] Sometimes that leads people astray into thinking it is their organizational structure, not their people, which accounts for their success.