The takeaway for me is that you should be constantly questioning whether there is a different way to run things that enhances the performance of your organization as a whole. I have personally been privy to how the people with the most impressive titles frequently have the least connection to what's going on in the business. Some of the methods taken at 37Signals seem to be aimed at fixing this problem, which I think is commendable.
At the same time, it seems a shame to have to let go of a good employee because they want to take on more responsibility. If their view on more responsibility is simply a bigger title, then perhaps they weren't the right fit for 37Signals. However, in my opinion, ambition and competence should be rewarded, so it seems like there may have been a better way to handle the situation than choosing between staying in the same role and leaving the organization.