This is an absolutely classic rule of managing any organisation where competing priorities must be settled.
Chains of command have a very high cost, but they can ameliorate internal politicking and remove uncertainty about what, if anything, has been decided.
However, decision making power must come with accountability for the decisions, or it will NOT turn out well.
A purely flat organisation will wind up with de facto bosses, minus any institutional constraints on their activities and minus any accountability. If you're dealing with a sociopath the damage they can wreak will be magnified by the lack of structure to constrain their power.