Marty Cagan wrote one of his characteristically great posts in Product vs. IT Mindset. In one particularly harsh section he describes what happens when the people who make decisions about a product are far removed from those who make the product:
In IT mindset companies, accountability frankly is a farce. The people actually working on a project typically have no real say in what they are building, and sometimes even in how it’s built, and even when it’s due. In theory, the leadership team could try to hold the requesting stakeholders accountable for the results, but if they do they immediately hear complaints that they didn’t get what they actually wanted, and because of delays and costs, critical things had to get cut, and so it’s certainly not their fault. So management writes it off as yet another failed technology initiative. In contrast, in a product organization, we are measured by results.
I’ve always felt that this is the biggest challenge to companies as they grow. The further away those who make decisions are from those who build the product, the harder it is to remain customer-focused in the long term.