An individual person will act to the best of their ability. A group of people at bare minimum has to pay communication costs, and so will act to less than the best of the ability of its members.
Furthermore, since dysfunctional organizations aren't quickly removed, the reality is usually a lot worse than the ideal. Depending on how much slack there is in the arena of competition there can be almost no limit on how dysfunctional small pockets, or even large slices, of the organization can become without leading to the death of the host.
The organization might "know" more about subject A and subject B together than expert A or B, but it will "know" less about subject A than expert A and subject B than expert B.
What about subjects like “building rockets that are moon-capable”? All experts know negligible amounts about this subject, but organizations have “sufficient” knowledge.
That's essentially half my point. The organization might be passable at "building rockets that are moon-capable," but it's going to be worse at each individual specialized task than the individual experts that make it up. One of the C programmers is likely to look at the architecture of the control system and think "that's a dumb way to architect a control system," and he'll probably be right. The same will be true for every subsystem, and even the integrated assembly. However unless someone figures out how to reduce communication costs, that's the best anyone can do; the alternative would be to have a great control system with no rocket.
Is the implication that a company can spend more time and money to get each subsystem to subsystem-expert-acceptance level, or is there something about current organizational practice that makes even this impossible?
* competition between people in the same tier of the hierarchy
* opposing incentives throughout the hierarchy (company aims to maximize employee labor and minimize employee compensation and; employees minimize their labor and maximize their compensation)
Left alone, this results in a lot of the stupidity, and that's why "building culture" is so important - a good company culture transcends this perverse base nature.
Furthermore, since dysfunctional organizations aren't quickly removed, the reality is usually a lot worse than the ideal. Depending on how much slack there is in the arena of competition there can be almost no limit on how dysfunctional small pockets, or even large slices, of the organization can become without leading to the death of the host.