The Peter Principle, formulated by Dr. Laurence J. Peter, states “In a hierarchy every employee tends to rise to his level of incompetence.” The gist is that employees of a business or organization are normally promoted to their highest level of competence, after which further promotion raises them to a level at which they may become incompetent
A key concept is that an employee’s incompetence is not necessarily a result of a higher-ranking position being “more difficult.” Instead, the cause may be that the new position is sufficiently different to require separate skill sets, which the employee may not possess.
A common example is a factory worker whose excellence at his work results in him being promoted into a ’management position.’ However, the skills that got him promoted in the first place are no longer of any use and as a result he is let go.
I have found a few other interesting references and adaptations to this principle on blogs. Here it is applied to internal innovation in the enterprise. An example can be seen in Michael Scott’s character from The Office, in a real-life example here, and even offers up a good explanation for the Wolfowitz predicament. Websites such as Digg and Reddit are also susceptible.