Managers only hire and reward based on loyalty and threats in these highly political environments. It is very common to see a decent director with very weak managers under him, to ensure that nobody is a threat to his position.

Mediocre corporations work in a very different way from results oriented high performance companies. In mediocre places, games of power rule the place, even if it doesn't make sense economically.

Different definition of power law, but still very applicable to this case.

On any given dimension, everyone/everything cannot possibly be above average. If you take competence, most companies will be mediocre. At best you have a bell curve, at worst it's an exponential curve with only a very small amount of high competence.