Organisations fail when the ‘business’ people take over. People who let short term money-thinking make the decisions, instead good taste, vision or judgement.
Think Intel when they turned down making the iPhone chips because they didn’t think it’d be profitable enough, or Google’s head of advertising (same guy who killed yahoo search) degrading search results to improve ad revenue.
Apple have been remarkably immune to it post-Jobs, but it’s clear that’s on the way out with the recent revelations about in-app purchases.
The innovators in the company are likely correlated with doing more than 9-5. These people get frustrated that their ideas no longer get traction and leave the company.
Eventually what's left are the people happy to just deliver what their told without much extra thought. These people are probably more likely to just clock in the hours. Any remaining innovators now have another reason to become even more frustrated and leave.
Companies die when the sort of managers take over who see their job as to manage, taking pride in not knowing about the product or customers, instead of caring deeply about delivering a good product. The company may continue for years afterwards, but it’s a zombie, decaying from the inside.
I don't mean to look down on this kind of group, I am probably one of them. There is nothing wrong with people enjoying a good work life balance at a decent paying job. However, I think there is a reality that if one wants a world-best company creating world-best products this is simply not good enough. Just like a team of weekend warriors would not be able to win the Superbowl (or even ever make it anywhere close to a NFL team) - which is perfectly fine! - the same way it's not fair to expect an average organization to perform world champion feats.