I sat through an endless presentation by the CEO of a fast-growing company. He was doing fine for half an hour, but then, when his time was up, he chose to spend 45 minutes more on his final slide, haranguing and invecting, jumping from topic to topic and basically bringing the entire group to its knees in frustration.
Power, of course, is the first problem. When things are going fairly well, the CEO has a ton of power, and often, that power makes things appear to work, even when they're not the right thing to do for the long-term. As a result, there's no market that is correcting the bad decisions, at least not right now.
Exposure is the second problem. Once a company gets big enough, the CEO spends his time with investors and senior executives, not with people who actually invent or deliver products and services, and not with customers. Another form of not getting the right feedback, because the people being pleased aren't the right ones.
The truth is the final and most endemic problem. Employees incorrectly (in many cases) believe that the boss doesn't want to hear from them, doesn't want constructive feedback. Everyone else has a boss, and built into the nature of boss-ness is the idea that someone is going to tell you what's not working. But we fall into the trap of believing that just because the CEO isn't assigned a boss, he doesn't need or want one.
A stupid CEO can coast for a long time if the systems are good. But a stupid CEO is always wasting opportunities, because being smarter usually leads to doing better. Plus, they're a lot more fun to work for.