The need for boundaries - RL Wolfe Case Study

I have been working diligently this Sunday afternoon on the RL Wolfe case study that is due this Wednesday.  In my first run through of reading it, I did not really see any major problems.  The plant is outperforming other similar plants.  They have lower call off rates and lower turn over rates than the other plants.  They are still remaining non-union as well, which is a good thing in my opinion.  All of these things seem to be working well, yet the managers are not satisfied.  I agree that once we reach a point of satisfaction then we start to decline, but how can I solve a problem if I don't really perceive a problem?
All of this aside, I only agree with self-directed teams to a point.  I believe that you should hire good employees that you can trust to do their jobs right and do them well.  Once you hire these employees you train them how to do their jobs and let them go.  Where I don't see self-directed teams working is in setting some policies or changing the policies in place.  I am all for my employees making suggestions how to fix or improve problems that exist.  I encourage that kind of thinking.  What I don't want is rule by the masses.  I am a capitalist not a communist.  I do not agree that there should be no higherarchy in management structure.  I do not think we are all equal or should all be treated as equals in every sense.  I think without guidelines and goals some people will excell and set their own guidelines and goals and be very successful.  I also think that some people will wander aimlessly through life.  We all have different personalities and different motivators.  Without boundaries, decisions are very difficutl to make.