The Peter Principle: Why Things Always Go Wrong by Dr. Laurence J Peter and Raymond Hull was first published in 1969. The book talks about a hierarchical corporate management theory: "In a hierarchy, every employee tends to rise to his level of incompetence."The theory is called "The Peter Principle." Along with Murphy's law ("whatever can go wrong, will go wrong.") and Parkinson's law ("Work expands to fill the time available for its completion."), they are called the three rules of western management.
Base on Peter's Principle, "if the selection of a candidate for a position is based on the candidate's current performance rather than on the abilities relevant to the intended role, then the corporate will end up led by incompetent people."
With the knowledge of the principle, the following approaches are used to avoid the "Peter's Plateau" (the level of incompetence)
Provide trainings to the promoted candidates so that they can take the new responsibility.
Promote people based on his/her capability in the new role.
Flatten the corporate architecture.
The principle brings awareness of the problem and thus avoid having any position occupied by incompetent people.