The things that make a start-up so awesome in the beginning are the very things that cause so much trouble once the company achieves some level of success. A small, dedicated team of individuals becomes a large, unwieldy troupe of employees. Hierarchies are established, managers and executives are brought in from the outside, processes are standardized. And that core group of dedicated individuals looks around at what the company has become and realize that work is not fun anymore. So they leave, taking with them their innovative, entrepreneurial spirit that helped the company become what it is.
Bureaucracy kills innovation. Instead of creating a bureaucratic system to manage a few wrong people, focus on getting and keeping the right people for your organization. The right people are competent and disciplined. They do not need, or want, a bureaucratic system to work in.