You'd generally have PMs who had little contact with the engineering team proper. They'd take requirements from the execs, turn them into design documents, and then pass them to the engineering team to implement. So there would be a fair amount of friction, yeah. And lots of DFDs and ERDs that didn't match what was really happening ;-)

But then again nobody on the engineering team took them too seriously anyway, so it kind of worked out.

The main problem in those days was centralization of decision making at the top, where the decision makers had the least exposure to the reality on the ground. The military legacy of computer systems, I suppose...