It only takes one to ruin a good thing. You can have the best hopes for a flat organization that doesn’t look at or care about titles but as soon as one person in an upper level position cares then titles take on real world significance.
Call it the rule of one. The issue behind it is that as soon as someone at the top starts behaving as if titles (or years of experience or friendship outside work) matter then it becomes real. Some people suddenly have authority over others simply because of two or three words on a business card. Suddenly project assignments are trickle down instead of ability based.
It’s especially bad when a flat organization that hasn’t paid attention to titles suddenly becomes title focused. Those that arbitrarily fought for titles are suddenly rewarded over those that simply got the work done. Sometimes it can be fought back but usually once it starts it’s hard to stop.
Culture matters. But culture can also change in surprising ways. If flat is a key part to the organization it’s important to ensure it is vigilantly maintained.