IMO, the main reason is the very heart of the system - DPOS (Delegated Proof of Stake).

This might be a minor quibble but I don't like it when people conflate DPOS, the blockchain consensus mechanism, with the other governance structures in BitShares.

I don't think DPOS (i.e. the system that elects the witnesses who produce blocks) has any major flaw, technical or incentive-based. The other governance structures (committee, workers, voting rights, funding allocation) is a different story.

I understand that is what you seem to mean, but I think it is worth stating that difference.

The corporate world has a lot of internal flaws but its efficiency in executing large-scale projects is unquestionable and one of the crucial parts of it is the concept of board of directors headed by a CEO. The problem is that DPOS, in its current form, does not offer any solution that could replicate the role of the above structure. Also, there is no incentive to vote, and the voting system does not even differentiate between long-term holders and short-term ones. As a result, BitShares ended up in a fatal decision paralysis.

I agree that voting rights should be differentiated based on how long one commits to hold stake, similar to Steem.

However, the governance features in BitShares do technically allow mimicking something close to traditional corporate structures. The committee is the board of directors which is elected by the BTS stakeholders. A long-term worker proposal sending considerable funds to the committee account could be elected by the stakeholders. The committee would then redirect the funds (perhaps keeping a small portion to compensate them for their work) to another account that they choose (the CEO).

The main difference is that everything can rapidly change in BitShares in just one hour, whereas the timescale for change (replacing the board of directors or cutting off their share issuance authorization) is much slower in a traditional corporation. Maybe there needs to be hard-coded features for a little bit of added inertia into the system in order to restrain the (usually misguided) impulses of the stakeholders?

Hopefully a hard-forking code change like that isn't necessary. I think the stakeholders just need to restrain themselves from micromanaging and to give the benefit of the doubt to their elected committee for some reasonable amount of time. If a new competent leader can be found, they need to just approve a huge worker to the top (paying the committee account), elect a trusted and vested committee in charge of keeping the CEO in check (and finding an alternative if necessary), and do their own checks on the CEO's performance and committee's management on a longer time scale (quarters rather than weeks).