I think the "up or out" dogma is garbage, and ends up hurting some of an organizations best people. Sorry to hear this happened to you.
I truly don't think it's that challenging to allow for an alternative path. But as a low level manager at a big corp there's only so much you can do, I get it.
"Up or out" is the best way to enable the Peter Principle and all the institutional mediocrity it brings. When you keep pushing your best performers to a level where they can't perform, what you're really doing is pushing the entire organization down instead. I wish more managers would recognize that.
Fortunately, I'm right now in a place where that doesn't happen, but at the same time there's not that much room for growth either. Fortunately, there's all sorts of personal and OSS projects for that.
I'm not sure what the idea is exactly but it seems people get promoted until they are just outside their comfort zone. There they quietly do their job without complaining hoping no one notices until a scapegoat is needed.
I truly don't think it's that challenging to allow for an alternative path. But as a low level manager at a big corp there's only so much you can do, I get it.