You can find smug attitudes in a variety of places. No workplace, department or job title is immune. I've encountered blue collar shops that are as smug as any executive suite and sales clerks who could rival a freshly-minted MBA grad in the Smugness Sweepstakes.
"Where are we screwing up?" is an essential question. It is not inconsistent with excellence or self-confidence nor should it replace those occasions when the blame must be appropriately placed elsewhere. A failure to ask and listen carefully to the responses is a characteristic of dysfunctional organizations.
There are, of course, gradations. The smugness that afflicts minor practices is the most noticeable while that which surrounds large operational arrangements is seldom challenged. Rooting out that fungus takes a clear eye, a lot of patience, and a willingness to risk unpopularity.