Not sure it applies to mid-management in the same way as a CEO. A CEO is at the top of the pyramid, and wants to NEVER be replaced...unless he leaves to go become CEO somewhere else, in which case, who cares if there's nobody qualified to replace him.
For mid-level management, you're hoping to get promoted at some point. If you're the best at what you do, and there's nobody else capable of doing what you do, then when your boss' position becomes available, the company will either recruit externally, or pick somebody less indispensable in their current role.
Kind of like the phenomenon of the most productive employee being held down while less productive peers are promoted over him: Why take a great worker off the floor for a managerial position, when we have a whole stack of mediocre producers to select, who the production crew can more easily do without.