Loyalty vs. Betrayal

In last year's notorious "mutiny" of KCRC's management (where the management team requested the board of directors to fire the chairman), disregard the right or wrong consideration of individuals. It demonstrated a dilemma to many working people: if you find your boss/supervisor is the root cause of the problems, what should you do?

What I mean "root cause of the problems" is not personal. By default, all bosses/supervisors are not lovely as they are the one to assign tons of work to you.
What I really mean is if you identify (truly) the problems you/your team/your department/your business unit/your company are facing are caused by your boss or direct supervisor (for instance, lack of integrity, insufficient capability in terms of management, over commitment to the board and etc.).

In this case, what can we do?

1. Talk to him/her frankly with possible suggestion/solution and wish he/her realize the true for change.
2. Talk to the boss of him/her with possible suggestion/solution.
3. Keep accepting the reality in silence.
4. Quit and find a new job (or find a new job first and then quit)
   

Frankly, all four options are practical ways but they all have different pros and cons:

1. First one is a "loyal" way but requiring high level of communication skill and patience. The higher the seniority, the lower the tolerance to accept criticism. Bear in mind the fact: good management skill/knowledge/methodology is not something mysterious, but known to most people (including your boss/supervisor). So there must be more hidden issues behind causing such problems (This can be another huge topic to be discussed. See if I can talk about this later on).
2. Second one is a way of "betrayal". This is a "lose-lose" approach and is not recommended. In general, if I were the boss of the boss/supervisor, I would trust my direct subordinate (that's why I hired him/her) in the first place instead of the next level down. However, many people would like to use this approach (this was exactly the aforementioned case of KCRC) ending up with unrecoverable results.
3. This should be the approach adopted by the majority because of "earn-a-living" basis. The situation would not be changed until incident happened (though this would be too late like 1998 new Hong Kong Airport incident).
4. This should also be the practical approach. But bear in mind, finding a new job may just be the case of "going from one hell to another".
   

So when you experience problems with your works/company and you find the root causes of the problems are from your supervisor/boss. What will you do?