The full entry should be ‘lets run that up the flagpole and see who salutes’ and now usually shortened to ‘run that up the flagpole’. Meant to be colourful shorthand for forwarding an idea / plan / solution / design to other stakeholders to see if they are interested. Once the idea is public (on a flagpole, geddit ?) and people send signals that the idea is good one, then you can continue to work on it.
Of course, the perpetrator should immediately slapped and told to get real.
It’s my understanding that this term originated in IBM for the IT industry. Given IBM’s ties with the US military I’d guess the this is a military term. Waving hands at a piece of cloth on a pole has a great deal of importance for that business as as a team building exercise. It’s not any more weird than other team building exercises.