You don't really explain what the management intervention is doing to cause people to freeze; nor what it is you do to get them moving. So I'm guessing a lot. But...
Use the 'five whys' exercise. Start with "why are they afraid of making a mistake" and work down from there to the root cause(s) of the behaviour. You could also do this on the business side, starting with "why are they intervening?"
If you are out of step with your leadership, you'll never break that cycle. You may need to talk to them about what you have been trying to do and why; and ask them why they are intervening the way they do. Don't be combative about it, just try to understand what's motivating them. If you don't want to talk to them directly, maybe there's someone in the organisation that you do feel comfortable talking to about this - ideally someone with a bit more visibility into management, who you could approach for advice.
Even if you don't feel comfortable broaching this directly... a key question to ask yourself about everyone involved: what are they being measured on? People will always focus on whatever determines their ongoing employment and remuneration.
The answers here could be a huge variety of things.
It is probably something else entirely, these are just generic "IT team problems".