Payments company Block will double down on its artificial intelligence strategy, using the technology to try to restyle its corporate structure and eliminate middle management.
The company that owns Square, Cash App and Afterpay showed its big bet on AI by cutting about 4,000 employees, or 40% of its workforce in February. Now, in a lengthy blog post Tuesday spanning the course of war and business history, Block’s top executive, Jack Dorsey, and the venture capitalist Roelof Botha, explained how AI will allow Block to rearrange its management approach.
“Companies move fast or slow based on information flow,” they said. “Hierarchy and middle management impede information flow.”
Dorsey’s formal title is “Block head,” according to the company’s website, and he’s also the chairman and a cofounder. Botha is a venture capitalist who is a partner at the Menlo Park, California-based firm Sequoia Capital, which invested in Block years ago, and the lead independent director at Block.
While most companies are using AI as a “copilot” to the organization structure, Block aims to go beyond that, the blog post said. To reach for its new structure, the company needs a new world view of its own operations, and a clear signal from its customers based on how they spend money.
“For the first time, a system can maintain a continuously updated model of an entire business and use it to coordinate work in ways that previously required humans relaying information through layers of management,” the blog post said. “At Block, we're questioning the underlying assumption: that organizations have to be hierarchically organized with humans as the coordination mechanism. Instead, we intend to replace what the hierarchy does.”
Still, some have argued that Block’s workforce cuts, the latest after prior rounds of reductions in the past two years, were based on a more standard business reason, the need to cut back after over-expansion during the COVID-19 pandemic.
Nonetheless, the writers outlined four areas in which Block must rethink its way of doing business, including with respect to its services, operations, capabilities and interfaces, as in software and hardware.
Layers of management and the chain-of-command become less important for coordinating action with this use of AI, and workers on the frontlines of the business become important in new ways, they said.
“They sense things the model can't perceive: intuition, opinionated direction, cultural context, trust dynamics, the feeling in a room,” the blog post said. “They make the calls the model shouldn't make on its own, especially ethical decisions, novel situations, and high-stakes moments where the cost of being wrong is existential.”
The post described new roles for workers, including “individual contributors,” who build intelligence capabilities; “directly responsible individuals,” focused on customer outcomes; and “player-coaches, who combine building with developing people.”
The authors said they believe other companies will grapple with similar questions as to how AI can reshape their businesses.
“Block is in the early stages of this transition,” the leaders said in the post. “It will be a difficult one, and parts of it will likely break before they work.” They didn’t specifically address job cuts, either in the past or the future.
