Jack Dorsey Orchestrates AI-Centric Organizational Restructuring

Block recently carried out extensive layoffs, dismissing 40% of its entire workforce. This measure follows a surge in headcount from 5,477 in 2020 to 11,372 in 2024.

The company's performance has been strong, with gross profit increasing by 17% year-over-year, and profit from the personal remittance service Cash App increasing by 33%. Therefore, these layoffs are understood to be for a new organizational design with the introduction of AI agents, rather than due to deteriorating business conditions.

Block aims to quadruple the total profit generated by one employee from the current level of approximately $500,000 to over $2,000,000. This is a process of testing the hypothesis that productivity can be maximized by introducing AI agents.

Immediately after this announcement, Block's stock price rose by over 20%, reflecting market expectations.

The core of this paper argues that artificial intelligence can replace the information transfer and coordination tasks previously handled by managers.

Accordingly, the essence of the paper is that the conventional hierarchical structure of organizations can be eliminated.

The reason hierarchical structures have been necessary for the past two millennia, from ancient Roman legions to modern corporations, can be traced to the cognitive limitations of humans. There was a limit to the number of people a human manager could efficiently manage, typically a maximum of 8.

However, with AI agents taking on the role of information coordination, such hierarchical structures are no longer necessary. Humans will focus on tasks that AI finds difficult, such as judgment and building trust.

This asserts that if AI agents organize and coordinate the information generated by 6,000 people in the middle, Jack Dorsey alone can control everything without middle managers.

Block plans to reduce management layers from the current 5 to 2-3 by 2026. AI will perform key middle management tasks such as status reporting, meeting scheduling, and prioritizing coordination.

Block presents the components of its organization in four layers. The lowest layer is 'Foundational Capabilities,' which includes financial components like payments and loans. Next, the 'World Model' learns organizational decisions and progress.

The third layer is the 'Intelligence Layer,' where AI makes judgments. Finally, 'Interface' refers to customer touchpoints, and this four-stage structure aims for efficient, AI-centric organizational operation.

This model is designed for AI to handle core organizational functions, while humans focus on higher-level judgments and interface tasks that AI cannot perform.