This piece describes Block's bold attempt, as of 2026, to use AI to fundamentally transform traditional organizational hierarchies and operate the company as a single unified "intelligence." It traces the evolution of organizations from ancient Rome to the modern corporation, emphasizing AI's potential to accelerate information flow and revolutionize decision-making. 🚀

1. The History and Limits of Organizational Hierarchy

Throughout history, humanity has always faced the challenge of efficiently coordinating and managing large numbers of people.

1.1. The Wisdom of the Roman Legion 🛡️

About two thousand years ago, the Roman army faced the daunting task of commanding vast numbers of troops spread across wide territories with extremely limited means of communication. Their solution was the hierarchy.

"The smallest unit was the contubernium — eight soldiers sharing a tent, equipment, and a mule, led by a decanus. Ten contubernia formed a century of eighty men under a centurion. Six centuries formed a cohort, and ten cohorts formed a legion of roughly five thousand soldiers." Each level had a commander with clear authority, aggregating information from below and conveying decisions from above. This was a protocol for routing information within the limits of what a single leader could effectively manage — three to eight people. The modern U.S. military follows a similar pattern, and we call this the "span of control."

1.2. Prussia's Innovation: The General Staff 🇩🇪

After being defeated by Napoleon, Prussia rebuilt its army on the realization that it could not rely on individual genius alone. Reformers like Scharnhorst and Gneisenau created the General Staff — trained officers dedicated not to fighting but to operational planning, intelligence processing, and coordination between units.

"Scharnhorst intended these staff officers to 'support incompetent generals, providing the talent that leaders and commanders might lack.'" This was the concept of "middle management" before the term existed — a mechanism for conveying information through complex organizations, pre-calculating decisions, and maintaining coherence. The distinction between "line" functions (carrying out the core mission) and "staff" functions (providing specialized support) was established at this time, and it became the vocabulary used in every company today.

1.3. The Model Spreads to the Corporate World 🚂

Military hierarchy entered the business world through the American railroad industry in the 1840s. West Point–trained engineers brought military organizational thinking to civilian rail companies. In the mid-1850s, Daniel McCallum of the New York and Erie Railroad created the world's first org chart to manage a system spanning over five hundred miles with thousands of employees. By formalizing the same hierarchical logic as the Roman army, it became the blueprint for the modern corporation.

1.4. Scientific Management and the Functional Pyramid 📊

Frederick Taylor, "the father of scientific management," optimized what happened within the hierarchy. He divided work into specialized tasks, assigned them to trained experts, and managed through measurement rather than intuition. This gave rise to the functional pyramid organization, optimized above all for efficiency.

1.5. Stress-Testing the Hierarchy: World War II 💣

During World War II, the Manhattan Project required specialists from physics, chemistry, engineering, and the military to collaborate toward a single goal under extreme secrecy and time pressure. Robert Oppenheimer organized Los Alamos into functional departments while emphasizing open collaboration across those departments.

"In 1944, as the implosion problem became acute, he reorganized the laboratory to create cross-functional teams — something not yet seen in the corporate world." This worked, but it was an exceptional case made possible by wartime conditions and the leadership of one extraordinary individual.

1.6. The Matrix Organization and Growing Complexity 🕸️

After World War II, as corporations grew and globalized and the limits of functional design became apparent, McKinsey proposed the matrix organization in 1959 — combining functional expertise with business-unit divisions. It balanced central standards against local agility and became the model for the "professional" or "modern" corporation that drove the postwar global economy. Over time, however, other frameworks emerged to address the complexity, rigidity, and bureaucracy of matrix structures. The McKinsey 7-S framework, developed by Tom Peters and Robert Waterman in the late 1970s, highlighted not only "hard S" elements like strategy, structure, and systems, but also "soft S" elements like shared values, skills, staff, and style — demonstrating that structural factors alone were never enough.

1.7. Tech Companies' Experiments and Their Limits 🧪

In recent decades, technology companies have aggressively experimented with organizational structure. Spotify tried cross-functional squads with short sprint cycles; Zappos tried Holacracy, abolishing management roles; Valve tried a flat structure with no formal hierarchy at all.

"Each of these experiments revealed the limits of traditional hierarchy but failed to solve the underlying problem. Spotify reverted to conventional management as it scaled. Zappos suffered significant attrition. Valve's model proved difficult to scale beyond a few hundred people." As organizations grow, they tend to revert to hierarchical coordination — because no information-routing mechanism existed that was powerful enough to replace the hierarchy. Ultimately, the same constraint Rome faced remained: narrow spans of control produce more layers of command, and more layers slow information flow.

2. Block's New Vision: The Company as Intelligence 🧠

Block is now questioning that foundational assumption: "Does an organization have to be structured as a hierarchy, with humans serving as the coordination mechanism?" Block aims to replace what hierarchy used to do.

2.1. Fundamental Change Through AI 🤖

While most companies use AI as a productivity tool, Block is focused on AI's potential to fundamentally change how collaboration works.

"We are showing what Block will look like as it radically rethinks organizational design and ultimately uses AI to compound speed as a competitive advantage." Block wants to build the company as a single intelligence — a kind of mini-AGI. Unlike past attempts, AI is a technology that can actually perform the coordination functions that hierarchy used to provide. For the first time, a system can continuously update a "world model" of the entire business and use it to coordinate work that human managers previously had to perform through information relay.

2.2. Two Core Elements: Company World Model & Customer Signals 🌐

For this system to work, two things are required.

1. Company World Model: Block is a remote-first company, which means every decision, discussion, piece of code, design, plan, problem, and progress update exists in recorded form. This becomes the raw material for a "world model" of the company that AI can build and maintain.

   "In a traditional company, a manager's role is to understand what is happening inside their team and carry that context up and down the chain. In a remote-first company, work already exists in a machine-readable form, so AI can continuously build and maintain that picture." What is being built, what is blocked, how resources are allocated, what is working and what isn't — all of this is captured in the model, replacing the information-relay role that hierarchy used to play.

2. Customer Signals: The power of the system depends on the quality of the customer signals fed into it.

   "And money is the most honest signal in the world." People lie on surveys, ignore ads, and abandon shopping carts — but when they spend, save, send, borrow, or repay money, they reveal the truth. Every transaction is a fact about someone's life. Through Cash App and Square, Block sees both sides of millions of transactions every day. This gives the customer world model a rare asset: an understanding of each customer's and merchant's financial reality, built from honest signals. The richer the signals, the better the model; the better the model, the more transactions; the more transactions, the richer the signals — a virtuous cycle.

2.3. Four Pillars of the New Organization ✨

The company world model and the customer world model form the foundation for Block's new kind of company. Instead of building products along a predetermined roadmap, Block is now building four things.

1. Capabilities: The fundamental primitives of finance — payments, lending, card issuance, banking, buy-now-pay-later, payroll, and more. These are not products but building blocks. They have no UI of their own, but they have reliability, compliance, and performance targets.
2. World Model: The company world model, which is how the company understands itself, its operations, performance, and priorities; and the customer world model, a per-customer, per-merchant, per-market representation built from proprietary transaction data.
3. Intelligence Layer: The part of the system that assembles solutions for specific customers at specific moments and delivers them proactively.

   "A restaurant's cash flow is tightening as it enters a seasonal slow period. The model knows this in advance. The intelligence layer assembles a short-term loan from the lending capability, structures a repayment schedule through the payments capability, and surfaces this to the merchant before they go looking for capital." These solutions are not made by a product manager — they emerge because the capabilities exist and the intelligence layer recognizes the moment and composes them.

4. Interfaces: Square, Cash App, Afterpay, TIDAL, bitkey, proto, and others — the channels through which the intelligence layer delivers composed solutions. Value is created in the model and the intelligence, not in the interfaces.

When the intelligence layer tries to assemble a solution and fails because a capability doesn't yet exist, that failure signal becomes the roadmap. Customer reality generates the backlog directly.

2.4. A New Role for People: Inverting the Hierarchy 🔄

Once intelligence is embedded in the system, what happens to people's roles?

"In a traditional company, intelligence is distributed among people and the hierarchy routes it. In this model, intelligence lives in the system. People are at the edge. The edge is where action happens." The "edge" is where intelligence meets reality. People reach places the model cannot yet go and sense things the model cannot yet perceive — intuition, subjective direction, cultural context, trust dynamics, the feel of a room. They also make the ethical decisions, handle novel situations, and call the critical moments where being wrong carries an enormous cost.

With this shift, Block plans to simplify roles into three types.

• Individual Contributors (ICs): Deep specialists who build and operate capabilities, the model, the intelligence layer, and the interfaces. Because the world model supplies the context that managers used to provide, ICs can make decisions about their own layer without waiting for direction from above.
• Directly Responsible Individuals (DRIs): People who own a specific cross-functional problem, opportunity, or customer outcome. A DRI might own the problem of merchant churn in a particular segment for ninety days, with full authority to pull resources from the world-model team, the lending-capability team, and the interface team as needed.
• Player-Coaches: Those who both build and invest in the growth of those around them. They replace the traditional manager whose primary job was routing information. Player-coaches still write code, build models, or design interfaces — while simultaneously investing in the development of the people alongside them.

Permanent layers of middle management become unnecessary. Everything else the old hierarchy did is coordinated by the system, and everyone is empowered in a role much closer to the work and the customer.

3. Block's Challenges and the Road Ahead 🚀

Block acknowledges it is in the early stages of this transition and that the journey will not be easy. But the company believes every organization will eventually face the same question.

"What does your company genuinely understand that is hard to understand, and is that understanding deepening every day?" If the answer is "nothing," AI will amount to cost optimization — and the company will eventually be absorbed by something smarter. But if the answer is "something deep," AI will not merely augment the company; it will reveal what the company truly is, Block says.

Block's answer is the economic graph: millions of merchants and consumers, both sides of every transaction, financial behavior observed in real time. That understanding compounds with every moment the system operates. Block is convinced that this pattern — a company organized around intelligence rather than hierarchy — will be significant enough to reshape how organizations of every kind operate in the years ahead.

Closing

For two thousand years, organizational innovation has been an attempt to work around the constraints of hierarchy — yet the middle-management layer that slows information flow has always remained. In the past, the question "Did the decanus need eight soldiers, the centurion eighty, the commander five thousand?" always had to be answered yes. But humans are no longer the only option for playing those roles. Block is building the next step through AI — and it carries the potential to fundamentally change what organizations look like in the future. It is a genuinely exciting shift. 🤩