The Race Is On

Sign in<br>Subscribe

Stephen Messer , Co-founder of Collective[i] and LinkShare (sold to Rakuten for $425M, 1996–2005). Entrepreneur of the Year. Board member, Spire Global (NYSE: SPIR). Building intelligence.com

When you see the headlines about Brian Armstrong, Jack Dorsey, and Klarna's CEO cutting thousands of jobs, your first instinct might be cynicism. Don't trust that instinct. What you're watching may be the first major restructuring of how companies operate since World War II.

Something important is happening right now and most people are misreading it. This week, Coinbase CEO Brian Armstrong announced he was cutting 14% of his workforce and turning the org chart upside down, eliminating what he called "pure managers," building AI-native pods where a single person can do the work of an entire team, and capping the hierarchy at five layers. Before that, Jack Dorsey cut 40% of Block's staff and said most companies will do the same within a year. Klarna halved its workforce while growing revenue 108%. The headlines call this "AI layoffs." That framing is wrong, or at least incomplete.<br>In earlier articles in this series, we talked about removing the software stack and replacing it with a system of intelligence, and we talked about the mindset shift from workflows to outcomes. Today I want to connect those two ideas to explain what they produce together: a fundamentally different organizational structure. And I want to give you the historical context to understand why this isn't incremental change. It's structural. It's permanent. And the companies making this move right now are pulling ahead faster than most people realize.<br>A BRIEF HISTORY OF HOW COMPANIES ORGANIZE<br>To understand what's changing, you have to understand what it replaced. The modern corporation, with its hierarchies, departments, managers, and process flows, was not designed from first principles. It was designed around the communication and information technology available at the time.<br>EARLY 1900s — THE LETTER ERA<br>Hierarchy as Information Control<br>When business communication moved by letter and took days, organizations needed layers of management simply to relay information. Frederick Winslow Taylor codified this as "Scientific Management," breaking work into repeatable tasks, with managers whose primary job was to coordinate information between workers and leadership. The tall hierarchy existed because information traveled slowly and decision-making required proximity to the top, where the knowledge lived.<br>1920s–1950s — TELEGRAPH & TELEPHONE<br>The Rise of the Functional Department<br>As the telegraph and then the telephone accelerated communication, companies could coordinate across geographies. Alfred Sloan's reorganization of General Motors in the 1920s became the template: decentralized divisions with centralized financial control. This created the functional department model, Sales, Marketing, Finance, Operations, each with its own leadership, its own data, its own vocabulary. The silos were a feature, not a bug. They let large organizations operate with the communication tools available.<br>1950s–1980s — THE COMPUTER AGE<br>Data as Power<br>Mainframes and early computers let companies process data at scale for the first time. This didn't flatten organizations; it created a new layer: the data analyst, the MIS department, the IT function. Information became a source of power because it was still scarce and hard to access. Senior executives asked questions that took weeks to answer. The computer improved the speed of data collection but didn't change who controlled it or how decisions were made.<br>1990s–2010s — THE INTERNET & SAAS ERA<br>Software Stacks as Operating Systems<br>The internet and then cloud software created the modern SaaS stack. Every function got its own tool: a pipeline management tool for sales, a human capital system for HR, an ERP for finance, a marketing automation platform for demand generation. This accelerated execution within functions but created new translation problems between them. Data lived in different systems, used different definitions, required BI teams and spreadsheet armies to reconcile. The information broker became a full profession. The org didn't flatten; it added layers of translation.<br>NOW — THE INTELLIGENCE ERA<br>The First Genuine Restructuring<br>AI doesn't just accelerate the old model. It eliminates the reason the old model existed. The hierarchy was information control. The functional silo was communication constraint. The software stack was the best translation layer available. When a system of intelligence can observe everything, reason across all of it, predict outcomes, and surface the optimal action for every person in real time, the entire architecture built around information scarcity becomes unnecessary. Not outdated. Unnecessary.<br>WHAT THE HEADLINES ARE ACTUALLY SAYING<br>Read Armstrong's exact words carefully. He's not describing cost cuts. He's describing a different theory of how a company...