Middle Managers Aren't Vanishing. Something Else Is

Opening

Hello, reader. Have you heard that middle managers are disappearing?

Two interesting stories collided last week. Meta renamed the titles of 1,000 Reality Labs employees to “AI builder,” and Block’s Jack Dorsey declared he’d cut the management layers between himself and 6,000 employees down to 2-3. He even said the ideal, ultimately, would be for “every employee to report directly to me.”

If you only read the headlines, it looks like “the end of the middle manager.” But I’m looking somewhere else. This isn’t a story about eliminating managers—it’s a story about who takes on the function of managing, and how.

🏷️ Changing a Title Isn’t the Same as Changing a Structure

Let’s first look at what actually happened.

At Meta’s Reality Labs, the existing titles were reorganized into 3: “AI builder,” “AI pod lead,” and “AI org lead.” Pod leads manage day-to-day execution, while org leads handle performance reviews and promotions, assisted by AI systems. Team sizes themselves didn’t change.

Block is more radical. In an essay co-authored by Jack Dorsey and Sequoia Capital’s Roelof Botha, titled “From Hierarchy to Intelligence,” the two invoke history from the Roman army to the Prussian general staff, arguing that AI can now replace hierarchical structures as an “intelligence layer¹​.” Instead of managers, they say, work gets done by DRIs (Directly Responsible Individuals)²​ and “player-coaches.” I wasn’t running Kkochi Coaching since 2023 for nothing—I saw this coming!

But here’s what needs pointing out. In February 2026, Block laid off more than 4,000 people—40% of its entire workforce—even as gross profit grew 17% year-over-year in 2025. Right after the layoff announcement, the stock jumped 20–25%. In other words, this “organizational innovation” isn’t a purely philosophical experiment—it’s also a narrative wrapper for a massive restructuring.

In the words of Chris Kaufman, StockX co-founder and leadership consultant, this might amount to little more than “moving the peas to the corn compartment on a TV dinner tray.”

📉 The Decline of Middle Managers Is Already a Structural Trend

This isn’t just about Meta and Block. According to Indeed, middle-management job postings fell 12.3% year-over-year in 2025 (though overall postings declined too). In Korn Ferry’s 2025 report, 41% of employees worldwide said their company’s management layers had been reduced. Gartner predicts that by 2026, 1 in 5 companies will use AI to flatten their organizational structures, eliminating more than half of current middle-management positions.

There’s also an analysis showing that in 2023, 1/3 of all layoffs were middle managers. This trend predates AI. During the pandemic, companies discovered that smaller, flatter teams could maintain performance. AI has simply poured fuel on that fire.

🧪 The Zappos Lesson: Removing Managers Doesn’t Remove Management

At this point, it’s hard not to think of Zappos’s experiment in 2013.

Then-CEO Tony Hsieh adopted Holacracy³​, eliminating all management positions. Titles, bosses, traditional org charts—all abolished. The result? 18% of employees left, taking severance packages. Those who remained struggled with ambiguous decision-making authority and unclear accountability. Holacracy’s elaborate governance rules drew criticism for creating “a hierarchy more complicated than hierarchy itself.”

Ironically, because Zappos was an Amazon subsidiary, SOX (the Sarbanes-Oxley Act)⁴​ required a clear reporting structure. So the HR system still retained reporting lines underneath. The surface was horizontal, but the inside was vertical.

Harvard Business School professor Linda Hill makes a similar point. Small cross-functional teams can accelerate innovation, she argues, but you still need a human leader playing the role of “bridger,” coordinating collaboration across teams. Her judgment: “Innovation rarely happens without diversity of thought and expertise.”

If there’s a difference between Zappos’s experiment and today, it’s that back then, there was no AI to serve as a coordination tool. Could the “intelligence layer” Block describes be the missing puzzle piece from the Zappos era? It’s possible—but nothing has been proven yet.

Oz’s Lens

Honestly, I think half of this movement is sincere and half is storytelling.

I went through an MBA program and studied countless corporate case studies during it. And of everything I saw and heard, the pattern I encountered most often was this: whenever a company changes its organizational structure, two motives are always mixed together. One is genuine efficiency. The other is a signal sent to the market. Look at Block: workforce down 40%, revenue growing, stock up 20%. What Wall Street rewards isn’t a “flat organization”—it’s “lower labor costs.”

That doesn’t mean this is entirely fiction, though. It’s true that AI can automate a significant share of the coordination work middle managers do—relaying information, tracking progress, allocating resources. The problem is that the rest of what managers do—motivating people, mediating conflict, exercising contextual judgment, mentoring career development—is territory AI can’t touch.

Former Netflix Chief Talent Officer Patty McCord put it precisely. “AI won’t take humans out of the equation. Like factories did, it’ll take out certain tasks.” Managers aren’t disappearing—the portfolio of management is being reorganized. Routine coordination goes to AI; the parts requiring human judgment go to the “player-coach.” This is redistribution, not elimination.

What actually worries me is something else. When the management function gets distributed, accountability gets distributed too. When something goes wrong, someone has to be able to answer the question “whose responsibility is this?” This was the core reason Zappos’s experiment failed. An AI intelligence layer may be able to coordinate—but it can’t be held accountable.

Closing

• Meta’s and Block’s reorganizations aren’t “eliminating middle managers”—they’re relocating the management function. Titles change, but the essential need for management doesn’t disappear.
• Half of this trend is genuine AI-driven efficiency, and half is a signal sent to investors. It’s worth separating the two motives when you look at it.
• The real question isn’t “do we need managers?” It’s “who is accountable for the distributed management function?”

As Santa Clara University professor Jo-Ellen Pozner put it, changing titles and structures isn’t enough on its own. New performance goals and measurement methods have to follow. “In the end, what matters is execution. Otherwise, people just keep doing exactly what they’ve always done.” Whether Block’s experiment turns out to be real, or just peas and corn shuffled around on a TV dinner tray, is something the next 12 months will tell us.

References & Further Reading

• Jack Dorsey & Roelof Botha, “From Hierarchy to Intelligence”, Block, 2026. : This is the core primary source for today’s newsletter—an essay spanning organizational theory from the Roman army to AI.
• “Goodbye, middle managers. Hello, ‘player-coaches’ and ‘org leads’”, Business Insider, 2026. : The most detailed coverage of the organizational changes at Meta and Block.
• “Jack Dorsey’s ‘AI-Native Company’ Is a Compelling Piece of Storytelling”, TechBuzz.ai, 2026. : A balanced critique of Block’s essay, one that captures the gap between vision and reality well.
• “Middle managers are getting laid off—but their role is ‘more important than ever’”, CNBC, 2025.
• “Beyond the Holacracy Hype”, Ethan Bernstein & John Bunch, Harvard Business Review, 2016. : An academic analysis of Zappos’s Holacracy experiment, balancing the possibilities and limits of self-organization.
• “Hierarchy on Steroids: Ten Years After Zappos Went Holacratic”, Markus Brinsa, Medium, 2025. : A retrospective look back 10 years later.

The author, Kwangseob Ahn, is a professor of business administration at Sejong University and lead consultant at OBF (Oswarld Boutique Consulting Firm). He teaches statistics and data analysis — business data management and business analytics — while leading GTM and AI strategy consulting in the field, designing the seam between technology and business. He has published academic research on a memory architecture for AI dialogue systems (HEMA) and runs Daily Arxiv, a daily curation of global AI papers. He holds a master’s from Korea University’s Graduate School of Technology Management and a KMBA. He is the author of Homo Brainless: The People Who Outsource Their Thinking.

Footnotes

1. Intelligence Layer: A concept proposed by Block in which AI analyzes a company’s internal data (code, tickets, design documents, etc.) to coordinate work. Think of it as AI taking over the information-relay function that human managers used to handle through meetings and reports. ↩

2. DRI (Directly Responsible Individual): An individual who bears final, time-limited responsibility for a specific project or issue. Not a permanent management title, but a role assigned per task. Originating at Apple, the concept is now widely used across Silicon Valley. ↩

3. Holacracy: A self-management system created by Brian Robertson in 2007. It eliminates managers and titles, running the organization instead through autonomous team units called “circles.” Notably, it comes with a detailed “constitution,” almost like a board-game rulebook. ↩

4. SOX (the Sarbanes-Oxley Act): A US corporate accounting transparency law enacted after the 2002 Enron scandal. Because it requires publicly traded companies to maintain clear internal controls and reporting structures, it can legally conflict with a fully horizontal organization. ↩