Most of my practice is with technology transformations, and I rely on the Andreessen Horowitz podcast The a16z Show to stay current with emerging trends. Two weeks ago, a16z host David Haber spoke with Block's executive business leader Owen Jennings about their reorganization that was directly brought about by the integration of Artificial Intelligence capabilities and technologies.
We are likely to see much more of this, especially in technology focused businesses. Typically, firms will reorganize before M&A in order to make themselves a more attractive acquisition target or merger partner. Ultimately, the entities want to strengthen their negotiation position before the transaction. Those that do not undergo this often painful and disruptive reorg process in advance will likely be in a weaker position going into and it can be even more problematic for the future organization that is formed.
For this week's post, I'd like to hear the community's perspectives on how AI triggered reorganization can be managed before and after M&A activities. Owen Jennings describes the impact of AI on Block's operations, and how they navigated reorganization. 40% of their workforce was eliminated in one day. What impressed me was the clarity he had, all be it in hindsight, and the transparency Block adopted in their reorg. So often, organizational change is mired in a lack of open communication that's justified with the assumption that it's necessary for things to go well. In this interview, Jennings expresses a matter of fact assumption that transparency is the only, human way to reduce staff after they realized significant value from AI as a engineering partner. IT was the follow-through on the cultural contract Block forged with all of their employees.
Everyone knew in advance, the announcement was made in a public meeting everyone was invited to, and all employees had access to their technology network throughout the weekend. Of course, smaller, startups, especially very successful ones, are going to have cultures more amenable to such radical transparency, however I feel this points to something more critical. The humanity and ethics of this strategy amazes me. When organizations make their cultures and people the primary consideration, once the reality of tech transformation makes reorg inevitable, everyone is able to navigate the process in a way that respects everyone's humanity and limits friction to only that necessary.
My question to you is, do you agree with how Block did their reorg, and do you believe this human strategy sets them up for growth as a separate entity, or in a stronger position for M&A transactions in the future? Secondly, for those whose jobs were eliminated, are they in a better position because they were treated in a respectful, humane way as the result of radical transparency?
Thank you for joining me as a thought partner as we explore the intersection of humanity, ethics, and organizational transformation. The link to the podcast is above and you can find it here: How to Reorg After AI Changes Everything | Block's Owen Jennings on the a16z Show
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Matt Cinelli
Principal Consultant
Le Savoir Faire Consulting
matthewca@email.com------------------------------