When Block Cut 40%, the Market Cheered. Here's What Nobody Measured.

In February 2026, Block announced it was cutting 40% of its workforce — more than 4,000 people — and tied the decision directly to "intelligence tools." Jack Dorsey predicted most companies would follow suit within a year. The market response was immediate and clear: Block's shares jumped 24% on the day.

I've watched this pattern before, from a different angle. A decade and a half ago at IG, we were replacing manual back-office settlement with straight-through processing. At Capital.com, we built algorithmic bidding, automated KYC, automated hedging, automated exposure management — automation that let us operate a global business with a technology headcount that outnumbered every other function combined. I know what happens when you replace human capital with technology capital at scale. I also know what doesn't show up in the headline numbers.

The Economic Transaction the Market Missed

The Block story, and the Salesforce, Amazon, and Meta stories that followed, are being told as a binary: human jobs cut, AI substituted in, efficiency gained, shares up. But that framing misses the actual economic transaction that is taking place. A company that cuts 40% of its workforce isn't just trading wages for compute costs. It is executing the largest intangible asset restructuring most of these businesses will ever do — simultaneously affecting at least five of the twelve intangible value drivers that underpin enterprise value.

Here is what actually moves when a company at Block's scale makes this kind of decision.

Human Capital drops. This is the visible change. 4,000 people leave. Skill, experience, and capability exit with them.

Technology & Innovation rises. AI tools, agent infrastructure, and the compute stack that supports them become a larger share of the asset base. If deployed well, this can be a durable capability.

Organisational Capital shifts — and often drops. This is the one that never makes the press release. When long-tenured staff leave, institutional knowledge leaves with them. The undocumented workflows, the relationships with regulators, the "we tried that in 2019 and it failed because of X" memory — none of that transfers cleanly to an AI agent. Salesforce's reduction of its support team from 9,000 to 5,000 removed an enormous pool of accumulated customer context. Some of it was documented in knowledge bases. Most of it was in the heads of the people who left.

Customer Capital faces pressure. Customer relationships are intangible assets. When the humans who maintained them are replaced by AI, the relationship changes. It might improve (faster response times). It might degrade (lost empathy, lost continuity). The companies that measure this properly will know. The ones that don't will find out from churn numbers six quarters later.

Culture moves in ways that are hard to predict. The surviving workforce watches. Some thrive on the leaner, faster model. Some become anxious, disengaged, or quietly start looking. Retention patterns change. Innovation patterns change. Culture is a slow-moving intangible, but it compounds in both directions.

This is five drivers in motion simultaneously. A straightforward P&L view sees only two of them — a decrease in wage expense, an increase in technology spend. The other three are invisible to traditional accounting. Under IAS 38 and FRS 102, internally generated intangibles largely cannot be recognised on the balance sheet. So the most important parts of the transaction don't appear anywhere in the reported numbers.

Why This Doesn't Mean the AI Transformation Is Wrong

This doesn't mean the AI transformation is wrong. It might be exactly the right move. At Capital.com, we ran a cash-generative global broker with half of the organisation in technology, and that structure served our customers better than a larger, slower one would have. The issue isn't whether to invest in automation. The issue is whether you can tell, with data, that you have created more intangible value than you destroyed.

Most companies currently can't tell. They have revenue figures, cost figures, and headcount figures. They don't have a driver-level view of their intangible portfolio that lets them say:

• Human Capital is down 22%
• Technology is up 31%
• Organisational Capital is holding steady because we captured critical knowledge before the departures
• Customer Capital has softened by 8% — we are addressing it through relationship manager augmentation
• Culture scores are recovering in the second quarter post-transformation

That is the kind of dashboard that turns an AI transformation from a leap of faith into a measured capital reallocation.

The Framing This Change Needs

The conversation around AI layoffs has split into two camps. One camp treats every headcount reduction as vindication of AI hype. The other treats every announcement as evidence of human displacement without productivity gain. Both camps are arguing about whether the transformation is "real" without measuring the thing that actually matters: whether net intangible value is being created or destroyed.

The companies that get this right over the next three years will do something different. They will treat AI transformation as a portfolio rebalancing exercise. They will baseline their intangible asset position across all twelve drivers before they begin. They will track the drivers quarterly through the transformation. They will make specific, informed decisions about:

• Which parts of Human Capital and Organisational Capital to protect aggressively — documentation, knowledge transfer, retention of key individuals who embody institutional memory
• Which parts to rebuild in new form — AI-augmented relationship management, new technical roles, redesigned operational processes
• Which parts of Technology & Innovation to build with intent, and which risks to close before they compound

They will be able to prove, with evidence, that the intangible base of the company grew through the transformation rather than being hollowed out.

The Opagio Thesis

The Opagio 12 was built as the measurement framework for this exact problem. It covers all twelve categories of intangible value — the balance-sheet-eligible ones and the ones accounting standards don't recognise — and gives a driver-level view that updates as the business changes. When a company cuts headcount and deploys AI, the Opagio 12 shows what moved, which direction, and by how much.

The Growth Accounting Engine, grounded in the CHS academic framework, separates the intangible capital contribution from the rest of productivity. The result is a dashboard that would let a CEO, a CFO, or a board answer the question that really matters during an AI transformation: is our intangible base stronger than it was at the start, or weaker?

Closing Observation

The market cheered when Block cut 40%. The market was reacting to a single signal — operational efficiency — and extrapolating from there. In a year, or two, or three, we will know whether the bet paid off. Block itself will know sooner than the market, but only if it is measuring the right things. The same goes for Salesforce, Amazon, Meta, and the dozens of companies that will follow this year.

The bold move here isn't cutting 40% of a workforce. Companies have been making that move for decades whenever structural conditions demand it. The bold move is measuring what you have built, what you have lost, and what you have gained across your full intangible portfolio as you make the transition. That is what turns a layoff into a transformation.

Measure Your Own Intangible Portfolio

If your leadership team is weighing an AI-driven transformation, the question isn't whether to do it. It is whether you can see the full asset movement before, during, and after. Two ways to start:

• Score your Opagio 12 position in 20 minutes. The free assessment walks you through the twelve drivers, baselines your current portfolio, and flags the ones most at risk in an AI transformation.
• Run it as a platform. Sign up and go through onboarding to build a full Value Drivers Register for your business, with quarterly tracking as the transformation moves. See pricing for Opagio Intangibles and solutions for companies for the full scope.

The transformation is going to happen across your sector whether or not you measure it. The question is whether you will be the company that compounds advantage through it, or the company that discovers the gap in three years from the wrong side of the data.