In 1920, Alfred Sloan invented the modern corporation to solve an information problem. Companies were too big and too complex for any one person to coordinate. His divisional management model routed knowledge from the edges to the center and back again. It worked for a century.
Enterprise software is the digital version of Sloan's org chart. And the trillion-dollar selloff in software stocks last week is the market recognizing that this architecture has an expiration date.
AI doesn't replace bad software with slightly less bad software. It dissolves the coordination layer that made the software monopoly possible. When an AI agent can bridge the gap between a customer signal and an engineering response directly, you don't need five layers of management or a monolithic ERP system in between.
Jensen Huang says replacing software with AI is like reinventing the screwdriver. He's wrong. Nobody is reinventing the screwdriver. They're eliminating the guy who stands between you and the toolbox and charges rent.
New post on what this means for GDP growth, whether copycat economies can close the gap, and the three things to watch as the Sloan model unwinds.
What will actually happen is that the Sloan model will just be reimplemented as a neural network. The firm will complete its cyberization. The model is not going anywhere. What is going out is the people that make the information flow inefficient.