That is still simple AI and commonly used.

1. Make individual agent AIs that can act on their own.

2. Make squad AIs that can influence their agent AIs.

3. Add even more AIs on top, like a scenario AI.

Each of these AIs can be a state machine, behavior tree, rule system or goal system. They’re exactly equivalent and can be translated into each other mechanically. So the whole hierarchical AI is equivalent to one big state machine.

Such a hierarchcal AI is how most RTS games work, and also the famous Falcon 4 campaign system which could simulate a realistic modern war scenario on the Korean peninsula in realtime down to individual units (although collapsed into higher level 'group AIs' when far away from the player) and all that on a 1998 PC!