Chaordic Thinking

VISA Dee Hock

“Given the right circumstances, from no more than dreams, determination, and the liberty to try, quite ordinary people consistently do extraordinary things”, Dee Hock

Visa has been called “a corporation whose product is coordination.” Hock calls it “an enabling organization”(1)

“How many of you recognize this?” Someone asks, holding out his own Visa card. Every hand in the room goes up.
“Now, how many of you can tell me who owns it, where it’s head quartered, how it’s governed, or where to buy shares?” Confused silence. No one has the slightest idea, because no one has ever thought about it.

This is the way Dee Ward Hock, founder and first CEO of the Visa credit card association, used to play on an audience(1):

And that is exactly how it ought to be: The better an organization is, the less obvious it is. In Visa, we tried to create an invisible organization and keep it that way. It’s the results, not the structure or management that should be apparent.

In 1968, Hock convinced Bank of America to give up ownership and control of their BankAmericard credit card licensing program. The new company, called National BankAmerica, was a non-stock membership corporation owned by its member banks. The name was changed to Visa in 1976.

In May 1984, Hock put his beliefs to the test. He resigned from Visa and three months later, with his successor in place, dropped completely from sight, retiring to spend almost ten years in relative isolation on a parcel of land on the Pacific coast to the west of Silicon Valley. Six years later, in an acceptance speech as a laureate of the Business Hall of Fame, Hock put it this way:

Through the years, I have greatly feared and sought to keep at bay the four beasts that inevitably devour their keeper — Ego, Envy, Avarice, and Ambition. In 1984, I severed all connections with business for a life of isolation and anonymity, convinced I was making a great bargain by trading money for time, position for liberty, and ego for contentment — that the beasts were securely caged.

Today Visa Inc. is the world’s largest retail electronic payments network, with US$6.5 trillion transacted on its payment products over the four quarters ended March 31 (Visa Investor Relations).

When Hock started to think how to design an organization that could best globally guarantee and exchange data in the form of arranged, electronic signals, he realized that It was beyond the reach of imagination to perceive all the conditions it would encounter. It was clear to him that no hierarchical corporation nor nation-state could do it. In fact, no existing form of organization could do it. And it gradually became apparent that such an organization would have to be based on biological concepts and methods. It would have to evolve, to invent and organize itself.

In June 1970 the result of his vision and work came into being: the Visa chaord(2):

By Chaord, I mean any self–organizing, adaptive, non-linear, complex system, whether physical, biological, or social, the behaviour of which exhibits characteristics of both order and chaos or, loosely translated to business terminology, cooperation and competition.

Like all Chaords –including those you call body, brain and biosphere– is self-regulating:

It remains difficult to describe that community, but the record is impressive with regard to what happened when chaordic principles were applied, power distributed, and human ingenuity released. It is a chaord which, in less than five years, transformed a troubled product with a minority market share into a dominant market share and the single most profitable consumer service in the industry.

In “The Chaordic Organization: Out of Control and Into Order“, Dee Hock describes his beliefs and his own personal journey as an organization man. His conviction, which by the way, I fully support is that:

Today, the present hardly exists at all, everything is change, with one incredibly important exception. There has been little loss of organizational float. Although their size has greatly increased, there has been virtually no new idea of organization since the concepts of corporation, nation–state, and university emerged a few centuries ago.

Newtonian science has dominated the whole of society and the mass of our thinking for more than two centuries. We have since structured society in accordance with that perspective, believing that with ever more reductionist  scientific knowledge, more efficiency, more hierarchical command and control, we could pull a lever at one place and get a precise result at another.

Hierarchical command-and-control pyramids of power, whether political, social, educational, or commercial, are aberrations of the Industrial Age, antithetical to the human spirit, destructive of the biosphere, and structurally contrary to the whole history and methods of physical and biological evolution. Today’s social change, the ever-increasing diversity and complexity in the way people live and work demands radical organizational change.

Is Visa an unrepeatable example, one of kind success story, or does it just show the way forward? This is the question that The Joyce Foundation asked Dee Hock to analyse. They refused to accept his initial conviction that the current epidemic of institutional failure would become catastrophic. After considerable research and thought, he suggested three things:

  • First: At least five or six large, extremely successful examples of chaordic organizations, similar to Visa and Internet, would have to evolve. Ideally, they would span such diverse areas as education, government, social services, and commerce.
  • Second: Sophisticated, three-dimensional, physical models of such structures would have to be created, so that people would have something tactile to examine and relate to existing organizations. Computer models would have to be created, graphically demonstrating how such institutions could self-organize, evolve, and link in new patterns of 21st-century society.
  • Third: A “global chaordic institution” would have to be created. Its sole purpose would be to accelerate the implementation of the principles of chaordic organizations.

Hock concludes that:

We are at that very point in time when a four–hundred-year-old age is dying and another struggling to be born; a shifting of culture, science, society, and institutions enormously greater than the world has ever experienced. Ahead, the possibility of regeneration of individuality, liberty, community, and ethics such as the world has never known and a harmony with nature, with one another, and with the divine intelligence such as the world has never dreamed.

The only question is whether we will get there through massive institutional collapse, enormous social carnage, and painful reconstruction, with the distinct possibility of yet another regression to that ultimate manifestation of Newtonian concepts of control–dictatorship.

Chaordic we are, chaordic we will remain, chaordic the world is, and chaordic our institutions must become.

Amen.

____________________

(1) “The Trillion-Dollar Vision of Dee Hock“, Fast Company magazine 1996

(2) The term chaord was coined by Dee Hock. His defition clearly resembles that of a Complex Adaptive System

This post is dedicated to my colleague and friend @JoseValles

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