One from Many: VISA and the Rise of Chaordic Organization

By: Dee Hock
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Revised edition of Hock's award-winning Birth of the Chaordic Age, updated throughout and featuring two new chapters The only first-person account of the rise of VISA, the world's largest business enterprise--in 2004, VISA's products were used by more than a billion people at 20 million locations in more than 150 countries Hock, VISA's founder, details the revolutionary "chaordic" organizational philosophy that was instrumental in VISA's success Hock skillfully weaves together the story of VISA with his own remarkable life story and elaborates the visionary philosophy that allowed VISA to thrive. Hock calls his approach "chaordic"--simultaneously chaotic and orderly. Hock makes a compelling argument that this organizational philosophy is a more supple, responsive and creative alternative to mechanistic Industrial Age models, one more in tune with what we see in nature. One from Many--revised throughout from its original hardcover publication as The Birth of the Chaordic Age--includes two new chapters in which Hock reflects on his post-VISA experiences as an advocate for chaordic principles, and details some examples of chaordic principles in action: the Internet, World Weather Watch, Alcoholics Anonymous, and others. Lyrical, playful, philosophical, and straight from the heart, One From Many challenges us to change forever the way we think about money, organizations, leadership, management, the human spirit, and our relationship to the natural world.

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1. Old Monkey Mind

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No single thing abides, but all things flow.
Fragment to fragment clings; all things thus grow
Until we know and name them. By degrees
They melt and are no more the things we know.

—Lucretius

Nine hours we have happily worked the hillside together, a sixtyfive year old man and Thee Ancient One, a diesel crawler-tractor of indeterminate age and lineage. Thee roars and clanks across the ground, a squat, old creature with massive winch and rippers behind, dozer and brush rake ahead, roll cage overhead, and huge hydraulic cylinders left, right, and rear. It is more equipage than Thee was designed to bear, but she labors on nonetheless.

It was quiet and cold when we began at dawn on land savaged by a century of overcropping and abandoned decades ago to the ravages of wind and rain.Where scant soil remains, masses of poison oak and coyote brush have scabbed the land to begin the healing.

It is 1993, nine years since I abruptly severed all connection with the business world for life on the land. It is still hard to believe. After sixteen years of intense conflict with industrial age, command-and-control corporations; after thirty-five years dreaming of new concepts of organization and experimenting with them; after two impossible years bringing one of those dreams into being; after fourteen grueling years leading it to maturity— after all that, turning my back on Visa in 1984 and walking away at the pinnacle of success was the hardest thing I have ever done.

 

2. A Lamb and the Lion of Life

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The striking of a match is every bit as wonderful as the working of a
brain; the union of two atoms of hydrogen and one of oxygen in a
molecule of water is every bit as wonderful as the growth of a child.
Nature does not class her works in order of merit; everything is just
as easy to her as everything else: she puts her whole mind into all that
she does ... [she] lives through all life, extends through all extent,
spreads undivided, operates unspent.

—Stephen Paget

It is 1934, and I am five years old, wild with excitement, trotting back and forth, peering around overall-clad legs bulging with muscle as neighbors with crowbars strain alongside my father to move the frame cottage a quarter mile down the cement highway, on rollers made of old telephone poles, to an acre of land purchased from a neighboring farmer. With the cottage on site and a man on either end of a ten-foot crosscut saw, the poles are soon bucked into short sections. They are buried on end under the jacked-up house, which is slowly lowered, creaking as it comes to rest a foot above the ground on the wooden foundation.

 

3. The Bloodied Sheep

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Begin the morning by saying to thyself, I shall meet the busybody, the
ungrateful, arrogant, deceitful, envious, unsocial. All these things
happen to them by reason of their ignorance of what is good and evil.

—Marcus Aurelius Antonius

A society of sheep must in time beget a government of wolves.

—Bertrand de Jouvenal

In the summer of 1951, the lamb fell into a job at a small, floundering branch office of a consumer finance company. Within months, the manager departed and his lot fell to the lamb. Protected by remoteness, anonymity, and insignificance, four lambs, whose average age was twenty, trashed the company manual, ignored commandments, and did things as common sense, conditions, and ingenuity combined to suggest.Within two years, business tripled and the office was leading the company in growth, profit, and quality of business.Anonymity was gone and the blind fists of corporate power and orthodoxy began pounding for conformity. How much better the lambs could do if they conformed to central mandates. Even if they could be trusted with freedom to use their ingenuity, others could not. Exceptions could not be made without risking anarchy.

 

4. Retirement on the Job

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How can a part know the whole? Man is related to everything that he
knows. And everything is both cause and effect, working and worked
upon, mediate and immediate, all things mutually dependent.

—Blaise Pascal

For prosperity doth best discover vice, and adversity doth best discover
virtue.

—Sir Francis Bacon

It was in 1965 that the heart went out of me. Four years before, partially from concern we would never be able to educate three children on my earnings alone and partially to fulfill a thwarted dream, Ferol had decided she would begin university.

With three young children, a heavily mortgaged house, no job, little money in reserve, and Ferol in her final year at university, it was impossible to stay out of a dismal swamp of depression. Day after day, I walked the woods in misting Northwest rain. My constant companion was an overwhelming feeling of failure. What was wrong with me? Why constant inability to climb the corporate ladder? Why continual conflict with superiors? Extraordinary effort and exceptional results had come to nothing. It seemed impossible to act consistent with my beliefs and succeed in the corporate world. Yet, there seemed no way to escape from it without putting the welfare of family at risk.That I could not do.

 

5. The Zoo

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I experienced under the sun that
The race is not to the swift,
Nor the battle to the strong;
Wise men lack an income,
Prophets do not have riches,
The learned lack wealth,
And time and chance overtake them all.

—Koheleth

Over a lunch of smoked oysters, Bob Cummings and I verbally circled and sniffed one another like two strange dogs deciding whether to fight or form a pack. We soon discovered four things in common. We didn’t like one another. We didn’t want the jobs we had been offered. We didn’t know why we had been selected. We had high regard for Maxwell Carlson.

Bob had come up through the ranks of commercial lending at the National Bank of Commerce. He seemed a traditional, conservative branch manager. He believed that credit cards were nothing but another form of banking. The thought of being burdened with an assistant who was an unorthodox, consumer-credit outsider was appalling. I believed that credit cards were nothing but high-volume, unsecured, consumer lending. The thought of being burdened with a conservative banker boss was appalling. I knew it wouldn’t work. Bob knew it wouldn’t work.

 

6. The House of Cards

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Taking a new step; uttering a new word is what people fear most.

—Fyodor Mikhailovich Dostoyevsky

Early in 1966, within months after Bank of America let it be known that it would license its BankAmericard program and five California banks announced a joint MasterCharge program, the banking industry was seething with speculation and rampant with rumors: “Citicorp has committed millions to develop proprietary card technology to force an industry standard controlled by them” — “American Express is buying a bank and will blanket the country with American Express bank cards” — “Bank of America’s licensing program is a cover-up they will use to promote deposit accounts nationwide” — “Citicorp and Chase Manhattan are going to license proprietary cards” — “Banks in a dozen different regions are forming groups modeled after the California MasterCharge association” — “Independent bank cards are forming a network using a common interbank logo” — “Legislation is being introduced to give the Federal Reserve System a monopoly for the clearing of sales drafts between banks” — “The federal government is going to pass a usury law to preempt all state laws governing credit card rates” — “The federal government is going to forbid mass mailing of unsolicited cards.”

 

7. Peeling the Onion

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To be free is precisely the same thing as to be pious, wise, just and temperate,
careful of one’s own, abstinent from what is another’s and
thence, magnanimous and brave... To be an opposite of these is the
same thing as to be a slave ... So it comes to pass that the nation
which has been incapable of governing and ordering itself and has
delivered itself up to the slavery of its own lusts is itself delivered
against its will to other masters, and whether it will or not, is compelled to serve.

—John Milton

There was no time for the new licensee committee to do more than get acquainted and agree to meet two weeks hence. On the flight home, Jim Cronkhite and I ripped a map of the United States from the airline magazine and began dividing the country into sections, minds buzzing with a multitude of questions. What might best define areas of operational, political, cultural, and banking interests? What might provide equitable balance of number of licensees and volume of BankAmericard business? What might keep travel time and costs to a minimum? What might include a healthy mix of differing interests, yet not be so diverse as to make agreement impossible?

 

8. The Impossible Imagined

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What is a good man but a bad man’s teacher?
What is a bad man but a good man’s job?
If you don’t understand this you will get lost,
However intelligent you are.
It is the great secret.

—Lao-Tzu

“Mr. Carlson, I’m in trouble. When I spoke up at the meeting in Columbus I had no intention of getting so involved. I agreed to serve on the committee with the thought of setting things in motion and stepping aside. Problems are much worse than we imagined. People across the country have become deeply concerned and are looking to the committees as a possible solution. There is growing expectation I’ll continue as chairman. I have a few ideas about how to proceed, but no way of knowing what might result. I’m continually being drawn deeper into the situation and should either make a serious commitment or step aside. I’m torn between the two.”

Conversations with Mr. Carlson are never long. The most patient, intense listener I have ever known, his questions are inevitably short, penetrating, and singularly to the point, although often softened by looking down or away. His manner induces others to listen intently and give short, clear answers. In the habit of referring to me as “young man,” that is how he began.

 

9. The Next to the Last Word

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Trust thyself; every heart vibrates to that iron string!

—Ralph Waldo Emerson

The weeks after the Sausalito meeting were filled night and day by work with lawyers, accountants, and members of the various committees as we struggled to translate the principles into a conceptual structure. Dozens of working groups formed, dissolved, or combined as question after question was posed. No ultimate answers emerged, only better questions. If this institution were to self-organize, in effect, to design itself, it would require continual consensus. Not consensus in the modern meaning of unanimous agreement, but in the original, deeper sense of solidarity. A position where all could stand comfortably together to act in accordance with purpose and principle, learn from the acts, reflect upon the learning and formulate the next step. It required valuing innovation more than engineering—synthesis more than analysis—understanding more than knowing. Another insight was slowly forming, although I could not articulate it then. In lighter moments, I now refer to it as the theology of chaordic organization writ simple. Heaven is purpose, principle, and people. Purgatory is paper and procedure. Hell is rule and regulation.

 

10. The Corporation or the Cane

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Man is not born evil. Why then are some of them infected with this
plague of malevolence? It’s because those who are at their head have
the malady and communicate it to the rest of mankind.

—Voltaire

It is a ridiculous thing for a man not to fly from his own badness, which is indeed possible, but to fly from other men’s badness which is impossible.

—Marcus Aurelius Antonius

The days after returning from Chicago to Seattle were miserable as I alternated between the multitude of things necessary to keep the organizational effort alive and a search for equanimity and clarity about what I should do. Near the end of the second day, notebook and pocket knife in my jacket, I slipped away for a long walk in woods filled with slanting shafts of light from a spring sun sinking slowly in the western sky.A few yellowed pages of notes survive from that day, resurrected from an old file where they remained unseen and forgotten these past thirty-five years. The flood of feeling they evoke is impossible to describe.

 

11. And Then ThereWas One

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This spreading radiance of a true human being
Has great importance.
Look carefully around you and recognize
The luminosity of souls.
Sit beside those who draw you to that
.

—Jalal Uddin Rumi

When I returned a week later with the promised plan, Sam did not like it. ”Dee, it’s impossible.There is absolutely no way three thousand banks can be persuaded to surrender their licenses, become members of NBI, hold an annual meeting of members, elect a board, and have the whole thing in operation in ninety days. It can’t be done.”

“Sam, we can’t know that without making the attempt.We have the support of thirteen powerful people.We have the interest and participation of dozens of others who have worked on it for a year and a half. The concepts are sound. The need is compelling. Momentum is building. If we link people in the right relationships, challenge them, and free them, they’ll perform miracles. I’ve seen it happen before. Never on this scale, but we’ve got to try. If we drag it out it may never happen.” Sam begins to waver.

 

12. Quite Ordinary People

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If you have built castles in the air your work need not be lost: that is
where they should be. Now put the foundation under them
.

—Henry David Thoreau

The evening before the first annual meeting of members, lawyers from the Bank of America had asked for a meeting, saying they had something they wished to discuss, insisting it must be held in strict confidence until it could be made public. I was astonished at what they had to say.

The bank had been in secret discussions with American Express for months.They had jointly developed a plan for the two companies to build a nationwide credit card authorization system, to be owned and controlled by the two of them.At the time, American Express, by a huge margin, was the largest travel and entertainment card issuer in the world. Bank of America, by a similar margin, was the largest bank card issuer. Other credit card issuers would be invited to become participants in the new system, each paying a substantial sum at the time of commitment, which would provide most of the capital for development of the authorization system. However, they would have no ownership. The plan would be announced within days.

 

13. The Victims of Success

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There is nothing more difficult to take in hand, more perilous to conduct or more uncertain in its success, than to take the lead in the introduction of a new order of things.

—Niccolò Di Bernardo Machiavelli

Hand in hand with NBI’s early success went equal failure. The issue of duality was the greatest example. On no issue were we more right. On none did we fail more ignominiously. On none did our failure have a greater effect on the future of payment systems, or a greater outward appearance of success.

At its inception, NBI inherited a two-tiered system created by the Bank of America licensing program. Banks were divided into two classes, A and B. The A class was composed of two hundred card-issuing, merchant-servicing banks that became full owner/members of NBI.The remainder were class B members— participants sponsored by A members. They enrolled merchants, bought merchant transactions, entered them into the system, and assisted A members in developing cardholders. Naturally, the class B members wanted to be members of both Visa and its principal competitor, MasterCharge (now MasterCard), in order to offer merchants a single point of deposit for all card transactions.This, in turn, placed pressure on A members to also become owner/members of both systems in order to offer merchants the same services.A few had already done so before NBI was formed. NBI placed a moratorium on such duality until the board could thoroughly look into the matter and try to determine what was most likely to produce maximum competition.

 

14. The Golden Links

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What was the scenery of this beautiful universe which we inhabit;
what were our consolations on this side of the grave—and what were
our aspirations beyond it, if poetry did not ascend to bring light and
fire from those eternal regions where the owl-winged faculty of calculation
dare not ever soar.

—Percy Bysshe Shelley

As NBI struggled with duality, communications systems, marketing, security, and other major efforts required to turn the BankAmericard system around in the United States, the Bank of America Service Corporation continued to license banks in the remainder of the world. Each license was different, leading to a morass of different marketing, computer systems, operations, and names.The blue, white, and gold card known as BankAmericard in the United States was known as Sumitomo Card in Japan, Barclaycard in the United Kingdom, Chargex in Canada, Bancomer in Mexico, and a multitude of other names in different countries. The situation quickly led to even greater and more complex problems than those experienced earlier in the United States, partially due to the diversity of language, currency, culture, and legal systems.

 

15. What’s in a Name?

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Either the Stars are great geometers or the eternal geometer has
arranged the stars.

—Voltaire

It was perfect—perfect in its beauty—and perfect because, from the
sun in the heavens to the fly with burnished wings on the hot rock,
there was nothing out of harmony.

—Mark Rutherford

In 1973, it became apparent that continuing proliferation of names for the card could hinder growth of the system. At the time, the only common worldwide identity was the blue-white-gold bands design. The product had a different name in every country and in some countries, several names. In the United States, the common name was BankAmericard. In Canada, Chargex. In the remainder of the world, it was usually known by the name of the issuer, such as Sumitomocard in Japan, or Barclaycard in the United Kingdom. Once the card had been introduced in the name of one bank, others were reluctant to join.The multitude of names was confusing to merchants, seriously undermining card acceptance. Ability to conduct international marketing and ensure acceptability of cards was severely limited.

 

16. Breaking the Mold

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The true strength of rulers and empires lies … in the belief of men
that they are inflexibly open, truthful, and legal. As soon as government
departs from that standard, it ceases to be anything more than
“the gang in possession” and its days are numbered.

—H. G. Wells

They that reverence too much the old times are but a scorn to the new.

—Sir Francis Bacon

How could you treat people who performed a miracle of communications with a piece of string and a dirty coffee cup and proved the validity of a new design by counterfeiting their own cards as though they were no more than “human resources?” You couldn’t and we didn’t.

The greatest delight from all my days leading Visa were open staff meetings, from which we never wavered.Within a day after every board meeting, staff meetings were held to include every employee of the company at every level including the newest. They were conducted by the most senior person present.At the meeting, every decision of the board was fully disclosed. Every employee was free to ask any question about the decisions, or anything else of concern to them. Their questions were answered fully. “That’s confidential” was not considered an answer. “I don’t know but I will find out and tell you at the next meeting” was permissible, but only if the promise was faithfully kept. All I ever said to them of a cautionary nature was, “You realize that some things you will learn could be detrimental to our purpose if they were bandied about publicly or prematurely leaked to the press. However, until we are consistently proved wrong, we will do our best to behave in accordance with the belief that mutual respect and trust is the strongest bond among people, and can be relied upon. I hope to earn your trust and respect and you shall certainly have mine.”

 

17. The Successful Business Failure

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I cannot praise a fugitive and cloistered virtue, unexercised and
unbreathed, that never sallies out and sees her adversary, but slinks
out of the race, where that immortal garland is to be run for, not
without dust and heat... that which purifies us is trial, and trial is
by what is contrary.

—John Milton

It is painful to think about weakness and failure. It is even more painful to write about it, but it is an essential part of the story.

At times our failures were highly visible. I have already written about one in Chapter Thirteen, the fight to prevent duality. Another of the more visible was immense. After a number of early successes in building an electronic system for authorization, BASE 1, and another for clearing transactions, BASE 2, we were approached by several members who professed to have common needs (mistake one, they did not), asking if we would undertake the creation of cardholder and merchant-processing software for member banks to use, BASE 3.

By pooling money and effort, it was thought that much more sophisticated software could be developed at reduced cost. The members having immediate need would underwrite development of the product. It would then be available to all other members who would, if they elected to use it, pay a proportionate share of the development cost, to be distributed back to the initial funders.

 

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