The Mihir Chronicles

One from Many | VISA and the Rise of Chaordic Organization by Dee Hock

November 01, 2023

I. Brief Summary

A beautiful chronicle by Dee Hock, the creator of VISA which had a profound impact on our society at scale. It is a part biography, history, business management and philosophy book. He argues that industrial age is an outdated operating model and has been destructive to our society and well-being. It explores the emergence of a new form of organization that blends chaos and order (chaordic organization). Chaordic is an operating model based on competitive but cooperative, distributed, decentralized organization modeled after nature rather than machine. This is going to be one of my all-time favorites. Dee Hock is my business hero!

II. Big Ideas

  • Dee Hock was born in North Ogden, Utah in 1929.
  • In 1967, Dee Hock helped open one of the first six BankAmericard credit card licensee operations at the National Bank of Commerce in Seattle. After seeing all of the problems of the licensee banks in working with Bank of America, he managed to create what would become Visa and acted as the CEO from 1970 to 1984.
  • Hock in the section “Old Monkey Mind” throughout the book explores the philosophical underpinnings of the things he was doing and learning.
  • Dee had three questions that were critical in the origin story of Visa & the chaordic organization:
    • Why are organizations, everywhere, political, commercial, and social, increasingly unable to manage their affairs?
    • Why are individuals, everywhere, increasingly in conflict with and alienated from the organizations of which they are part?
    • Why are society & the biosphere increasingly in disarray?
  • Chaordic is defined as the behavior of any self-organizing and self-governing organism, organization, or system that harmoniously blends characteristics of chaos and order. Characteristic of the fundamental, organizing principle of nature.
  • Drawn from his observations of nature, evolution, and communities, Dee is a proponent of enabling people to organize and do their best collective work based on purpose and principle, not rule and regulation.
  • At VISA the entire team was working together to pick up tasks and help each other out, with no central control, but instead collective incentive and drive moved all the necessary projects forward.
  • On community:
    • Composed of things that we cannot measure, for which we keep no record and ask no recompense. Since they can’t be measured, they can’t be denominated in dollars, or barrels of oil, or bushels of corn — such things as respect, tolerance, love, trust, generosity, and care, the supply of which is unbounded and unlimited.
    • The non-monetary exchange of value is the most effective, constructive system ever devised. Evolution and nature have been perfecting it for thousands of millennia. It requires no currency, contracts, governments, laws, courts, police, economists, lawyers or accountants. It does not require anointed or certified experts of any kind. It requires only ordinary, caring people.
    • In true community, unity of the “single one” and the “plural one” applies as well to beliefs, purposes, and principles. Some we hold in common with only part of the community. Others we may hold alone. In true community, the values others hold that we do not share we nonetheless respect & tolerate — either because we realize that our beliefs will require respect & tolerance or return, or because we know those who hold different beliefs well enough to understand & respect the common humanity that transcends all differences.
  • On management:
    • The first and paramount responsibility of anyone who purports to manage is to manage self—one’s own integrity, character, ethics, knowledge, wisdom, temperament, words, and acts. It is a never-ending, difficult, oft-shunned task. The reason is not complicated. It is ignored precisely because it is incredibly more difficult than prescribing and controlling the behavior of others.
    • The obvious question then always erupts. How can you manage bosses, peers, regulators, associates, customers? The answer is equally obvious. You cannot. But can you understand them? Can you persuade them? Can you motivate them? Can you disturb them, influence them, forgive them? Can you set them an example? Of course you can, provided only that you have properly managed yourself. Eventually the proper word will emerge. Can you lead them?
  • Purpose of card payments:
    • The first primary function of the card was to identify buyer to seller and seller to buyer.
    • The second primary function was as guarantor of the value data.
    • The third primary function was origination and transfer of value data.

III. Quotes

  • The source of all our problems today comes from the gap between how we think and now nature works.
  • The theology of chaordic organization is simple. Heaven is purpose, principle, and people. Purgatory is paper and procedure. Hell is rule and regulation.
  • The list goes on and on: welfare, social security, global warming, ocean pollution, preservation of species, communications, software development, fisheries; each with a need for a concept of organization that enables independent, effective action as the smallest scale, right on down to the individual. One that also allows self-organization and self-governance to ensure effective action at any subsequent scale right on through to the global. An organization within which coherence, cohesion, and order could emerge on which every part could rely without need for knowledge or control of others.
  • The essence of community, its heart and soul, is the non-monetary exchange of value; things we do and share because we care for others, and for the good of the place.
  • Community is composed of that which we don't attempt to measure, for which we keep no record and ask no recompense. Most are things we cannot measure no matter how hard we try.
  • Life is not about control. It’s not about getting. It’s not about having. It’s not about knowing. It’s not even about being. Life is eternal, perpetual becoming, or it is nothing. Becoming is not a thing to be known, commanded, or controlled. It is a magnificent, mysterious odyssey to be experienced.
  • The truth is that a corporation, or for that matter, any organization has no reality save in the mind. It is nothing but a mental construct to which people are drawn in pursuit of common purpose; a conceptual embodiment of a very old, very powerful idea called community.
  • What is this chasm between how most institutions profess to function and how they actually do; between what they claim to do for people and what they actually do to them? What makes people behave in the name of institutions in ways they would never behave in their own name? Church, school, government—all the same.
  • Nothing in nature feels like church or school. There’s no black bird “principal” pecking away at the rest of the “teacher” tree lining up the saplings and telling them how to grow.
  • The essence of community, its very heart and soul, is the non-monetary exchange of value. The things we do and the things we share because we care for others, and for the good of the place. Community is composed of things that we cannot measure, for which we keep no record and ask no recompense. Since they can’t be measured, they can’t be denominated in dollars, or barrels of oil, or bushels of corn—such things as respect, tolerance, love, trust, generosity, and care, the supply of which is unbounded and unlimited. The non-monetary exchange of value does not arise solely from altrusitic motives. It arises from deep, intuitive, understanding that self-interest is inseparably connected with community interest; that individual good is inseparable from the good of the whole; that all things are simultaneously independent, and intradependent—that the singular “one” is inseparable from the plural “one.”
  • 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.
  • How much time, energy, and ingenuity did they spend obeying senseless rules and procedures that had little to do with the results they were expected to achieve? How much did they devote to circumventing those rules and procedures in order to do something productive with the remainder? How much was wasted interpreting such rules and enforcing them on others? How much time and talent did they simply withhold due to frustration and futility? It’s a rare person who arrives at a sum less than 50 percent. Eighty is not uncommon.
  • Educe, a marvelous word seldom used or practiced, meaning, “to bring or draw forth something already present in a latent, or undeveloped form.” It can be contrasted with induce, too often used and practiced, meaning, “to prevail upon; move by persuasion or influence—to impel, incite, or urge.
  • Healthy organizations are a mental concept of relationship to which people are drawn by hope, vision, values & meaning, along with liberty to cooperatively pursue them. Healthy organizations educe behavior. Educed behavior is inherently constructive. Unhealthy organizations are no less a mental concept of relationship but one to which people are compelled by accident of birth, necessity, or force. Unhealthy organizations compel behavior. Compelled behavior is inherently destructive.
  • Leader presumes follower. Follower presumes choice. One who is coerced to the purposes, objectives, or preferences of another is not a follower in any true sense of the word, but an object of manipulation....If the behavior of either is compelled, whether by force, economic necessity, or contractual arrangement, the relationship is altered to one of superior/subordinate, manager/employee, master/servant, or owner/slave. All such relationships are materially different than leader/follower.
  • Clear, meaningful purpose and compelling, ethical principles evoked from and shared by all participants should be the essence of every institution.
  • Lead yourself, lead your superiors, lead your peers, employ good people, and free them to do the same. All else is trivia.
  • If your interest runs to sports, the same phenomenon is apparent. Teams whose performance transcends the ability of individuals.
  • Rules and regulations, laws and contracts, can never replace clarity of shared purpose and clear, deeply held principles about conduct in pursuit of that purpose.
  • Ordinances, orders, and enforcement are simply different words for control, command, and tyranny. Force is the ultimate tool of tyranny. Those who rise in a tyrannical world are those least capable of self-governance, whether of themselves, or inducement of it in others, else they would not engage in tyranny.
  • The time between the discovery of new knowledge, the resultant technology, and its universal application. It took centuries for the wheel, one of the first bits of technology, to gain universal acceptance—decades for the steam engine, electric light, and automobile—years for radio and television. Today, countless microchip devices sweep around the Earth like the light of the sun into universal use....The same is true of cultural float. For the better part of recorded history, it took centuries for the customs of one culture to materially affect another. Today, that which becomes popular in one country can sweep through others within weeks.... Today, the past is ever less predictive, the future ever less predictable and the present scarcely exists at all. Everything is accelerating change, with one incredibly important exception. There has been no loss of institutional float....there has been no new, commonly accepted idea of organization since the concepts of corporation, nation-state, and university emerged, the newest of which is several centuries old.
  • Money had become guaranteed alphanumeric data expressed in the currency symbol of one country or another. Thus, a bank would become no more than an institution for the custody, loan, and exchange of guaranteed alphanumeric data.
  • “Credit card” was a misnomer based on banking jargon. The card was no more than a device bearing symbols for the exchange of monetary value. That it took the form of a piece of plastic was nothing but an accident of time and circumstance. We were in the business of the exchange of monetary value.
  • Unlike finite physical resources, information multiplies by transfer. It is not depleted by use…the supply of information is infinite, therefore, it does not obey any of our industrial age concepts and laws of scarcity. To the extent that we increase the value of the mental content of goods and services, we can reduce the value of the physical content. We can make them lighter, more durable, more recyclable, more versatile, and more transportable. Information breeds. When one bit of information is combined with another, the result is new information.
  • Although Visa arose from thinking about organizations as living, biological systems, I missed completely the need for an institutional immune system to thwart the viruses of old ways.
  • By standards of what Visa out to be, it would be a lie to deny a sense of failure. In spite of my pride in all that Visa demonstrated about the power of the chaordic concept of organization and all the things it has accomplished, I do not believe that Visa is a model to emulate. It is no more than an archetype to study, learn from, and improve upon.
  • Failure is not to be feared. It is from failure that most growth comes, provided that one can recognize it, admit it, learn from it, rise above it, and try again.