Key Takeaways from One From Many: VISA and the Rise of Chaordic Organization

Jul 19

Dee Hock

Dee Hock is a singular business leader incomparable to any other I’ve read. He was born in North Ogden, Utah in 1929. He was a very hard worker growing up: his first job picking fruit and vegetables for a penny a pound at ten years old. At 14, he forged a baptismal certificate to get a job dumping slop in a canning factory. Ultimately after getting his Associates degree, he started working in banking. In 1967, he 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. At the peek of his success, he abruptly resigned and became a rancher and farmer for nearly a decade. In 1992, he reentered public life and became a philanthropist, adviser, and public speaker seeking to expound upon the “chaordic” organizational ideas he had helped to implement at Visa.

One from Many: Visa and the Rise of the Chaordic Organization

One from Many chronicles Dee’s early life, introduction into banking, credit cards, and the creation of Visa. In addition the autobiographical details, Dee interweaves constant conversations between himself and his “Old Monkey Mind” where he further explores the philosophical underpinnings of the things he was doing and learning. It is a unique book in providing both an atypical business journey as well as delving deeply into the mind and beliefs of this business legend. It also goes deeply into his theories of “chaordic” organization: the idea that in the digital age, decentralized or chaotic organizations can nonetheless act in orderly ways to achieve great benefits to society without centralized leadership beyond a few key principles.

Key Takeaways

Below, I’ve outlined the most important things I learned from the book and the quotes to back it up. I haven’t covered much of the Visa organizational history and details and focused more on the broader learnings.

Definition of chaordic

“1. The behavior of any self-organizing and self-governing organism, organization, or system that harmoniously blends characteristics of chaos and order.
2. Characteristic of the fundamental, organizing principle of nature”

“…the theology of chaordic organization writ simple. Heaven is purpose, principle, and people. Purgatory is paper and procedure. Hell is rule and regulation.”

Dee’s key questions that return time and again

“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 and the biosphere increasingly in disarray?”

Community is about exchanging value without monetary reward

“the essence of community, its very heart and soul, is the nonmonetary 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 nonmonetary 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.””

You can really excel when you ignore the rules and focus on common sense

“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.”

Much of business is time wasted obeying or circumventing rules

“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.”

Definition of 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.””

Leadership requires voluntary cooperation

“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.”

Institutions require principles and purpose

“…clear, meaningful purpose and compelling, ethical principles evoked from and shared by all participants should be the essence of every institution.”

First, you must manage yourself before others

“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.”

Second, you manage your leaders or superiors

“The second responsibility is to manage those who have authority over us: bosses, supervisors, directors, regulators, ad infinitum. In an organized world, there are always people with authority over us. Without their support, how can we follow conviction, exercise judgment, sue creative ability, achieve constructive results, or create conditions by which others can do the same? Devoting a quarter of our time and ability to management of superiors is not too much.”

Third, manage your peers

“The third responsibility is to manage one’s peers—those over whom we have no authority and who have no authority over us—associates, competitors, suppliers, customers. Without their respect and confidence, little can be accomplished. Peers can make a small heaven or hell of our life. Is it not wise to devote at least a fifth of our time and ingenuity to managing peers?”

Fourth, manage your employees or followers

“The fourth responsibility is to manage those over whom we have authority. The instinctive response is that one’s time will be consumed managing self, superiors, and peers. There will be little or no time left to manage subordinates. Exactly!”
“…If those over whom you have authority properly manage themselves, manage you, manage their peers and replciate the process with those they employ, what is there to do but see they are properly recognized, rewarded, and stay out of their way? It is not making better people of others that management is about. It’s about making a better person of self. Income, power, and title have nothing to do with that.”

You can’t manage people you don’t employ, you have to lead them

“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?”
“Forget management! Strike the word from your dictionary! That’s not what I’ve been writing about at all.
Lead yourself, lead your superiors, lead your peers, employ good people, and free them to do the same. All else is trivia.”

Flow state of organizations are impossible to measure but obvious

“If your interest runs to sports, the same phenomenon is apparent. Teams whose performance transcends the ability of individuals”
“Countless professors, consultants and other “experts” have joined in effort to reduce to a mechanistic, measurable, controlled process that which causes the phenomenon. It has never been done and never will be. It is easily observed, universally admired, and occasionally experienced. It happens, but cannot be deliberately done. It is rarely long sustained but can be repeated. It arises spontaneously from the relationships, interaction, and convictions of those from whom it is composed. Some organizations seem consistently able to do so, just as some leaders seem able to cause it to happen with consistency, even within different organizations”
“Leaders can only recognize and modify conditions that prevent it; perceive and articulate a sense of community, a vision for the future, a body of principle to which people are passionately committed, then encourage and enable them to discover and bring forth the extraordinary capabilities that lie trapped in everyone, struggling to get out.”

Trust in ingenuity and a few principles

“Restraint went into the garbage can as I pleaded with Bob to abandon tradition, throw detailed planning to the winds, rely on a clear sense of direction, a few simple principles, common sense, trust in the ingenuity of people, and let the answers emerge”
“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.
Principles are never capable of ultimate achievement, for they presume constant evolution and change”
“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 digital age has collapsed the sharing of knowledge to an instant but we haven’t changed our institutions to acknowledge this

“…the disappearance of scientific and technological float: 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.”
“This endless compression of float, whether of life forms, money, information, technology, time, space, or anything else can be combined and thought of as the disappearance of “change float”—the time between what was and what is to be—between past and future. Only a few generations ago, the present stretched relatively unaltered from a distant past into a dim future. 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.”

There are four ways of looking at things necessary to influence the future

“…as they were, as they are, as they might become, and as they ought to be.”

Organizations exist only in the mind

“Can you perceive the company you work for, or any other organization, whether political, social, or commercial, with any of your senses? Obviously not. If you can’t perceive an organization with any of your senses, does it have any reality at all? Perhaps it’s a fiction. Perhaps it doesn’t exist. But you’re not going to accept that explanation.
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.”
“Healthy organizations are a mental concept of relationship to which people are drawn by hope, vision, values, and 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.”

Money is intangible

“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.”

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.
Clearly, it warranted to both buyer and seller that the system would attend tot he mechanism of exchange without either having to know the language, laws, currency, customs, or culture of the other.”
“…the third primary function was origination and transfer of value 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.”

Principles in forming what became Visa

“What if ownership was in the form of irrevocable right of participation, rather than stock…”
“What if it were self-organizing, with participants having the right to self-organize at any time…”
“What if power and function were distributive, with no power vested in or function performed by any part that could reasonably be exercised by any more peripheral part?”
“What if governance was distributive, with no individual, institution, or combination of either or both, particularly management, able to dominate deliberations…”
“What if it could seamlessly blend cooperation and competition, with all parts free to compete…”
“What if it were infinitely malleable, yet extremely durable, with all parts capable of constant, self-generated, modification of form or function without sacrificing its essential purpose”

Information is not constrained

“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.”

As organizations grow, it’s hard not to fall into normal command-and-control systems as new people enter

“I would discover departments within the company where people were subjected to ridiculous rules and regulations. When I would forbid it, managers quite rightly saw my efforts to restrain their conduct as command-and-control, and so it was. I used command-and-control techniques to prevent command-and-control. Plain stupid!”
“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.”

Visa is not a model to emulate, just an archetype to understand

“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.”

Examples of Chaordic Organizations

Dee suggests a number of exemplars of chaordic organization beyond Visa, both real and imagined

Real examples

The internet
Linux and other open source code
World Weather Watch
Air traffic control systems
Alcoholics Anonymous
Mondragón Corporación Cooperativa
The family
Terrorist organizations
Organized crime
Guerilla armies

Theoretical examples

New decentralized healthcare model disrupting lock-in insurance
Decentralized education model displacing the Education Department with individualized funds for learning that you could pay to schools or for books or for all kinds of things that first would be funded by the government in your youth and then your employer as you enter the workforce

“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.”

David Short