The Trillion-Dollar Vision of Dee Hock

It was the chance Hock had been waiting for. Even then, he was a man who thought Big Thoughts. Born in 1929, the youngest child of a utility lineman in the mountain town of North Ogden, Utah, he was a loner, an iconoclast, a self-educated mountain boy with a deeply ingrained respect for the individual and a hard-won sense of self-worth. And he stubbornly refused to accept orthodox ideas: before he'd started with the Seattle bank he'd already walked away from fast-track jobs at three separate financial companies, each time raging that the hierarchical, rule-following, control-everything organizations were stifling creativity and initiative at the grass roots -- and in the process, making the company too rigid to respond to new challenges and opportunities.

He'd been a passionate reader since before he could remember, even though his formal schooling ended after two years at a community college. He read history, economics, politics, science, philosophy, poetry -- anything and everything, without paying the slightest attention to disciplinary boundaries.

What he read convinced him that the command-and-control model of organization that had grown up to support the industrial revolution had gotten out of hand. It simply didn't work. Command-and-control organizations, Hock says, "were not only archaic and increasingly irrelevant. They were becoming a public menace, antithetical to the human spirit and destructive of the biosphere. I was convinced we were on the brink of an epidemic of institutional failure."

He also had a deep conviction that if he ever got to create an organization, things would be different. He would try to conceive it based on biological concepts and metaphors.

Now he had that chance. In June 1970, after nearly two years of brainstorming, planning, arguing, and consensus building, control of the BankAmericard system passed to a new, independent entity called National BankAmericard, Inc. (later renamed Visa International). And its CEO was one Dee W. Hock.

The new organization was indeed different -- a nonstock, for-profit membership corporation with ownership in the form of nontransferable rights of participation. Hock designed the organization according to his philosophy: highly decentralized and highly collaborative. Authority, initiative, decision making, wealth -- everything possible is pushed out to the periphery of the organization, to the members. This design resulted from the need to reconcile a fundamental tension. On the one hand, the member financial institutions are fierce competitors: they -- not Visa -- issue the cards, which means they are constantly going after each other's customers. On the other hand, the members also have to cooperate with each other: for the system to work, participating merchants must be able to take any Visa card issued by any bank, anywhere.

That means that the banks abide by certain standards on issues such as card layout. Even more important, they participate in a common clearinghouse operation, the system that reconciles all the accounts and makes sure merchants get paid for each purchase, the transactions are cleared between banks, and customers get billed.

To reconcile that tension, Hock and his colleagues employed a combination of Lao Tse, Adam Smith, and Thomas Jefferson. For example, instead of trying to enforce cooperation by restricting what the members can do, the Visa bylaws encourage them to compete and innovate as much as possible. "Members are free to create, price, market, and service their own products under the Visa name," he says. "At the same time, in a narrow band of activity essential to the success of the whole, they engage in the most intense cooperation." This harmonious blend of cooperation and competition is what allowed the system to expand worldwide in the face of different currencies, languages, legal codes, customs, cultures, and political philosophies.

No one way of doing business, dictated from headquarters, could possibly have worked. "It was beyond the power of reason to design an organization to deal with such complexity," says Hock, "and beyond the reach of the imagination to perceive all the conditions it would encounter." Instead, he says, "the organization had to be based on biological concepts to evolve, in effect, to invent and organize itself."

Visa has been called "a corporation whose product is coordination." Hock calls it "an enabling organization." He also sees it as living proof that a large organization can be effective without being centralized and coercive. "Visa has elements of Jeffersonian democracy, it has elements of the free market, of government franchising -- almost every kind of organization you can think about," he says. "But it's none of them. Like the body, the brain, and the biosphere, it's largely self-organizing."