Dee Hock is the Founder and CEO Emeritus of VISA International.


“This article describes a new organizational form that carries within it the seeds of a new organizational culture- a culture that might well spell the difference between a smooth, orderly transition to a salubrious and sustainable global society, and the chaos and anarchy that some see in our near-term future.”– Willis Harman

It is almost impossible these days to read a business article or participate in a seminar without stumbling over such popularities as “learning organizations,” “empowerment,” or “re-engineering.” It is equally common to encounter in the scientific community the study of complex adaptive systems, commonly referred to as “complexity.” I find it cumbersome to either think or write about fundamental principles underlying both physical systems and human institutions in the terms unique to either business or science. So after grubbing in various lexicons for a suitable word to describe the kind of organization discussed here, it seemed simpler to construct one. Since the knowledge pursued is believed by scientists to lie on the knife’s edge between chaos and order, the first syllable of each was borrowed and Cha-ord (kay-ord) emerged.

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

But first, let me introduce a particularly rich, robust chaord and then relate it to the principles presented here.

The VISA card had its genesis four decades ago as a California service of the Bank of America called BankAmericard. In response, five California banks jointly launched MasterCharge in 1966. In turn, Bank of America franchised its service. Other large banks quickly launched proprietary cards and offered franchises. Action and reaction were soon rampant. Bank after bank issued cards with little regard for customer qualifications, while television screamed such blather as, “The card you won’t go berserk with,” a challenge the public accepted with enthusiasm.

By 1968, the infant industry was out of control. Operating, credit, and fraud losses were believed to be in the tens of millions of dollars. Life magazine ran a cover story depicting banks as Icarus flying to the sun on wings of plastic above a red sea labeled losses, into which banks were soon to plunge, wings melted, and drown. In the midst of the mess, Bank of America called a meeting of its licensees to discuss operating problems. The meeting quickly disintegrated into acrimonious argument. In desperation, the bank proposed forming a committee of seven, of which I was one, to propose solutions to the more critical problems, which the bank would then attempt to implement. How I came to be there has relevance, so a bit of biography.

I was born, the youngest of six, to parents with but eight years of schooling in a small mountain community. At an age too young for memory of the source, came a passion for reading and the necessity to pursue it unencumbered by guide or mentor. With school and church, came awareness of the chasm between how institutions professed to function and how they actually did, along with a stubborn, refusal to accept orthodox ideas, be persuaded by authoritarian means, or seek acceptance by conformity.

A dean at a local college put me in the way of the classics and awareness of both the power and limitations of the human mind. At the same time, conflict with that institution inflamed a growing preoccupation with the paradoxes inherent in organizations and the people who hold power within them. Thus at twenty, newly married, eager to learn but averse to being taught, absurdly idealistic and naive, emerged the ultimate Lamb hunting the Lion of life. The Lion was quick to pounce. The Lamb fell into a job at a small, floundering branch of a consumer finance company. Six months later the manager departed and his lot fell to the Lamb. Protected by remoteness, anonymity, and insignificance, four people, whose average age was twenty, ignored company commandments and did things as conditions, common sense, and ingenuity combined to suggest.

Within two years, the office led the company in growth and profit. Anonymity was gone and the inexorable fists of hierarchical power and orthodoxy were pounding for conformity. The Lamb escaped to open a new office in a small Oregon town. There, the pattern repeated itself. A year and a half later the Lion and the Lamb came face to face in the corporate headquarters — the Lamb responsible for nationwide marketing and, determined to change the company, the company determined to control the Lamb. It was simply no contest. Within the year, no longer a Lamb but no less a Sheep and badly mauled, it was out the door much wiser in the ways of linear, hierarchical systems and the people who hold power within them.

We can skip details of the next fifteen years of guerrilla warfare between a Sheep irrevocably committed to iconoclastic, innovative methods and the success they brought, and three different command-and-control organizations; each tune the Sheep determined to change the company, the company to corral the Sheep, and with the, same inevitable result. Just another hunk of unemployed mutton bruised and bleeding on the sidewalk. (As an aside, I am delighted to inform you those companies no longer exist.)

Throughout the years, the Sheep continued to read avariciously, including much organizational theory, economics, science, and philosophy. The preoccupation with organizations and the people who hold power within them became an obsession.

Why, the Sheep asked time and time again, are organizations, whether governmental, commercial, educational or social, increasingly unable to manage their affairs? Why are individuals increasingly alienated from the organizations of which they are part? Why are commerce and society increasingly in disarray?

Today, it doesn’t take much intelligence to realize we are in the midst of a global epidemic of institutional failure. Even then, the signs were everywhere if one cared to look. It has much to do with compression of time and events. Some of you may recall the days when a check might take a couple of weeks to find its way through the banking system. It was called “float” and many used it to advantage. Today we are all aware of the incredible speed and volatility with which money moves through the economy and the profound effect it has on society. However, we overlook vastly more important reductions of float, such as the disappearance of information float.

As the futurist James Burke pointed out, it took centuries for information about the smelting of ore to cross a single continent and bring about the Iron Age. During the time of sailing ships, it took years for that which was known to become that which was shared. When man stepped onto the moon, it was known and seen in every corner of the globe 1.4 seconds later — hopelessly slow by today’s standards.

No less important is the disappearance of scientific float, the time between the invention of a new technology and its universal application. It took decades for the steam engine and automobile to attain universal acceptance. It took years for radio and television. Today, countless devices utilizing microchips leap virtually overnight into universal use throughout the world.

This endless compression of float, whether of money, information, technology or for that matter anything else, can be described as the disappearance of “change” float, the time between what was and what is to be, between past and future. 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.