The History of Visa is Probably Different Than You Think


visa prepaidVisa credit card association founder Dee Hock is a world-leading expert in payment systems. While an official in 1968 at a local bank in Washington State franchised by Bank of America to issue BankAmericard, Hock became chairman on a committee to create what would become Visa in 1976. Hock is open-minded and outspoken. He has even spoken favorably of the online digital currency Bitcoin.

“Bitcoin is one of the best examples of how a decentralized, peer-to-peer organization can solve problems that these dated organizations cannot,” Hock once said. “[Bitcoin] presents incredible opportunities for new levels of efficiency and transparency in financial transactions.”

In a 1996 Fast Company article, many of Hock’s beliefs were made clear. He developed the concept of a chaordic system, fusing chaos and order, comparable to Prigogine’s dissipative structures theory.

“We are at that very point in time when a 400-year-old age is dying and another is struggling to be born — a shifting of culture, science, society, and institutions enormously greater than the world has ever experienced,” Hock told Fast Company. “Ahead, the possibility of the regeneration of individuality, liberty, community, and ethics such as the world has never known, and a harmony with nature, with one another, and with the divine intelligence such as the world has never dreamed.”

Hock oversaw the creation of Visa, which resembles a distributed organization. The Fast Company article revisits one of Hock’s favorite things to do with a conference audience:

“How many of you recognize this?” he asks, holding out his own Visa card.

Every hand in the room goes up.

“Now,” Hock says, “how many of you can tell me who owns it, where it’s headquartered, how it’s governed, or where to buy shares?”

Confused silence. No one has the slightest idea because no one has ever thought about it.

He never wanted Visa to be a traditional public-facing entity. “In Visa, we tried to create an invisible organization and keep it that way. It’s the results, not the structure or management that should be apparent,” Hock said.

Hock holds a distrust of authority. Before he worked at the Seattle bank where he would soon become chairman of the Hock Committee to oversee the development of Visa, he turned down three jobs in finance,

each time raging that the hierarchical, rule-following, control-everything organizations were stifling creativity and initiative at the grassroots — and in the process, making the company too rigid to respond to new challenges and opportunities.

Command-and-control organizations, Hock says in the Fast Company article, “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.” The Visa bylaws he drafted encouraged member banks to innovate and even compete with Visa.

“Members are free to create, price, market, and service their own products under the Visa name,” Hock said. “At the same time, in a narrow band of activity essential to the success of the whole, they engage in the most intense cooperation.” Hock saw himself as solving two problems faced at the organizational level: power and complexity.

“It was beyond the power of reason to design an organization to deal with such complexity, and beyond the reach of the imagination to perceive all the conditions it would encounter,” he said. “The organization had to be based on biological concepts to evolve, in effect, to invent and organize itself.” He explained some of the inspirations behind the Visa model.

“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,” the well-read leader once said. “But it’s none of them. Like the body, the brain, and the biosphere, it’s largely self-organizing.”

In may 1984, a 55-year-old Hock left Visa and disappeared. He later explained his thinking in his acceptance speech as a laureate of the Business Hall of Fame: “Through the years, I have greatly feared and sought to keep at bay the four beasts that inevitably devour their keeper — Ego, Envy, Avarice, and Ambition. In 1984, I severed all connections with business for a life of isolation and anonymity, convinced I was making a great bargain by trading money for time, position for liberty, and ego for contentment — that the beasts were securely caged.” An old partner and friend of Hock recalls his philosophy

“He really means you to blow up the whole organization. He really wants you to dissolve the power relationships — everything,” according to MIT’s Peter Senge. Senge recalls the way in which Hock once addressed a room of CEOs. While explaining his ideas, the CEOs rejoiced, thinking they had found the secret to a functional organization.

“Great! This is how to create a learning organization that can grow at 20% per year! He’s found the keys to the kingdom!,” the CEOS thought. Until Hock finished, that was. There was one problem for the CEOs in Hock’s model.

You’ll never be able to justify paying a CEO $1 million a year to run this kind of corporation, Hock said.

“You could almost see the excitement ebbing,” Senge told FastCompany.

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