Canadians for
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Notes on Dee Hock's
Birth of the Chaordic Age


by Colin Stark
April 20th 2000

The following is the text of a broadcast e-mail sent out to Politicians, Managers, Journalists, Book reviewers, Bureaucrats, Activists, and Readers everywhere

"Leadership Best-Seller reads like a Thriller"

This book reads like a funny thriller, crammed with fresh insights, yet it contains more governance know-how, and more community than my 1970s MBA.
Hopefully Politicians, Managers, Journalists, Book reviewers, Bureaucrats, Activists, and Readers everywhere will read it, and sloooooooooowly absorb, adjust and evolve!

"Written by the founder of VISA, the largest business enterprise on earth, with 22,000 member institutions worldwide, 750 million customers, and $1.25 trillion in transactions annually. Visionary yet pragmatic ideas about the nature of money, information, organization, and community, and hope for a better future in an increasingly complex and troubled world."

The balance of this Review is extracts from: Amazon.com 5-STAR ***** Review at http://www.amazon.com/exec/obidos/ASIN/1576750744/qid=951969311/sr=1-1/002-2473715-9921830

and

Dee Hock's website at http://www.chaordic.org/

I hope you enjoy it as I have done

Colin Stark

************************

From http://www.chaordic.org/

Dee Hock skillfully weaves together the story of VISA with his own remarkable life story and visionary philosophy to describe a new form of organization he calls "chaordic".

Dee Hock's long-awaited book describing his personal, professional, and philosophical odyssey in creating the chaord know as Visa, and his subsequent decision to dedicate the rest of his life to pursuing the four objectives of The Chaordic Alliance, has finally reached store shelves. Staying true to the spirit of all chaords, Dee's book is not so much a "How To" manual as it is a "Why Not" call to action.

Publisher's Summary:

Written by the founder of VISA, the largest business enterprise on earth, with 22,000 member institutions worldwide, 750 million customers, and $1.25 trillion in transactions annually. Visionary yet pragmatic ideas about the nature of money, information, organization, and community, and hope for a better future in an increasingly complex and troubled world.

A rare commodity-a book by a corporate CEO actually written in its entirety by that CEO, with no ghostwriter. Dee Hock is a gifted and literate writer with a great story to tell.

Skillfully weaving together the story of how VISA International was conceived and founded with his own life story and a dose of visionary management philosophy, Hock shows that there is a clear need to reconceive long-held notions of institutional organization and offers a glimpse into the possibilities for the future. According to Hock, the bright light on the horizon is that the past few decades have seen the emergence of opportunities for complex groups to interconnect in ways that would have been difficult to imagine forty or fifty years ago. Showing that these new chaordic ways of organization are not just theoretical or utopian, Hock points out that they represent a way of thinking that has been demonstrated in groups that exist now, are successfully achieving their purpose, and give us exciting evidence of the possibilities.

*******

From: http://www.amazon.com/exec/obidos/ASIN/1576750744/qid=951969311/sr=1-1/002-2473715-9921830

Birth of the Chaordic Age ~ Dee W. Hock / Hardcover / Published 1999 Our Price: $19.57 Average Customer Review: 5 STAR *****

Editorial Reviews Amazon.com

Birth of the Chaordic Age is a compelling manifesto for the future, embedded within the intriguing story of a personal odyssey. An engaging narrator, Dee Hock is the man who first conceived of a global system for the electronic exchange of value, becoming the founder and CEO of VISA International. He looks critically at today's environment of command-and-control institutions and sees organizations that are falling apart, failing to achieve their own purposes let alone addressing the diversity and complexity of society as a whole. The solution, Hock claims, lies in transforming our notion of organization; in embracing the belief that the chaos of competition and the order of cooperation can and do coexist, succeed, even thrive; and in welcoming in the chaordic age.

The underlying tenets of Hock's ideas are well illustrated by the incredible story of the birth of VISA International, an organization formed on chaordic principles that now links in excess of 20,000 financial institutions, 14 million merchants, and 600 million consumers in 220 countries. Hock deplores an age where ingenuity and effort are wasted on circumventing the rules and regulations of insular, hierarchical bureaucracies. In a bold-type subtext interspersed throughout the book, he examines how this situation is stunting our potential as individuals and communities and contemplates what can be changed. This rumination is propelled onward by "Old Monkey Mind" (Hock's own thoughts). Though the technique allows the reader to engage in stimulating mental discovery along with the author, its New Age spiritual tone is sometimes a bit saccharine. His insights, however, are clear and provocative. In the Chaordic Age, he contends, "success will depend less on rote and more on reason; less on the authority of the few and more on the judgment of many; less on compulsion and more on motivation; less on external control of people and more on internal discipline." Hear, hear. --S. Ketchum

From Kirkus Reviews If only the world were more like VISA International, chaos and order would be in balance, and people would work happily together in communities based on ``shared purpose.'' At least, that's the utopian vision of Hock, founder and ``CEO emeritus'' of VISA International and head of a group called The Chaordic Alliance, advising mostly not-for-profits how to reorganize themselves in a new humanitarian way. Hock advocates an evolutionary system of social organization: Top-down control is out, and a... read more

Book Description In Birth of the Chaordic Age, Dee Hock argues that traditional organizational forms can no longer work because organizations have become too complex. Hock advocates a new organizational form that he calls "chaordic," or simultaneously chaotic and orderly. He credits the worldwide success of VISA to its chaordic structure: It is owned by its member banks, which both compete with each other for customers and cooperate by honoring one another's transactions across borders and currencies.

*******

From http://www.chaordic.org/chaordic/faq.html#Projects

What kind of leadership is needed to run a chaordic organization?

First, it is important to note that leadership tends to be distributed throughout a chaordic organization rather than concentrated in a management class. No single person or group of persons "runs" it in the way we're used to thinking. Participants largely manage their own affairs as they see fit. When collective action needs to be taken the decision-making process may be based on unanimous consent, on a "sense of the meeting", or perhaps on a majority vote. High value leadership skills may differ from place to place within the organization. So, the short answer is that every imaginable kind of leadership is needed to run a chaordic organization. It is never a one-person show.

That being said, we often gravitate to the old-fashioned definition of leadership, namely, "going first and showing the way." The people within a chaordic organization that take a lead worth following are likely to have company.

**

I don't see any widespread institutional failure. Command-and-control organizations seem as firmly in control as ever. Am I missing something?

No. When we talk about "failure", we don't only mean failure in the sense of collapse, such as the Soviet Union or corporate bankruptcy. That kind of failure usually makes the headlines. Rather, we are just as concerned about failure in its more common and pernicious form -- institutions increasingly unable to achieve the purpose for which they were created, yet continuing to expand as they devour our resources, demean the human spirit and destroy the environment. The symptoms of institutional failure are all around us: schools that can't teach, corporations that can't cooperate or compete--only consolidate, unhealthy health-care systems, communities in which people can't communicate, welfare systems in which few fare well, judicial systems without justice, governance that can't govern, and economies that can't economize.

***************

From: http://www.chaordic.org/chaordic/res_visa.html

The Visa Story

Bank of America launched its BankAmericard in the 1950s. In 1966, five other California banks counter-launched MasterCharge. Bank of America countered by franchising BankAmericard to small and mid-sized banks, and still other large US banks launched their own proprietary cards.

After two more years of hectic growth, the credit card industry was on the brink of collapse. Widespread fraud, severe operating problems, and cutthroat competitive practices led to massive losses for most issuing banks.

Dee Hock, then a young vice president of a Seattle bank that was a BankAmericard licensee, was asked to head a committee to look into the problems for that system. The problems, it turned out, were much deeper and wider than anyone realized. They were far beyond the ability of any existing organization to solve.

What Hock realized was that the problems could only be solved by reconceiving the concepts of bank, money and credit card. Money was rapidly becoming nothing more than electronic data. The "credit" card was a misleading name for what could become an indispensable device for exchanging monetary value. The exchange would need to be continual and global. No existing form of organization could do it. It would require a new way of thinking about organization.

Hock led a two-year consensus-building process, based on what would later be called chaordic principles, which resulted in the creation of an organization that would become Visa USA and then Visa International. This highly decentralized, collaborative organization had a unique structure.

In the legal sense, Visa is a non-stock, for-profit, membership corporation. In another sense, it is an inside out holding company in that it does not hold but is held by its functioning parts. The 23,000 financial institutions which create its products are, at one and the same time, its owners, its members, its customers, its subjects and its superiors. It exists as an integral part of the most highly regulated of industries, yet is not subject to any regulatory authority in the world.

It is an organizational chaord, the totality of which, excluding thousands of affiliated entities, would, if converted to a stock company, have an astronomical market value. Yet, it cannot be bought, traded, raided or sold, since ownership is held in the form of perpetual, non-transferable, membership rights. However, that portion of the business created by each member is owned solely by them, is reflected in their stock prices and can be sold to any other member or entity eligible for membership a very broad, active market.

VISA espouses no political, economic, social or legal theory, thus transcending language, custom, politics and culture to successfully connect institutions and peoples of every persuasion. It has gone through a number of wars and revolutions, the belligerents continuing to share common ownership and never ceasing reciprocal acceptance of cards, even though they were killing one another.

In less than five years, VISA transformed a troubled product with a minority market share into a dominant market share and the single most profitable consumer service in the financial services industry. At the same time it reduced more than 50% the cost of unsecured credit to individuals and merchant cost of handling payment instruments. It has had no less than twenty and as much as fifty percent compound annual growth for a quarter century, through the best and the worst of times.

It has multiple boards of directors within a single, legal entity, none of which can be considered superior or inferior, as each has irrevocable authority and autonomy over geographic or functional areas.

Its products are the most universally used and recognized in the world, yet the organization is so transparent its ultimate customers, most of its affiliates and some of its members do not know it exists or how it functions. At the same time, the core of the enterprise has no knowledge of, information about or authority over a vast number of the constituent parts. No part knows the whole, the whole does not know all the parts and none has any need to. The entirety is largely self-regulating.

A staff of around three thousand scattered in twenty-one offices in thirteen countries on four continents coordinates this trillion dollar business, providing product and systems development, global advertising, and around-the-clock operation of two global electronic communication systems with thousands of data centers communicating through nine million miles of fiber-optic cable. Those systems clear a greater number of electronic financial transactions in a week than the Federal Reserve wire system does in a year. Their capacity is 1,100 transactions per second at a cost of less than a penny each.

Despite Visa's incredible success and novel structure, Mr. Hock emphasizes that Visa is at best a flawed prototype of chaordic organization. Its history may be instructive, but it should not be viewed as a model. The next generation of efforts can and must be much better.

*************

http://www.chaordic.org/chaordic/news.html

In 1991, Mr. Hock became one of thirty living Laureates of the Business Hall of Fame for his many innovations in organization and management. In 1992, he was recognized as one of eight individuals who most changed the way people live in the past quarter century.

From http://www.chaordic.org/chaordic/res_read.html

Reading List

The Wholeness of Nature: Goethe's Way toward a Science of Conscious Participation in Nature Henri Bortoft Lindisfarne Press - 1996 - An excellent in depth exploration of different ways of perceiving science, nature and humankind.

The Web of Life: A New Scientific Understanding of Living Systems Fritjof Capra Doubleday - 1996 An accessible introduction to essential principles of ecology and living systems, with an aim to illuminating their implications for how we design sustainable communities.

Engines of Creation: The Coming Era of Nanotechnology K. Eric Drexler Anchor Books, Doubleday 1986 - A very good introduction to the technology which lies ahead. If read with the thought in mind of what this will mean to social, institutional and economic change, it will stretch the mind.

The Soul's Code: In Search of Character and Calling James Hillman Random House, Inc. - 1996 - A penetrating exploration of the wholeness of mind, body, spirit and soul, as opposed to the Newtonian/Cartesian concept that they are separate entities and that the self is separate from the world.

and several more!

***********************

The usual way to arrive here is from Bibliography

Notes on Daniel Yankelovich's
Coming to Public Judgment

March 9th 2000

By Daniel Yankelovich
1991, Syracuse University Press

Summary of Chapter 1 (page 11)

"The key to successful self-governance in our Age of Information is to create a new balance between public and experts. Today that relationship is badly skewed toward experts at the expense of the public. This out-of-balance condition is not the result of a power struggle (thought this is not wholly absent) but of a deep-rooted cultural trend that elevates the specialized knowledge of the expert to a place of high honor while denigrating the value of the public's potentially most important contribution -- a high level of thoughtful and responsible public judgement.

This prejudice is rooted in the dominant Culture of Technical Control, which on its positive side has made science, the benefits of modern technology, political freedom, and democracy possible. Yet, even with these impressive accomplishments, a serious difficulty exists.

The Culture of Technical Control saps the national will to confront the obstacles in the way of strengthening the quality of public judgement indispensable to self-governance and consensus-building. For democracy to flourish, it is not enough to get out the vote. We need better public judgement, and we need to know how to cultivate it.

The public is not magically endowed with good judgement. Good judgement is something that must be worked at all the time and with great skill and effort. It does not exist automatically; it must be created. Creating more and better public judgement is what this book is about.


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