One from Many

One from Many Plot Summary

Introduction

In the late 1960s, the American banking industry faced a crisis of unprecedented proportions. Millions of unsolicited credit cards flooded mailboxes across the nation, fraud ran rampant, and financial institutions were hemorrhaging money in what many considered banking's most spectacular failure. Yet from this chaos emerged one of the most revolutionary organizational innovations of the twentieth century—a system that would eventually process trillions of dollars in transactions annually while operating with minimal central control. This transformation challenged fundamental assumptions about how large organizations should function, pioneering concepts that would later influence network theory, complexity science, and digital-age business models. The story of this revolution reveals profound insights about organizational design that remain relevant today. How can competitors collaborate effectively while maintaining their independence? What alternatives exist to traditional command-and-control hierarchies? How might organizations function more like living systems than machines? These questions led to the development of a new organizational paradigm—one that balanced chaos and order, centralization and decentralization, cooperation and competition. For leaders, innovators, and anyone interested in how complex systems can self-organize without central control, this journey offers valuable lessons about creating adaptive organizations capable of thriving amid rapid technological and social change.

Chapter 1: Credit Card Chaos: The Banking Crisis of the Late 1960s

By 1968, the fledgling credit card industry was spiraling into disaster. What had begun as a promising innovation threatened to become banking's most spectacular failure. Banks across America, fearing they would miss the next big thing, had rushed headlong into the credit card business without adequate systems or understanding. The statistics were staggering—millions of unsolicited credit cards flooded mailboxes, many sent to people who had never requested them and some to individuals who weren't even bank customers. The operational problems were even more alarming than the financial ones. There was no electronic authorization system for transactions—everything was manual and paper-based. Merchants would call banks for authorization of larger purchases, and banks would call other banks, while customers waited impatiently. Sales drafts were physically transported between banks, often taking weeks to process. Back rooms filled with unprocessed transactions, customers went unbilled, and accounting systems collapsed under the volume. Industry losses mounted into tens of millions of dollars—an enormous sum for that era. Fraud became rampant as criminals quickly exploited the system's vulnerabilities. Counterfeit cards appeared in large numbers. Stolen cards were used extensively before being reported. Sham merchants deposited fraudulent sales drafts and disappeared with the money before complaints surfaced. Life Magazine captured the moment with a famous cover depicting banks as Icarus flying toward the sun on wings of plastic credit cards, about to plunge into a blood-red sea labeled "losses." The deeper problem was structural. The BankAmericard licensing program, created by Bank of America, had expanded rapidly but lacked effective coordination mechanisms. Each licensee bank operated independently, with minimal standardization and no effective means of resolving system-wide issues. The clearing system for transactions between banks was primitive and breaking down under the volume. Banks were simultaneously competitors and necessary collaborators, but had no framework for balancing these conflicting roles. This crisis created the perfect laboratory for emerging ideas about organizational design. The industry's problems weren't merely operational or financial—they were fundamentally organizational. The existing structures simply couldn't handle the complexity and interconnectedness of a nationwide payment system. What was needed wasn't just better management of the current system, but a completely new approach to how competing financial institutions could collaborate. The credit card chaos of the late 1960s would prove to be the catalyst for one of the most significant organizational innovations of the twentieth century. It created both the necessity and opportunity for radical rethinking of how financial institutions could collaborate while maintaining their independence—a challenge that would lead to revolutionary concepts in organizational design and governance.

Chapter 2: Principles Over Structure: Reimagining Financial Organizations (1969-1970)

In 1969, Dee Hock found himself unexpectedly leading a committee of licensee banks tasked with addressing the BankAmericard system's problems. Rather than simply patching the existing structure, Hock saw an opportunity to reimagine organizational design from first principles. This pivotal period marked the transition from theoretical questioning to practical innovation in how financial institutions could organize themselves. The breakthrough came during an intensive week-long retreat at the Altamira Hotel in Sausalito, California. After three frustrating days of arguing over conventional organizational structures, Hock proposed a radical shift in approach: "What if we quit arguing about the structure of a new institution and tried to think of it as having some sort of genetic code?" This biological metaphor opened entirely new possibilities. Instead of designing a rigid hierarchy, they would create a set of principles that could allow an organization to evolve organically. The group began exploring fundamental questions about organizational design. What if ownership took the form of membership rights rather than tradable stock? What if power was distributed rather than centralized? What if the organization could seamlessly blend cooperation and competition? These questions led to a set of principles that would become the foundation of a revolutionary organizational concept. Central to this new vision was the idea of "distributive governance"—ensuring that no individual, institution, or combination could dominate decisions. Power and function would be distributed, with no function performed by any part that could reasonably be performed by a more peripheral part. Hock's approach represented a fundamental departure from industrial-age organizational thinking. Traditional organizations were designed like machines, with interchangeable parts and clear lines of command and control. The new concept would be more like a living organism—adaptable, self-organizing, and capable of evolution. As Hock explained, "It was beyond the power of reason to design an organization" capable of coordinating a global network of financial transactions. Instead, they would create conditions that would allow such an organization to emerge. This principles-first approach represented a profound insight: in complex, rapidly changing environments, rigid structures quickly become obsolete, while principles can guide adaptation. By focusing on the organization's "genetic code" rather than its anatomy, Hock was creating something that could evolve with changing circumstances rather than requiring constant restructuring. The significance of this approach extended far beyond banking. Hock was pioneering what would later be recognized as a new paradigm of organizational design—one better suited to the information age than industrial-age hierarchies. The principles developed during this period would soon be tested in the challenging task of unifying hundreds of competing banks into a single coherent system. The success or failure of this experiment would determine whether principles-based organization could work in practice or would remain merely an interesting theoretical concept.

Chapter 3: From Competitors to Collaborators: Unifying Rival Banks

Transforming Hock's visionary principles into a functioning organization required overcoming seemingly insurmountable obstacles. The banking industry was notoriously conservative, fragmented, and competitive. The idea that hundreds of competing banks would voluntarily surrender autonomy to a new entity seemed impossible to most observers. Yet between 1970 and 1972, this improbable transformation occurred, creating what would eventually become one of the world's most successful financial organizations. The first major hurdle was securing Bank of America's support. As the owner of the BankAmericard system, they had little apparent incentive to relinquish control. When Hock and his committee presented their concept, Bank of America's initial response was predictably defensive. Ken Larkin, a senior vice president, insisted that "We invented the system! We own it! We produce 40 percent of the system volume!" and made clear they would not surrender control. Rather than accepting defeat, Hock secured a meeting with Sam Stewart, Bank of America's vice chairman. In a pivotal conversation, Hock took the considerable risk of telling Stewart directly that the bank's position was mistaken. After careful consideration, Stewart made a surprising decision: "We've thought very carefully about what you said and have come to the conclusion that, in the main, it is right." With Bank of America's support secured, Hock faced the even greater challenge of persuading hundreds of licensee banks to join the new organization. He orchestrated a masterful campaign, first securing the commitment of thirteen influential bank CEOs who formed an executive officers organizing committee. These leaders then hosted regional meetings where Hock could present the concept to other banks. The membership agreement Hock designed was revolutionary in its simplicity. Each bank would sign an identical brief agreement acknowledging receipt of the organizational documents and committing to abide by them "as they now exist or are hereafter modified." Hock's approach to securing membership demonstrated his deep understanding of human psychology and organizational dynamics. Rather than using coercion or manipulation, he relied on transparency, principle, and peer influence. As banks saw respected competitors joining, momentum built. His relentless personal outreach—working from early morning until late night, calling bank after bank—was crucial to the effort's success. The most remarkable aspect of this phase was the transformation from impossibility to inevitability. As Hock later recalled, "Two days before the deadline, I made the call I had dreamed of"—informing the final holdout bank that they were the only one not yet committed. Within hours, they too joined, creating unanimous participation in what would become National BankAmericard Inc. (NBI). This achievement represented more than organizational restructuring—it was a profound shift in how competing entities could collaborate. Hock had created a new model of organization that preserved the independence of its members while enabling unprecedented cooperation. He had demonstrated that with the right principles and structure, competitors could voluntarily unite to solve problems beyond the capacity of any individual organization. The formation of NBI in 1970 marked only the beginning of Hock's organizational innovation. The principles he established would soon be tested on a global scale.

Chapter 4: Beyond Borders: Creating a Global Financial Network (1972-1974)

By the early 1970s, the newly formed National BankAmericard Inc. had successfully stabilized the domestic credit card system in the United States. However, the international landscape presented even greater challenges. The Bank of America Service Corporation continued to license banks in other countries, each with different marketing approaches, computer systems, operations, and even different names for essentially the same product. What was known as BankAmericard in the United States was called Sumitomo Card in Japan, Barclaycard in the United Kingdom, Chargex in Canada, and Bancomer in Mexico. This fragmentation led to even more complex problems than those experienced in the United States, complicated by the diversity of languages, currencies, cultures, and legal systems. International licensees, influenced by the formation of NBI, attempted to create their own international organization but failed. In late 1972, they requested that NBI management lead a second effort to form a worldwide organization. The task was daunting—a global organization would need to transcend diverse languages, cultures, currencies, customs, legal systems, and political traditions. It would involve thousands of banks scattered around the world, as well as national consortiums in various countries. The NBI board took an extraordinary step by authorizing management to act as an organizing agent with freedom and obligation to act in the best interests of all parties worldwide. This began two years of simultaneous service as both the president of NBI and as an independent organizing agent for international licensees. Regional committees were formed with representatives from Europe-Mideast-Africa, Asia-Pacific, Latin America, and North America, bringing together countries with long histories of commercial, ethnic, and cultural conflicts. The international organizing process revealed fascinating patterns of human behavior. When discussing others, participants rarely referred to people by name, instead classifying individuals by nationality, race, or religious background. There was reluctance to deal with others as individual human beings and even greater reluctance to reveal oneself as one. The organizers worked patiently to change this dynamic, gradually shifting the language and building trust. Nine months into the effort, progress slowed considerably as some committee members appeared to be working against the formation of a new international organization. Rather than confronting suspected saboteurs directly, the organizers took a bold step by announcing their withdrawal as organizing agents, creating a crisis that ultimately led to a recommitment to the process. The breakthrough came during a meeting in San Francisco where the committee members were given cufflinks with a Latin phrase that translated to "The will to succeed, the grace to compromise." This symbolic gesture helped transcend the remaining differences, leading to the formation of Ibanco (later renamed Visa International). The organization's architectural principles were revolutionary—it would have multiple boards of directors within a single legal entity, none superior or inferior, each with irrevocable authority over geographic or functional areas. This structure acknowledged that no single governance model could appropriately address the diverse needs of global markets. By 1974, what had begun as a fragmented collection of national licensing agreements had evolved into a truly global organization capable of coordinating financial transactions across borders while respecting local autonomy. This achievement demonstrated that organizational principles developed for the American market could be successfully adapted to the far more complex international environment.

Chapter 5: The Electronic Transformation: Money Becomes Information

The final and perhaps most profound dimension of Visa's transformation concerned the nature of money itself. As electronic technology advanced through the 1970s and early 1980s, Dee Hock recognized that a fundamental shift was underway—one that would ultimately redefine financial systems and potentially reshape global economic structures. This period marked the transition from physical to electronic value exchange, creating the foundation for today's digital economy. Hock's insights began with a deceptively simple question: What is the essence of money? Through careful analysis, he realized that money had evolved from physical objects with intrinsic value (gold, silver) to symbols recorded on valueless metal and paper. With computers, it was becoming something even more abstract—"alphanumeric data in the form of arranged energy impulses." This transformation had revolutionary implications. "Money would move around the world at the speed of light at minuscule cost by infinitely diverse paths throughout the entire electromagnetic spectrum," Hock observed. This meant that traditional banking structures—built around the physical movement and storage of currency—would be fundamentally challenged. Hock recognized that credit cards were not primarily about credit at all—a misperception that had led many banks astray. Their essential function was to facilitate the exchange of value by identifying buyer to seller, guaranteeing payment, and originating and transferring value data. The extension of credit was merely an ancillary service. This insight allowed Visa to focus on building systems for the exchange of value rather than merely replicating traditional credit mechanisms. The practical manifestation of this vision came through the development of electronic authorization and clearing systems. When the banking industry was exploring options for electronic payment systems in the early 1970s, conventional wisdom held that competitive electronic authorization and clearing systems were not economically feasible. The American Bankers' Association recommended a monopolistic approach controlled by the Federal Reserve. Rejecting these centralized approaches, Visa's management believed that electronic communications should enable a highly decentralized, competitive business. The organization embarked on an ambitious project to build its own proprietary electronic system, despite having limited experience and few employees with the requisite skills. The initial attempt using traditional development approaches failed when cost and timeline estimates proved unacceptable. Rather than retreating, the team developed a completely different approach—becoming their own prime contractor and creating a self-organizing development process. The resulting system, called BASE 1 (Bank Authorization System Experimental), was completed on time, under budget, and exceeded all operating objectives. It forced the industry to abandon notions of natural monopoly and create competing systems. By the early 1990s, Visa's electronic systems were clearing more financial transactions in a week than the U.S. Federal Reserve System did in a year. Today, they process thousands of transactions per second, enabling commerce on a scale previously unimaginable. This transformation of money into electronic value represents one of the most significant economic developments of the past century, fundamentally changing how value is exchanged in the global economy and creating the foundation for today's digital financial systems.

Chapter 6: Self-Organization in Action: Challenging Command-and-Control Paradigms

The success of Visa demonstrated a new organizational paradigm that challenged conventional management wisdom of the 1970s and 1980s. Traditional organizations were structured as command-and-control hierarchies, but Visa operated as a "chaordic" entity—existing in the balance between chaos and order, where both competition and cooperation could flourish simultaneously. This represented a fundamental shift in organizational thinking that would eventually influence fields ranging from complexity theory to digital platform design. Visa was, in legal terms, a non-stock, for-profit membership corporation. But in another sense, it functioned as an "inside-out holding company" in that it did not hold but was held by its functioning parts. The financial institutions that created its products were simultaneously its owners, members, customers, subjects, and superiors. Though operating in a highly regulated industry, the core of the organization was not subject to regulatory authority since it made no loans, had no stock, and engaged in no external business. This unique structure created remarkable resilience and adaptability. The organization's approach to ownership was revolutionary. Ownership took the form of membership rights that could not be bought, sold, or traded—only acquired through participation. This prevented the organization from being "raided" or controlled by external financial interests. It also meant that while the system as a whole could not be bought, the business created by each member was owned solely by that company and reflected in its stock price—creating a unique blend of collective and individual ownership. Perhaps most significantly, Visa demonstrated the power of self-organization in practice. The BASE 1 electronic authorization system provided a compelling example. When traditional development approaches failed, the team created what became known as "The Dirty Coffee Cup System"—a wall-sized planning board with a coffee cup suspended on a string marking the current date. Tasks were written on scraps of paper with completion dates and responsible individuals. Anyone could modify the plan, provided they coordinated with others affected. As Hock described it: "Leaders spontaneously emerged and reemerged, none in control, but all in order. Ingenuity exploded. People astonished themselves at what they could accomplish and were amazed at the suppressed talents emerging in others." This approach extended beyond technical projects to the organization itself. A staff of less than five hundred scattered across more than a dozen countries coordinated a system that eventually processed trillions of dollars in transactions annually. The organization became incredibly robust because innovation occurred primarily at the periphery—in individual banks. Mistakes died quickly without affecting more than a single bank, while successes were swiftly emulated throughout the system. The core organization developed products and systems, created global advertising, and operated around-the-clock electronic communication systems, but had no power to require that any member issue or promote them—ensuring that central mistakes died as quickly as peripheral ones. Visa continued to function even through wars and revolutions, with belligerents continuing to share common ownership and reciprocal acceptance of products while their countries were in conflict. This demonstrated that given the right circumstances—clear purpose, sound principles, and the liberty to try—ordinary people could consistently accomplish extraordinary things. The chaordic concept proved that organizations could thrive without traditional command-and-control structures, creating a model that would influence organizational thinking for decades to come.

Summary

The evolution of Visa from competing banking systems to a global financial institution represents one of the most significant organizational innovations of the 20th century. Throughout this journey, we witness a fundamental tension between traditional command-and-control structures and emergent self-organization. The success of Visa demonstrated that organizations could thrive in the balance between chaos and order—what came to be called "chaordic" organizations—where both competition and cooperation flourish simultaneously. By establishing clear purpose and principles, then allowing participants the freedom to self-organize within those boundaries, Visa created a remarkably resilient system that could adapt to changing conditions without top-down direction. The lessons from this transformation remain profoundly relevant today. First, in environments of increasing complexity and rapid change, enabling self-organization around shared purpose may be more effective than attempting to control outcomes through hierarchical structures. Second, organizations can transcend traditional dichotomies—being simultaneously centralized and decentralized, cooperative and competitive, commercial and social. Finally, the most enduring organizations may be those that focus on creating the right conditions for emergence rather than designing rigid structures. As technology continues to accelerate change and increase interconnection, these insights offer a valuable template for creating organizations capable of thriving amid uncertainty while harnessing the full creative potential of their members.

About Author

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Dee Hock

Dee Ward Hock is the founder and former CEO of the Visa credit card association.More information: http://en.wikipedia.org/wiki/Dee_Hock

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