Ready or not, the millennium is coming. Will your organization look like chaos? Dee Hock - thinker, rancher, organizational visionary, founder and CEO Emeritus of VISA - hopes so.
Wait. Don't turn the page. The chaos Hock would like to see is not the collapse that he believes threatens organizations today, but the complex, unpredictable, and eminently orderly disorder that mystics for centuries (and scientists fairly recently) recognize as nature's way.
But first, a brief tutorial on chaos theory: Chaos, as science refers to it, is a revolution in our understanding of the way the world works. Its revelations have overturned Newton's law-abiding universe and replaced it with a world of infinite complexity, in which everything is connected in a vast and ever-evolving web.
One of the first connections chaos made was among the disciplines of science. Traditionally, mathematicians and physicists, not to mention mystics, had little to say to each other. They worked within the sacrosanct walls of their own intellectual castles, guns on the turrets aimed at the contrary opinions of others.
In the 1960s, however, certain meteorologists, mathematicians, physicists, and biologists began to find, and gradually exchange, undeniable evidence that caused them a range of chagrin, excitement, awe, and even anger. Nature can't behave in the way they were seeing, could it?
According to their experiments, nature's behavior seemed unpredictable, forming random and complex patterns described by equations that would not resolve into straight lines but that bifurcated at odd points and had their way with preconceived notions. Clouds. Lightning. Bubbles at the foot of a waterfall. Weather. Population. Those last bastions of nature's secrets finally, under scientists' insistent probing, yielded a shocking truth: Mother Nature is erratic. Not at all what science since the Middle Ages has wished her to be: a rational and eminently orderly extrapolation of the human mind. Not at all what Descartes declared she was: spiritless matter whose whole could be grasped by analysis of her parts. Not even what Newton assured us she was: a well-behaved machine set in motion by God and driven by laws that, if we just found them all, would deliver her to our control.
No. Our sun may rise daily, but nature does not run like dockwork. Nor is nature a summary of physical parts. Nature is complexity itself: chaos.
The paradox of chaos
Chaos. The word is deceptive. The band of baffled, chagrined, disbelieving, and sometimes almost evangelical scientists that first recognized it had a hard time settling on a name, for there was a paradox involved. At the edge of chaos, on a very narrow band, lives a kind of sublime order.
Picture a snowflake: a bit of moisture drifting to the ground and crystallizing into a unique, unrepeatable form distinct from every other snowflake. Yet, a snowflake is always recognizable. We see one and know right away what it is. Order in chaos, chaos in order.
Dee Hock, who works to bring organizations into harmony with nature and life, resolves the paradox linguistically and philosophically by joining the opposites and by calling the situation and organizational model he draws from it, "chaordic."
What does a chaordic system look like? I ask Hock, knowing that he won't describe a traditional organizational pattern. Still, I'm surprised when he says, "Look out the window!" with a sweeping gesture past the serene stacks in his library toward the tangled hillside beyond.
"Show me the chairman of the board of the forest," he says. "Show me the chief financial fish of the pond. Show me (tapping his head) the chief executive neuron of the brain!"
"In chaordic systems," Hock says with enthusiasm and wonder, "order emerges. Structure evolves. Life is recognizable pattern within infinite diversity."
Keep thinking about snowflakes. Patterned idiosyncratically by the turbulence through which they drift, snowflakes and other chaordic organizations exhibit what scientists call, "sensitive dependence on initial conditions." That means that unlike the linear idea of cause and effect - which you can visualize as a set of falling dominoes - in a chaordic system, a tiny change early on can create vast and unpredictable changes down the road - a road never straight but endlessly branching, like the pattern of a ganglion or lightning across a western sky.
"If it is truly chaordic," Hock says, "it won't look like anything else. But there will be a pattern you can recognize, coherence and cohesion within infinite diversity. Nature has never repeated a single human being, yet we know one when we see one."
Stirrups, computers, and Newton's apple
Organizations, snowflakes, human beings. Can we really compare societal structures to principles observed in science? We not only can, says Hock, but we must. The very idea of organizations must change and be brought into harmony with what we now know of the world, if the future we hope for is to emerge. The study of chaos offers a map.
Unlike quantum physics, which deals with submolecular happenings, chaos (or complexity theory, as it is also called) offers metaphors that are readily applicable to the human scale. Nobel Laureate Ilya Prigogene observes in his book, Order Out of Chaos, that human societies, like chaos models, are immensely complex systems highly susceptible to fluctuations. Witness the variety of cultures that have evolved in the short span of human history.
Technical advances (fluctuations) have changed the course of history in countless unpredictable ways. Think of the invention of the stirrup in the 11th century. That simple device enabled William the Conqueror's mounted knights to stand in their saddles, huff their lances, and devastate Saxon foot soldiers - winning the Battle of Hastings, delivering England to the Normans, and revolutionizing the way battles and horse raising (bigger horses were needed to carry the knights) were done.
Or, if you prefer, look closer to home. Think of the little computer screen glowing on your desk. Try to remember what life was like before it or what it would be like without it. The phrase "complex and highly sensitive to fluctuations" means that a small invention can alter a nation or revolutionize the way a society works.
That reassures us: Individual activities make a difference. "On the other hand," says Prigogene, "our universe (the security of stable, permanent rules) seems gone forever." That security and the mechanical model on which it rests have been with us since Newton's apple fell. They were created by two things: Descartes's rational method of inquiry that severed mind from matter with the decisiveness of a guillotine and Newton's laws of motion, which reduced the universe to a divinely managed, law-abiding machine.
Newton's certainty in a mechanically predictable universe - pull this lever here, get that result there - revolutionized the world and married the Scientific Revolution to the Industrial Revolution. Newton's certainty is like the certainty of the blind men in a well-known fable: Each tries to describe an elephant by grasping a different part. The blind man that feels the trunk describes the elephant as a flexible tube. Not wrong, just incomplete. Newton's certainty was hailed in the 1600s by scientists hungry to control their world.
"Where does the compulsion to control come from?" Hock wonders. "Let's pretend that I can take my desire for control and develop it to the ultimate. What would that mean? I'd have to know every event that ever happened in the past and everything that could possibly happen in the future. I would have to know every possible past and future thought. Emotion would have to go, along with desire, hope, love, and hate. If I [were to] reach that state of total and complete control, what would it be like?"
(Imagine generals pointing bug-eyed at their maps, faces contorted over chess boards, sweating.) Says Hock in disgust, "I'd be dead! Life is mystery. And uncertainty. To wish absolute control is to wish you were not alive." That thought hangs in the quiet air as he repeats, "At bottom, desire for control is a death wish."
Newtonian structures, the musty smell of which any of us can recall if we've ever tangled with a bureaucracy, require a vast hierarchy exerting ever-more control and using evermore resources to keep the antiquated behemoth alive. "The important thing to remember," says Hock (reflecting on what he calls the Age of Management that Newton's assumptions ushered in) "is not that we became a society of expert managers but that the nature of our expertise became the management of constants, uniformity, and efficiency while our need has become the coordination of variability, complexity, and effectiveness - the very process of change itself."
Organizations 'r us
Think about change for a moment. There is a natural interval between invention and its assimilation into society, which Hock calls float, a term from his banking days that refers to the time that can be used to advantage in which a check makes its way through the system. Now, whether in banking or in information, float has shrunk to nanoseconds. Life speeds in fast-forward; innovation and change chase each other into one continual digital blur. Change is not going to happen, nor is it likely to happen. Change is the very nature of what is happening.
"What has not changed," laments Hock, "is the mechanistic, hierarchical, command-and-control idea of organization that originated with Newton, Descartes, and the Industrial Age. That concept of organization," says Hock (not to mention the world view that spawned it), "is not only increasingly archaic and irrelevant, but it's also antithetical to the human spirit and destructive to the biosphere. It has become a public menace."
Examples are all around us: the extinction of species, loss of forests, global pollution, global warming, genocide...genocide? According to a recent New Yorker article, it was the hierarchical structure of government - the "intricate pyramidal pecking order of coercion and obedience refined by the old feudal, colonial order and re-tooled under the post-independence Hutu dictatorships" - that created, in the author's chilling phrase, "an engine of genocide" in Rwanda.
Our organizations are us. Our organizations and behaviors reflect the way we see the world. If you believed that the Earth is flat, would you set off on an ocean voyage? If, as the Newtonian system describes, cause and effect can be traced neatly in a linear chain and everything is controllable from the top down, then hierarchical organizations are the way to go. But if instead of a straight line, the organizing pattern of the universe is revealed to be an ever-complexifying web of bifurcations and connections, then how do you behave? Who's in control?
Picture a line of boxcars. If you take out the engine, what happens to the train? Now picture a flock of birds. Which bird would you shoot to destroy the "mind" of the flock?
A flock, in Hock's terms, is a chaordic system. In chaordic systems, hierarchical control is traded for dynamic possibility. The whole is greater than the sum of the parts. Every intelligence is an asset; every individual counts.
In Newtonian systems, hierarchy is preserved at the cost of flexibility and individuality. Compare Newtonian systems with chaordic systems: Machines break down; chaordic systems evolve. Machines dehumanize people; chaordic systems empower people. Machines are vulnerable and expensive to change; chaordic systems thrive on change. Machines cannot be retro-fitted to resemble chaordic systems; chaordic systems begin at the heart of the matter. There, at the heart of the matter, is where you will find Dee Hock.
The origin of a chaord
Around the time that mathematicians and physicists were tearing their hair out over unresolvable equations, a momentous change was brewing in the realm of business. In the late 1960s, an innovative, unconventional, and independent-minded vice president of a small bank in Seattle, was about to revolutionize the bank-card industry.
Hock, whose career up till then had been characterized by mold-breaking innovation leading to results and profits (followed, ironically, by attempts from higher-ups to force him back into the mold), was representing his bank at a meeting of Bank of America officials and its credit-card licensees. It was 1966, and the fledgling bank-card industry was in trouble. Ferocious competition, fraud, and massive losses were driving the industry under. After watching a range of unworkable solutions being argued back and forth, Hock suggested that the members consider creating "an orderly method of addressing all problems." Bank of America agreed, a committee was formed, and Hock, as he puts it, "was elbowed into the chair." VISA was not created overnight.
In the first six months, Hock's committee expanded into a complex of regional and national committees that invited the emergence of "organized information about the problems." The picture that emerged was grave: losses in hundreds of millions of dollars. Not only were the problems worse than anyone had thought, but also Hock saw that what was needed - a means of enabling lifelong, global, and electronic monetary exchange - was beyond the capability of any existing organization.
Says Hock, "All of the 'rees' now so popular - reorganizing, recapitalizing, reengineering, and reinventing - were the wrong 'rees.' They implied yet another version of that which [already] is. [Instead,] it was necessary to reconceive the very idea of bank, money, and credit cards. Once we did that, it became obvious we would have to reconceive the idea of [an] organization itself."
How does one "reconceive" the idea of an organization?
Before Hock tells the audiences of his management seminars how to go about that, he warns to be sure that they know what an organization really is.
"Think about your organization. What is its taste? Sweet? Sour? Don't know? How about its texture? Rough? Smooth?" At this juncture, audience members tend to stare with faces as pleasant and blank as stickers on a refrigerator door.
"Still don't know?" asks Hock. "That is because your institution has no reality, save in your mind and spirit. None whatever. It's a mental construct. It's a concept to which people and resources are drawn in pursuit of a common purpose."
He lets that sink in. "Every institution is nothing more than a manifestation of that ancient idea, community." (Nods of recognition.) "And if that is true, then the success of any organization has infinitely more to do with clarity of shared purpose and principles, and strength of belief in them, than it does with management practices or resources, important as they may be. Without the hearts and minds of people, all assets are just so much inert chemical and mineral material." (Smiles throughout the room.)
Shared purpose, by definition, is not something that can be imposed on people. It emerges; it evolves. And so, in 1966 Dee Hock, faced with a crippled bank-card industry, invited three other people to focus with him on a single question: If anything imaginable was possible, if there were no constraints whatever, what would be an ideal organization to create the world's premier system for the exchange of monetary value?
That was beyond what they could imagine and certainly beyond what they could engineer. But Hock, an original thinker whose interests range without boundaries from the classics to modern science, took his cue from the natural world. "After all," he says, "evolution routinely tossed off much more complex chaords with seeming ease." And so, he and his group began.
After much discussion, agreement emerged that the ideal organization should be based on biological concepts. It would have to evolve, in effect, to invent itself. It would have to balance competition and cooperation. What better model than nature?
Now, Hock would remind you, when you start to think of an organization in terms of biological metaphors, you must acknowledge the whole human being - body, mind, and spirit. Not the segregated entities of Newton's time, but the whole person, with emotions, intuitions, beliefs, and thoughts. When you bring all that to the table, an interesting thing happens: Discussions of change become value-based.
Over the next two years as values were dragged out and wrestled over slowly and painfully, some guiding principles emerged:
* "The organization must be equitably owned by all participants."
* "Power and function must be distributive to the maximum degree."
* "It must embrace diversity and change."
Eventually, those and other principles became a concept, and the concept became a structure. In 1970, the structure became an entity, and VISA, a nonstock, private, for-profit membership corporation, came into being.
The VISA story
VISA is part of the commerce of many people's lives. Since 1970, the company has grown 10,000 percent. Today, with a staff of about 3,000 in 21 offices on four continents, ViSA is a trillion-dollar business serving more than half a billion clients. Yet, as Hock loves to remind audiences, you don't know where it's located, how it's operated, who owns it, or where to buy its shares. That's because VISA is a new kind of organization - decentralized, nonhierarchical, evolving, self-organizing, and self-regulating. It's composed of 20,000 financial institutions operating in more than 200 countries and territories. Bound by no political, economic, social, or legal theory, its services reach across national and cultural boundaries. It is a chaordic system that thrives on a balanced diet of competition and cooperation - much more like a flock than a train.
Now, we see chaordic organizations everywhere, from patterns in nature to business. But in 1970, the idea was unique. Says Hock, "Virtually everyone thought it was technology that made VISA succeed. Or because it was in financial services. They didn't even see the significance of the organization - that its success was about a new way of creating relationships."
Hock smiles. "Think of it as social sculpturing."
He describes the structure: "Money and power should flow not up, as in hierarchical structures, but out to the most peripheral or smallest part, which then has commensurate responsibility to surrender back the minimum amount necessary to achieve common purpose."
Picture a root system and a fruiting tree.
Says Hock, "The whole heart and soul of VISA were in conceiving an organization on the basis of purpose and principle, and allowing the structure to evolve from them."
In less than 30 years, VISA evolved out of disaster into a large, successful business. But Hock doesn't seem satisfied.
"In 1969, I believed, and I believe today, that we were creating an archetype of institutions for the 21st century. But I don't think we got it more than 20 percent right." Hock is serious.
"The power inherent in that way of thinking about institutions is immensely greater than even the success of VISA would indicate. I've been working with these ideas most of my life, and I am barely beginning to understand them. I'd like to think we did the best we could, but I can now see so many flaws and failures along the way that I have a compelling sense we should have done better."
Hock's idols are the giants: Marcus Aurielius, Lao Tse, Francis Bacon, Thomas Jefferson, Gandhi, Goethe, Einstein, Shakespeare, Milton, and Montaigne. Hock works in the middle of his 5,000-volume library, shelves crowded with the writings and biographies of those great thinkers.
"Those people seemed able to put themselves into the future, to conceive of the world as it ought to be. They were able to bring that future into the present and live as though it were true. In a sense, their consciousness was a causative factor in creating the future."
You wonder if that's how Hock conceived of the chaordic organization of VISA. "I had a sense of direction," he says, "and an idea." Hock recalls the story of Einstein's response when asked how he conceived the theory of relativity. "Well," Einstein replied, "I thought deeply about how the universe ought to be organized, and so it was."
Order emerges not from decree, but from the depths of our beliefs and principles.
"We have to stop searching for some expert out there to solve our problems," says Hock. "Shakespeare said, 'First of all, to thine own self be true, and it follows as the night the day thou canst be false to no man.' Emerson used other words: 'Trust yourself, every heart vibrates to that iron string.'"
Hock's inside-out vision for the re-conceiving of organizations, founded on the absolute integrity of inner conviction, is consistent with the way he conducts his life and manages his organizations.
Listen as he talks to managers about management:
"I used to have sessions with my employees once a week. Anyone could come, and we'd talk about anything on their minds. They always wanted to talk about management. 'How do you do it?' 'What's the best way?' So, I would ask them, 'What is the single most fundamental responsibility of a manager?'
And I'd get a thousand different answers, all having one thing in common: They would be downward looking. They always had something to do with controlling those folks over whom they had power."
At this point, Hock's audiences usually smile expectantly: Isn't that what management is about?
"Dead wrong," says Hock, who waits for the confusion to settle in. "The first responsibility of anyone that purports to manage is to manage themselves." What?
Hock continues, "Their own integrity, their own knowledge, and their own ability, conduct, knowledge, ethics, and wisdom. Unless you do that, you're not fit for authority, no matter how much you acquire. You're not fit; you're dangerous. You're going to be destructive.
"And then I'd ask what the second responsibility is. And, boy, they'd think they were going to get those folks now. Dead wrong. The second responsibility is to manage your bosses. If they don't trust, respect, and support you, how are you possibly going to do anything with your people? Managing your staff is useless if you can't manage your boss.
"So, then I'd ask for the third responsibility of anyone who's a manager - downward looking again. So, I'd say, 'Dead wrong! Manage your peers, those over whom you have no authority and who have none over you. If you can't manage them, how are you going to do anything with your people?'
"Then I'd ask, 'What's the fourth responsibility?' And by then, everyone would be looking around. No one wanted to be wrong again. The fourth responsibility is to manage your staff."
Hock likes to test his audiences. "If you hire good people and teach them the theory and if they manage themselves, you, and their peers well and they hire good people and are willing to be well-managed by them, what do you have to do but recognize them, reward them, and get out of the way?" (Laughter, relief, and a few questioning looks.)
Hock responds to the unasked questions: How do you manage your boss? How do you manage your peers? He faces a sea of wide eyes with a calm smile.
"Well, the answer is incredibly simple. You can't. There's no way. You have no power over superiors and peers. But can you understand them? Can you motivate them? Excite them? Persuade them? Influence them? Set an example? Inform, forgive, and interest them? Disturb them? Of course you can. And eventually the word will emerge. Can you lead them? Absolutely."
Hock contends that there is nothing that can stop anyone from setting an example. He tells audiences, "The truth is that you were born a leader." (Raised eyebrows.)
"You think not? Then, one of you stand up and deny that you managed your parents." (Laughter.) "You were leading yourself, your superiors, and your peers from the day you were born until you were sent to school and taught to manage."
That's the paradoxical dance of a conversation with Dee Hock. You swoop along in the rightness of his vision, feeling euphoric because it's so obvious. Then, you suddenly let fall some comment, maybe pointing a finger here or pronouncing the blame there, and you trip over your big, Newtonian feet. "Ah ha!" he says, "Now, that's Newtonian!" And you know that your inner paradigm hasn't yet changed.
You're probably thinking, "That wouldn't happen to me. Why, I'm not Newtonian or mechanical." Oh no? Listen to Hock's samples of telltale Newtonian terms:
* out of sync
* shift gears
* turned on
* went ballistic.
Enough? Sound familiar? The mechanical metaphor lives in our language and drives our thoughts, and we're not going to change overnight.
Dee Hock knows that. Failure, he'll tell you, is an integral part of growth. No need to point fingers; no need to deify or demonize anyone. Just begin where you are. Just start. Imagine the world as it ought to be, and behave accordingly.
Four conditions, three chaordic groups
Hock left a flourishing VISA 13 years ago for a life of nature, family, and reflection on the VISA experience and the future of organizations. In 1994, he was sought by the Joyce Foundation, a philanthropic organization concerned about the prospects of institutional failure and inspired by the story of VISA. It asked Hock, "If anything imaginable were possible, if there were no constraints whatever, what would be required to catalyze chaordic institutional change throughout society to avoid massive institutional failure?"
Hock suggested four conditions that would have to be well underway within five years:
1. At least six extremely successful, new examples of chaordic organizations, similar to VISA and the Internet, would have to evolve, spanning such diverse areas as education, government, social services, and commerce to demonstrate universal applicability. Organizations ready and willing for such change must be sought and methods developed to help them through the process.
2. Sophisticated, four-dimensional physical models of such structures would have to be created so that people had the means to compare the new concepts with their existing organizations. The fourth dimension is the spiritual, ethical dimension. Additions to the physical models, computer models, would have to be created, collapsing time and graphically demonstrating how such institutions organize themselves and evolve and how, based on similar fundamental principles, they could link with new patterns for a peaceful, equitable, and constructive 21st-century society.
3. The models would have to be supported by an impeccable intellectual foundation. The economic scientific, political, historical, technical, and philosophical rationales for such organizations would have to be documented. Though a great deal of work has already been done, it's far from complete, and it lacks coherence and clarity. Nor have the necessary common language and metaphors evolved for massive dissemination and understanding.
4. A global organization would have to emerge whose sole purpose would be the development, dissemination, and implementation of new chaordic concepts of organization, linking in a vast web of shared learning, information, and ownership, as well as all people and institutions committed to institutional and societal reconception. The global organization must be organized on the chaordic principles it espouses and itself be one of the successful examples.
The Joyce Foundation asked whether, if it were to cover costs, Hock would contribute his time to investigate as freely and broadly as he liked whether the four conditions were possible and what might be required to set them in motion. At first, he refused. But thoughts of his seven grandchildren and the future that lay before them, should the present course continue, changed his mind.
After a year and a half traveling the world searching out people concerned and committed to change, Hock became convinced that there was at least a chance that the four conditions could be set in motion. He accepted the mission.
Fostering chaordic institutions is now Dee Hock's life work.' Since 1995, he has been talking, meeting, listening, and learning about the chaordic organizations that are beginning to emerge everywhere. He has founded the Chaordic Alliance to further his efforts. In a world hungry for life and purpose, Hock's ideas are increasingly in demand.
The groups that Hock has chosen to work with have gone through the same soul-searching process of discovering their purposes and principles that he and his associates went through at VISA. It's not easy. Three groups in particular have taken a year each to complete their statements of purpose and principles.
One group, the Northwest Atlantic Marine Alliance, is an unlikely union of fishermen, environmental lawyers, and academics drawn together by the impending collapse of local fish-eries. Each had vested, though different, interests in marine resources. Each was in cut-throat competition with the rest. To bring them together, much less elicit their deepest beliefs, was a feat in itself.
After months of arguments, tears, and table-pounding, NAMA has arrived at a statement of common purpose that is inspiring to everyone in its clarity and balance. A structural concept for a self-managing, community-based management system founded on those beliefs is nearly complete.
At the Massachusetts Institute of Technology, Peter Senge's group of highly evolved management specialists, the MIT Center for Organizational Learning, has been wrestling with the chaordic process for a year and a half. The group now has a solid statement of purpose and principles, and a new organizational concept based on its beliefs. It expects to bring its new organization into being this month.
A third group, the Appleseed Foundation, was founded by Ralph Nader and a group of Harvard law graduates to bring about needed change. The foundation has formed its purpose, principles, concept, and structure and brought into being its new organization.
After a group agrees on its purpose and principles, the actions of the organization grow continually and organically from the shared purpose. The result will be flexible, changeable, and viable with a core of integrity shared by each member - a community in balance with itself and its environment.
By now, you know that Hock is not talking about simple, surface, overnight change. This is a path, a way, a kind of evolution.
"I've been thinking about and implementing these ideas all of my life, and I'm just starting to learn about them." Hock notes that it will take a huge commitment of education and learning by people and institutions from top to bottom to bring this change into being.
"I think this is an emergent phenomenon," says Hock about chaordic groups. "I see it springing up everywhere."
This is no optimist with rose-colored glasses talking, but someone that sees the way of the future balanced on the "edge of a knife" and that could go either way.
"If the current epidemic of institutional failure continues," Hock warns, "we are quite likely to see a regression to even more dictatorial organizations in a blind effort to impose control - a modern Dark Age. But one thing is certain: It's far too late and things are far too bad for pessimism."
It is late, and the sun is raking over the dull winter green of Hock's Pacific hillside. There's not much time. Hock has miles to go and promises to keep, if he is to leave the kind of world he wants to leave for his seven grandchildren.
Bonnie Durrance is a freelance writer based in Bolinas, California. Phone 415/868-0326; e-mail BonnieBD@aol.com.
E-mail Dee Hock at chaordic @fog.net or phone the Chaordic Alliance at 415/712-5830.…