Magazine article The Futurist

A Philosophical Wallop

Magazine article The Futurist

A Philosophical Wallop

Article excerpt

VISA International was one of the first organizations to embrace "uncentralized" operations. Will it prove a good model for the Global Age before us?

This book is, first of all, VISA founder Dee Hock's true-life story--no less exciting because it is about banking and finance, no less readable because it packs such a philosophical wallop.

Thirty-two years ago, the credit-card business was a mess. Eager bankers, not thinking very hard about what it would mean to offer unsecured loans to all comers, found eager customers ready to oblige by borrowing beyond their means to buy from eager merchants. The Internet wasn't yet up and running, so the matching of merchants and consumers created a nightmare of ad hoc accounting. The proliferation of differing bank cards inflated, then devalued, this new symbolic money. Losses were uncountable, but guessed at "tens of millions of dollars, a huge sum for the time and for the size of the system."

In 1968, Dee Hock was an official of a local bank in the state of Washington, franchised by the Bank of America to issue its credit card. Through a series of improbable accidents, he helped invent and became chief executive of the system that would become VISA International. He built it from the outset as a deliberately uncentralized organization--for which he later coined the word chaord, a fusion of "chaos" and "order."

Three decades later, VISA is owned by 20,000 financial institutions. VISA's "products" (a complex of transactional procedures that people have learned to trust) are accepted by 15 million merchants in more than 200 countries, and are used by 750 million people to make 14 billion transactions a year worth $1.25 trillion--the world's largest block of consumer purchasing power.

The philosopher-executive who led this enormous global parade had no advanced education, either in business or in philosophy--though he was an avid reader. Fourteen years earlier, he had even sworn off using credit cards.

What qualified Dee Hock for the task, judging from this absorbing narrative, are two unusual propensities. One is a relish for doing what's never been done before. The other is a lifelong tendency to brood about why organizations of all kinds seem so dependent on "compelled behavior," which he considers "a disguised form of tyranny"--and thus put individuals, starting with himself, "increasingly in conflict with and alienated from the organizations of which they are a part."

In a charming departure from conventional storytelling, Hock suspends his narrative from time to time to analyze his own developing philosophy about organization and leadership. For the reader who wants to know not only what happened but why, these pauses do not interrupt--they clarify and deepen the story.

During one of these analytical pauses, Hock muses about accelerating change, which he calls "float." Float is a banker's word for the time it takes for money to move from one account to another. It used to take quite a while when gold bars moved by stagecoach. With today's instant transport and communication, the travel of money expressed as electronic symbols is measured in seconds. But you sometimes wait days or weeks for a check or a foreign exchange transaction to "clear," while some intermediary makes money on your money. …

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