Dee Ward Hock Saw That Victory Was In The Cards

• Kirk Shinkle
• On 6:03 pm EST, Wednesday November 4, 2009

Dee Ward Hock wanted to change the way his company did business.

Along the way, Hock -- the founder and former CEO of Visa Inc. (NYSE:V - News) -- did much more: He created a legend in finance.

It started with a crisis. In the late 1960s, credit cards had gone national and the results weren't pretty. Banks were sending new cards to anyone and everyone, inviting fraud, hefty nonpayments and red ink in the tens of millions.

San Francisco-based Bank of America's BankAmericard was among the earliest national cards. In 1968, some 120 of its licensees met at a heated meeting in Columbus, Ohio. Licensees blamed the bank and other licensees for poor performance. The bank blamed them right back.

It went on like that for days. Sick of the infighting, bank officials called for a committee to offer solutions and make rules for the licensees.

In the crowd was Dee Hock, then a 38-year-old vice president of a small Seattle licensee. As tempers flared, he spotted an opportunity.

All For One

Hock suggested a systematic analysis of the company's problems. But he knew that a small group imposing rules would just make things worse. Instead, he wanted licensees to meet as they liked, letting them offer solutions as they arose.

His part would be designing the system to help their ideas along. Bank officials, eager to end the standoff, agreed.

Hock threw himself into the task. He spent nearly two years working with a committee of other licensees, developing a framework for a new kind of company. By mid-1970, he was CEO of a new organization -- National BankAmericard, which later became Visa International.

To give customers a brand they could identify with, Hock decreed that all Visa cards would look the same. To ease processing, members would share common back-office functions like clearing and billing.

The result was a company that evolved from the outside in, with changes coming as bankers tailored their products to thousands of new markets, technologies and nations.

Under Hock's leadership, Visa thrived. Its principles of self-organization attracted tens of thousands of members during his tenure.

His job was to fix credit cards. But early on he saw his true goal as fixing the way humans work together.

Hock developed a framework to spur improvement. He called it a "chaordic" organization. Combining chaos and order, Hock maintained that the organization would grow organically, resembling an ice crystal more than a rigid pyramid. Leaders would support individuals' creativity rather than dictate rules.

Employees, he believed, deserve to follow their own path, and a true leader must nurture this. "True leaders are those who epitomize the general sense of the community -- who symbolize, legitimize and strengthen behavior in accordance with the sense of the community -- who enable its shared purpose, values and beliefs to emerge and be transmitted," Hock wrote in his 1999 book, "Birth of the Chaordic Age."

Managing Oneself

To encourage good leadership, Hock outlined four responsibilities of any manager. And they didn't involve bossing around subordinates.

The most important -- and most difficult -- is managing oneself. Hock saw management as a moral responsibility -- "the first and paramount responsibility of anyone who purports to manage is to manage self: one's own integrity, character, ethics, knowledge, wisdom, temperament, words and acts."

Without those, he said, no one deserves the opportunity to lead.

Second came managing those in authority -- making sure the support of a boss is there to back up innovative thinking.

Third is managing your peers -- suppliers, competitors, customers and others whom you can't hire or fire, but can make the difference between success and failure.

Lastly came the traditional managing role.

By 1984, Visa was the undisputed leader of the credit card industry.

Hock, born in 1929 in Utah, walked away that year, spending nearly a decade reading and getting back to nature.

This story originally ran June 29, 2006, on Leaders & Success.

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