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Rival banks, one shared brand
The association model
Bankers are by nature risk averse and care a great deal about their reputation. Hock understood that psychology better than anyone in his era. In an association, every bank competes with the others on its own while the whole group wins the Visa brand, so everyone saves face and still takes credit. Which bank outcompeted which hardly mattered.
Chaos and order
Hock held that the best expression of humans lies at the intersection of chaos and order. Too orderly and nothing new appears. Too chaotic and people stop communicating and everything breaks. To him the model was what made Visa work, and people missed that.
A simple version
He considered Visa a failure, because he only got to release the simple version of what he wanted, which was payments. What he had in mind looked like blockchains and smart contracts today, and he was probably 60 years ahead of his time.
How did Visa begin?
Bank of America launched BankAmericard in Fresno, California, in 1958 and began licensing it to other banks in 1966. Disputes among the licensee banks led to the creation in 1970 of National BankAmericard Inc., a membership organization that Dee Hock led. It was renamed Visa in 1976. Visa became a public company in 2008, ending the member-owned structure.
Why do card payments need a shared network?
Every card purchase involves a bank that issued the card and a bank that serves the merchant, and the two have to agree on how a payment is approved, settled, and disputed. A shared network supplies those common rules so any card works at any participating merchant. Visa's network moves transaction data between banks rather than issuing cards or lending money itself.
Where did Hock's word chaordic come from?
Hock coined the word chaordic by blending chaos and order. He used it to describe organizations that mix the two, with enough structure to function and enough freedom for new things to emerge. He explained the idea in his 1999 book Birth of the Chaordic Age, after leaving Visa in 1984.
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