An Interview with Dee Hock
by Chad Hall

Recently, Chad Hall conducted an interview with Dee Hock, author of Birth of the Chaordic Age and founder of VISA International. In this exclusive interview, Dee shares with readers what leadership will look like in Chaordic organizations.

Dee Hock is the founder and CEO Emeritus of VISA International. In his recent book, Birth of the Chaordic Age, Hock argues that the success of VISA (22,000 member banks, 750 million customers, and $1.25 trillion in annual transactions) stems from its chaordic structure. "Chaordic" is a combination of two words: chaos and order. Hock coined the term to describe any organization, system or business that is "self-organizing, self-governing, adaptive, nonlinear, and complex, and which harmoniously combines the characteristics of both chaos and order." At its core, VISA is chaordic. While other credit card companies are owned by one company or by a few banks, VISA is owned by the thousands of banks who are also its customers. All of these banks simultaneously cooperate (honoring cards assigned by other banks, and maintaining the VISA system of exchange) and compete (offering rival interest rates, fees, and restrictions in order to woo business from the other banks). The heart of what drives VISA's success is that it blends chaos with order.

Leaders will enjoy Birth of the Chaordic Age for its insight into how successful organizations of today must differ from yesterday's mechanistic and hierarchical systems. In the following excerpts, Dee talks candidly about the changes that have brought about the chaordic age, the traits needed for leaders of chaordic organizations, and how the chaordic approach differs from previous concepts of organization and success.

Excerpts from the Interview

CH:Dee, the title of your book implies that the chaordic age is just now being birthed. Why is that? What changes in society have enabled this birth?

Dee: At the basic level, it has been the collapse of float — the compression of time and events. Thirty years ago a check might take weeks to find its way through the banking system. We called it float. Today, everyone is aware of the speed and volatility with which money moves around the world and its profound effects. However, we ignore vastly more important reductions of float.

Consider information float. It took centuries for information about the smelting of ore to cross a single continent and bring about the Iron Age. When man stepped onto the moon, it was known and seen in every corner of the world 1.4 seconds later.

Consider technological float. It took centuries for one of the first bits of technology, the wheel, to gain universal acceptance. Today, countless microchip devices sweep around the globe like the light of the sun into instant use.

Consider cultural float. Throughout history, it took centuries for the habits of one culture to materially affect another. Now, that which becomes popular in one country can sweep through others within months.

Consider space float. In a bit more than a lifetime we went from the speed of the horse to interstellar travel. People and material now move in minutes where they used to move in months, and to places they could never have moved before.

It even extends to life float. The first life forms appeared about five billion years ago. The tiny step to the first nucleated cell took about 2.2 billion years; then, in only one billion years, the first simple vertebrate appeared; then in a half billion years fish, reptiles and forests; then, in only 200 million years dinosaurs and primitive birds; then in 100 million years complex mammals, each major leap in diversity and complexity occurred in half the time required for the former. With the advent of genetic engineering the time required for the evolution of new species may literally collapse.

Think of all this as the disappearance of change float--the time between what was and what is going to be--between past and future. Today, everything is accelerating change, with one incredibly important exception. There has been no loss of institutional float. Although their size and power have increased, there has been virtually no new idea of organization since the concepts of university, corporation and nation-state emerged. The newest is more than three centuries old.

People think of this as movement from the industrial age to the information age. The industrial age was really the age of machine-crafting, which is primarily an extension of muscle. Information is the raw material of the mind, which means that it's really the age of mind-crafting. You can also tie that to an amazing transformation -- a complete switch in less than a half century from a time when the value of the physical content of all goods and services was more than ninety percent to a time when the value of the mental content of all goods and services will be more than ninety percent. We're experiencing radically different, ever changing societal diversity and complexity and trying to manage it with archaic, seventeenth century concepts of organization and management. It demands extraordinarily different concepts of organizations, management and societal structures.

I call it this new age chaordic because it will be immensely complex and chaotic, but also requires cohesion and coherence, or order. What we have always thought of as opposites, such as competition and cooperation, will now have to be seamlessly blended. This doesn't mean that our present concepts of organization are bad and should be destroyed. It means that they are no longer relevant and must be transformed. They've brought us to a point which has given us the intelligence and the informational power to move to the next step. I see this not as a great destruction and reconstruction, but a transcending and unfolding--an evolution, not a revolution.

CH: Let's think about the leaders of chaordic organizations. What are the leaders of such organizations going to look like?

Dee:Their consciousness and behavior will be very different. They will find it impossible to organize a hierarchical structure that's capable of externally regulating individual behavior, so they're going to have to induce, not compel, desired behavior. In the industrial age, which can also be thought of as the age of the manager. Management was and still is taught primarily as methods for reducing all diversity and complexity to uniform, controlled processes endlessly repeated with ever increasing efficiency — that is how to make subordinate people behave as cogs and wheels in a mechanistic, predictable, mathematically measurable manner -- techniques of designing and compelling behavior – rules, regulations, procedures, processes. In the chaordic age, leadership will be enormously distributive. The old idea of thinking of leaders as superior people at the top dominating inferior people at the bottom will change. Everyone will have to simultaneously lead and follow. And that takes a whole new concept of what leadership means.

A perfect illustration of this is the military. Today, a modern tank is really a mobile, metal box filled with computers. A major engagement between 25 tanks at first sighting miles apart will be over in less than fifteen minutes. Life or death in an air engagement is determined in a tenth that time. And hundreds or thousands of such events are moving at lightning speed. There is not time no time to call the boss and ask directions or follow the procedures in the manual. The military has the problem of how to make every tank commander, literally every soldier, a leader while knitting them together so that they have cohesion, coherence and commitment in pursuit of a complex objective. You're sure not going to go with the old command-and-control structure.
In the book I write extensively about the necessity of for all people to lead themselves, then lead their superiors, then lead their peers, then hire, teach and motivate their people to do the same, because they are the ones who will have the minute-to-minute knowledge of what's happening. This is what I call managing in, up, around, then down. But the word management then becomes meaningless because you cannot command yourself, your superiors or your peers, you only can lead them. We'll see the emergence of a distributive kind of leadership in which every individual in an organization is simultaneously leading and following, depending on the issue and the situation from moment to moment.

CH: In this kind of organization, help me see the distinction between participants. What will differentiate leaders from followers in the more general sense?

Dee: There will be distinctions in the functions they have and the roles they play. It won't do away with hierarchy totally, but the principal leader will be the person who most exemplifies the kind of organization and behavior required who is best able to create the conditions such organizations require. What will become compellingly important is absolute clarity of shared purpose and set of principles of conduct sort of institutional genetic code that every member of the organization understands in a common way, and with deep conviction. And that means that they're going to have to be involved in determining what the purpose and principles that bind them together are. Any set of beliefs that comes to you externally you're inclined, perhaps even obliged, to distrust. It will be that clear sense of direction the purpose and principles to which everyone is committed -- that will induce them to act with freedom and autonomy within a structure where they can be trusted by, and trust others are to do the same, not in a uniform way, but with coherence, cohesion and commitment. This is going to require major individual and societal cultural transformation. Nothing less will do.

CH: What are some steps that leaders can take to help that transformation take place in the organizations they lead?

Dee: In the sense I'm talking about, leadership includes everyone. They should develop a deep, profound awareness of what's really happening in society. They should understand and question in the deepest sense their internal model of reality with respect to organizations and leadership, the degree to which it is based on the old Newtonian/Cartesian machine metaphor, and be willing to question its validity in the emerging new order of things. They have to develop and immerse themselves in a network of people who are moving in this direction, which is not likely to happen solely within their own organization. They should understand that it will be a profoundly disturbing, often counterintuitive process that has no presently known end. What we're talking about is a continuing process of transformational questioning and learning. They should realize that they are free to do it right now. It doesn't require anyone's permission to lead yourself, lead your superiors, lead your peers and be willing to be led by you're mislabeled subordinates. Everyone is free to do it right now!

If you're in such a position of power and your ego is such that this is not possible, then its essential to have a small cadre of very bright, committed people who are questioning, exploring and understanding these emerging concepts. They must have enough freedom, financing, and protection within the old structure to keep from being killed off. Any organization today that hasn't got this sort of internal effort -- or "skunkworks" -- underway is extremely unwise.

But I must add a caution. It would be a very imprudent company or organization that tried to blow its old structure up and to supplant it with one that's chaordic. There may be a few organizations that are at that point, but not many. The prudent course is to make an investment in learning, testing and understanding, determine how the new concepts compare to how you now operate and thoughtfully determine how they apply to what you want to achieve in the future.

Another caution: people tend to believe I am arguing against command-and-control. Not at all. I've just had cataract surgery, and the last thing I wanted was a chaordic operating room. Nor would I think of trying to produce a silicon chip without a controlled environment, or conduct many scientific experiments. Command and control has it place within any organization. But it's an increasingly irrelevant and destructive way to run any complex, adaptive organization, institution or society.

CH:So is one of the primary roles of leaders to understand when chaos is needed and when order is needed and how to combine the two of them?

Dee: Exactly. The leader will have to exemplify that in every conceivable way. The primary leaders will have to relish and release the chaos of talent, drive, values, and passion that every person possesses, then create the conditions by which they can self organize in an orderly way so that both individual and organization can evolve and succeed at a very deep level. Any leader worthy of the name must develop the wisdom and capacity to create the conditions by which organizations can come into harmony with the human spirit and biosphere. If they don't the three questions which have dominated my life will never be answered.

Ask yourself:
Why are or organizations, everywhere, political, economic and social, increasingly unable to manage their affairs?
Why are individuals, everywhere, increasingly in conflict with and alienated from the organizations of which they are part?
Why are society and the biosphere increasingly in disarray?

That is what my book, Birth of The Chaordic Age, is all about.

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Questions for leadership reflection:

1. Identify two or three specific realities in how your current organization operates. How are these helping or harming the organization's ability to achieve its stated purpose?
2. What must you, as a leader, be willing to give up and give away in order for your organization to be more chaordic?
3. Who are three persons with whom you could network to discuss these concepts and begin implementing them in your life and work?
4. Who in your organization could begin to form an 'internal skunk works' and how could you support such a movement? What barriers would have to be removed?

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