Introduction: As the creator of the world's largest payment empire, how did Dee Hock use a chaotic yet organized structure to shatter the traditional authority he detested and build a truly invisible business empire?

Author: Jin Mei | Source: Lishi Business Review

In the vast universe of business, Visa, with its secretive yet vast presence, has quietly become one of the largest business organizations in the world.

Its transaction volume is ten times that of retail giant Walmart, and its market value is more than twice that of General Electric.

Visa's success lies not only in its scale but also in its almost invisible construction of a true invisible business empire.

The creator of all this is Dee Hock, who at 36 was still considered a "bullied little lamb" and was named one of the "Eight People Who Have Most Changed Our Lives in the Past 25 Years" by the influential Fortune magazine in the United States.

1

Founder of Visa

Born at the beginning of the Great Depression in 1929, Hock grew up in poverty in Utah. He worked various physically demanding jobs, and "Root, hog, or die" (dig, eat greedily, or die) was the cruel reality of that era.

Dee Hock was an insatiable seeker of knowledge, and his childhood was filled with curiosity and exploration of the world. His rich survival experiences filled him with love and awe for nature.

Although he obtained an associate degree, Hock was mostly self-taught. At 14, he forged his age to work at a cannery, and later worked as a dairy farmhand, loader, slaughterhouse worker, and farm pesticide sprayer.

His relatives said he was too rebellious and unlikely to succeed.

This self-taught financial innovator began his career at a consumer finance company in Los Angeles in 1951. There, he lived a life of being driven around and was even assigned to search for lost deposit slips in the garbage dump.

Doing meaningless work and being fooled, Hock detested the centralized power and bureaucratic hierarchy of the "Industrial Age mindset" where people were treated like cogs in a machine.

"We are in the midst of a global epidemic of institutional failure," Hock abhorred the bureaucracy infiltrated by "mediocrities."

An ambitious Hock began experimenting with his new system. Sure enough, his team's performance improved, but unexpectedly, he was fired. The bureaucratic system, unlike nature, does not operate on the principle of "survival of the fittest," and when certain individuals hold power, biases naturally arise.

Being fired made Hock even more averse to authority, but things soon got worse.

Before being fired, Hock had started using credit cards frequently, and his uncontrolled spending landed him in insurmountable debt. He and his wife experienced unprecedented financial pressure, with no savings to repay their debts. Hock had to take on multiple jobs.

He cut up his credit cards and vowed never to do it again.

The importance of a stable and low-risk credit system began to germinate in his mind.

In 1965, Hock moved to Seattle, where he struggled as a father of three children. He took a menial job at a national commercial bank, which made him miserable and even made him want to escape. Fortunately, he stayed...

In 1966, he was chosen by his boss to solve a major problem with the credit card system, and Hock seized the opportunity to turn his life around, transforming from a wounded lamb into a giant of the super credit empire.

"I have never met anyone with so much power." "We are all limited in our way of thinking, but he is not." These were the evaluations of his colleagues on Hock.

"One of the eight people who have most changed our lives in the past 25 years," this was the evaluation of him by an influential American magazine.

How did Hock complete his transformation?

2

Symphony of Payment Revolution

In 1958, Bank of America ushered in the era of credit cards.

In early 1966, Bank of America announced the licensing program for credit cards, and the credit card business began to grow exponentially.

However, credit cards at that time did not have magnetic strips, and merchants did not have electronic card readers. All settlement processes relied on paper checks, phones, punches, and other primitive methods. The sheer volume of users overwhelmed the credit card centers, causing misery for banks, merchants, and users alike.

Worse still, complex situations like merchant discounts and exchange rate fluctuations made even small credit transactions a hassle for amount issuance, settlement, and reconciliation. Unfair competition among banks, information delays, and loopholes in some rules also brought systemic risks, and fraud began to spread...

In 1968, credit card losses exceeded $10 million.

Hock was one of the members tasked with solving this problem. Having suffered from the system for over a decade, Hock had long detested the administrative management system. As he had envisioned, only by breaking the authority of banks standing between users and merchants and the "control-centric" order could these problems be solved.

Hock proposed establishing a non-stock company jointly owned by member banks, uniting these competing banks to weave an unprecedented payment network, a "disruptive dream."

Persuading 200 licensed banks and thousands of employees to join this organization was no easy feat, especially as his proposal met with fierce opposition from everyone present. But as a skilled debater, Hock persevered.

"Credit cards are just banking jargon that happen to take the form of cards, but they have nothing to do with money. The monopoly of traditional banks and state control over money will be broken." Hock's insight was visionary. "What we are really engaged in is the business of monetary value exchange."

He demonstrated how the current system was heading towards collapse and proposed his new vision—creating an open, natural system like nature, a "Chaordic Organization."

Hock envisioned an organization that was highly transparent, with multiple boards-like bodies having unchangeable authority and autonomy in their respective functional areas, but with no single organization overriding others. Like a carefully orchestrated symphony orchestra, each voice is heard, but no single voice dominates the entire movement.

In this new system, the organization is decentralized and autonomous, making it more flexible and adaptable. Anyone who meets the requirements can join the network, further expanding it.

All members, partners, and end-customers provide and receive services under common rules, ultimately forming a globally unified brand and payment system. It is like an ocean or ecosystem with strong self-regulatory capabilities.

Today, with an Internet mindset, we may not find this design novel, but over 50 years ago, in an era without the Internet, Hock was undoubtedly a forward-thinking explorer.

In 1970, after Hock's electronic authorization system had been running for 90 days, everyone became willing to join. Elected president, Hock embarked on a world-changing endeavor.

3

Technological Leadership

Hock saved credit cards, transforming them from a loss-making department to a profitable one.

"The world's most important value exchange system." This was Hock's once-held ambition. How did he achieve all this?

It was Visa's technological prowess that supported it all.

Hock firmly believed that technology could transform the payment system, and he had a clear vision of the potential of electronic payment systems, driving Visa's transformation into an electronic value exchange system.

Hock established a set of operating procedures, the rules of the game for the entire ecosystem. He stipulated card design standards and logo usage rules in advertising, how to complete work among various members, and penalties for members violating rules. Basic provisions that must be enforced in contracts with merchants.

Then, he began building his own technological infrastructure. In 1973, National BankAmericard Inc. (NBI) launched the first electronic authorization system, marking the birth of Visa's electronic authorization system. Subsequently, the system underwent years of development and improvement, becoming the key technology supporting Visa's global transactions.

Data is the lifeblood of Visa, and its technological nervous system ensures the rapid and accurate flow of information. They establish rules for the system, ensuring its operation like the laws of nature.

The electronic authorization system ensures real-time processing of electronic authorizations, safeguarding smooth payments. Visa builds a global network, adopts advanced encryption technologies and security measures to protect data security, performs real-time transaction analysis to reduce fraud risks, integrates into POS terminals to simplify payment processes, and enables globalized payment tools that transcend languages, laws, currencies, customs, or cultures, allowing sellers to trust buyers and vice versa.

Visa not only expanded its influence by sponsoring Olympic events but also gained more users through TV advertisements. It rapidly surpassed American Express and Mastercard, becoming the world's number one credit card brand, from an initial 20% market share.

In 1976, Bank Americard officially changed its name to Visa, embarking on its international journey.

In 1983, Visa launched a global ATM network, enabling cardholders to withdraw cash around the clock worldwide. With this service, Visa's international payment status was instantly solidified.

In 1984, at the height of Visa's success, Hock put his business suit away, headed for remote wilderness, and embarked on a 10-year farming life, driving a tracked tractor and returning to his true nature.

In 1994, he returned to academia, conducting a series of seminars on his chaotic organization. On July 16, 2022, Hock passed away at his home in Washington state at the age of 93.

4

The Post-Hock Era

Following Hock's clear systematic and technological thinking, Visa's every step after his departure was solid.

In 1986, Visa developed a clearing and settlement system supporting 21 currencies, and its technological advantage once again helped it stand out.

In 2008, with the popularity of smartphones, Visa launched a mobile payment platform, comprehensively launching its strategic layout in the mobile payment field. In 2014, the Visa Checkout service further simplified the online payment process and enhanced the consumer experience.

Despite having over 3 billion credit cards worldwide, tens of thousands of banks, tens of millions of businesses, and billions of users, Visa has always remained at the forefront of technology. Visa's advanced authorization system processes over 65,000 transactions per second, prevents over $25 billion in fraud annually, demonstrating its data-driven and technological prowess.

All this is inseparable from Hock's chaotic yet ordered ecosystem and the cutting-edge positioning of technology companies, allowing it to continuously grow and evolve like nature.

Of course, Visa is not complacent, as emerging payment methods like Apple Pay, Google Pay, Alipay, and WeChat Pay, as well as the development of blockchain technology and digital currencies, may reshape the payment industry landscape.

With the development of blockchain technology, Visa has begun exploring cryptocurrency payment solutions to meet the growing market demand for digital currencies. The future of Visa still requires continuous innovation and adaptability to maintain its leading position in the global payment landscape.