ch 5


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Complexity and Organizational Structure by Emily F. Breuner
Chapter 5 Visa International: Its Structure and Governance
History of credit cards and Visa International It is difficult to understand Visa's structure without first understanding how the credit card industry evolved. The history of credit cards is a fascinating topic about which several books have been written. Unfortunately I must leave many intriguing stories to those books, and concentrate on the events that have most impacted Visa's current structure.
Bank of America A. P. Giannini, founder and head of the largest bank in California and in the world, built his Bank of America by concentrating on individuals rather than huge corporations. It was not surprising, then, that it was the Bank of America which innovated around the process of extending credit to individuals. Rather than go through the process of approving personal loans for consumers each time they were needed, the Bank of America decided it might be possible to approve a credit line, and then give people an easy way to access it. To that end, the Bank of America launched the world's first bank credit card, the BankAmericard in Fresno, California in 1958. The card's success depended on building a critical mass of merchants who would accept the card along with a critical mass of consumers who would use it. As the number of each increased, so did the value of the card since it could be used more widely. Being the largest bank in California, the Bank of America was well-positioned to build a robust network of consumers and merchants.
While consumers were leery of accepting credit because of fears that stemmed from the 1929 market crash and the lean years that followed, many merchants were eager to accept the card. In those days, many small retailers carried accounts for their customers because it was standard practice to do so, and many were struggling under the burden of billing hundreds or thousands of customers for small sums of money. Many small retailers in essence paid the Bank of America 3% per transaction to handle their accounts receivable, but saved themselves much more than that in reduced administrative expenses and bad debt. In this way, the Bank of America became a coordinating entity between merchants and consumers while at the same time continuing to perform one of its core business processes---extending credit. See Figure 5.1-3.

Figure 5.1 Generic Bank Credit Process

Figure 5.2 Generic Merchant Credit Process

Figure 5.3 Bank Credit Card Process

In the mid 1960's, the Bank of America decided that the card would only become more popular and valuable if it was more widely accepted. In order to expand its network of merchants and consumers, the Bank of America was forced to follow a franchise strategy for two reasons. First, U.S. laws prohibited interstate banking. Second, even as large as Bank of America was, it alone could not support the BankAmericard system with the funds necessary for a national network. The float alone would have overwhelmed the Bank of America's resources. Therefore the Bank of America licensed the BankAmericard to one bank in each state through a separate entity called the BankAmericard Service Corporation. At the same time, rival banks began a confederation called Interbank in order to offer their own card, MasterCharge, to compete with the Bank of America franchise system. In a race to build their networks quickly, both BankAmericard and MasterCharge issuing banks began mailing out cards to any and every person they could identify. The result was massive credit card fraud due to theft and huge losses due to bad credit risks. There were no systems to validate or evaluate credit when a card was used, and the banks hemorrhaged money.
In 1968, the problems had grown so great that a special meeting was called of the BankAmericard franchisees in Columbus, Ohio. Complaints were heard about fee structures, charge-back procedures, and lack of coordination. The problems were egregious enough that banks threatened to bolt to Interbank.
While operational problems were causing licensees to lose money, there were other issues threatening the stability of the licensing arrangements as well. For one thing, the Bank of America was a large bank that was getting in between other banks and their customers. The Bank of America might not be in their states, but the licensing banks were putting the Bank of America's logo and financial instrument into their own customer's hands, an uncomfortable activity at best. There was a natural fear of holdup and a strong one-way dependence on the Bank of America that was absent at Interbank, making membership at Interbank much more attractive.
Secondly, having the Bank of America as the issuer brought up sticky regulatory issues that seemed to be more easily mitigated by the Interbank structure. The Bank of America was just too large a force in banking to escape the intense scrutiny of the Justice Department. In fact, at the meeting in Columbus, the Bank of America was little help. It said that because of antitrust law, they couldn't dictate rules for the group---the franchise banks had to figure out how to organize the system.⁽¹⁾
Out of the ensuing confusion, a BankAmericard executive form the National Bank of Commerce in Seattle, Dee W. Hock, provided a glimmer of hope. "While most of the franchisees were concerned with operational problems, Hock saw the whole situation as a massive organizational problem."⁽²⁾ He knew that whatever structure the BankAmericard organization took would have to be radically different from anything that had been designed before. Apparently his vision of the kind of organization that would be capable of coordinating BankAmericard seemed sensible to the other bankers present. The other franchisees confirmed Hock then and there, and that was "the beginning of the end of BankAmerica Service Corporation, and the birth of a new licensing agent, National BankAmericard Inc. (NBI), a for-profit, non-stock corporation owned by its members."⁽³⁾
Dee Hock and the Formation of National BankAmericard Inc. Dee Hock was the right man in the right place at the right time. An avid reader of poetry, philosophy, science, etc., Hock had applied many frames to his personal philosophy of organizational design throughout his career. A banker more by chance than by choice, Hock had often been burned when he tried to institute some of his more innovative organizational ideas at his places of employment. Yet suddenly he found himself in a position to apply his organizational philosophy and invent a new kind of structure. Said he, "I had the idea that there should be a device for the exchange of value. There was no organization available. No existing organization could even begin to think of it."⁽⁴⁾
Hock and his committee of bankers retreated to a hotel in Sausalito, California to try to envision the structure of the new organization. He says he began with a purpose, "enabling the exchange of electronic value," a vision far more expansive than that of his peers, and then set out to devise some principles by which to achieve that purpose: it must be equitably owned by all participants power and function must be distributive to the maximum degree authority must be distributive within each governing entity it must be infinitely malleable yet extremely durable
Using these guiding principles, Hock and a small hand-picked staff created NBI, which opened for business in 1970 with 243 charter members. In 1977, NBI changed the BankAmericard brand name to Visa, and similarly renamed itself Visa International. Since 1970, Visa has grown to handle approximately 50% of credit card transactions, way ahead of both American Express and MasterCard. Just recently, Visa broke industry records by doing $630.6 billion in sales with 391 million credit card holders and over 12 million merchants through over 20,000 member institutions.⁽⁵⁾ Yet it has accomplished this with a small corporate staff and little fanfare.
According to Hock, "it took six months to get the principles and two years to get the organization right."⁽⁶⁾ The results are apparent, and Dee Hock himself expressed many of Visa's incredible characteristics in a speech given at MIT in the fall of 1994.⁽⁷⁾
The Visa Governance Process Now that the story of the conditions that generated Visa have been told, it is time to turn to the details of Visa's structure. First I will provide a narrative description of Visa in terms of the By-Laws which structure the Visa International corporation and its supporting regional corporations, and then I will use the Process Handbook notation to illustrate the governance process and its dependencies.
What is it and what does Visa International do? Structure aside, it is important to ask what it is that Visa International and its member corporate organizations produce. If you ask any Visa card holder what Visa is and what it does, you will most likely get the answer "they issue credit cards and sign up merchants to accept them." Then the cardholder might reflect for a moment and realize that they do not obtain a Visa card from Visa, but rather apply for it at a bank. It is also a bank that produces statements, collects payments from customers, and makes payments to merchants. What then does Visa International actually do?
Simply put, Visa International is a corporation whose product is coordination.⁽⁸⁾ While Visa International executives say that their product is the Visa brand and the interchange network that clears payments between member institutions,⁽⁹⁾ in a sense, all the people at Visa International are working to coordinate the efforts of hundreds of member institutions. This is reflected in the fact that the Visa International organization is small compared to the volume of money it handles.
How can Visa International, which has had such a huge impact on the world and people's ability to exchange payments, operate with a staff of about 2,000 world-wide? Because most of the work of building the number of cardholders and merchants is done by the member institutions. If one were to count the employees who deal with administering the Visa program at Citibank, the largest Visa issuer, along with the similar staffs at each of the 20,000 member institutions, as part of the Visa International staff, they might number in the hundreds of thousands. While those people do not actually work for Visa, the coordination of their efforts is Visa's primary concern.
The staff at Visa International delivers Visa brand marketing that benefits all members, that is marketing programs that convince cardholders to choose Visa over other credit cards (e.g., the popular "and they don't take American Express" ads as opposed to the member-specific ads, e.g. "Not just Visa, Citibank Visa" ads). The other key function at Visa International is the development of the interchange and credit authorization system, the quality of which dramatically effects the profitability of member banks' Visa programs since it lowers the cost of each transaction and the amount of fraudulent credit, and quickly uncovers bad debt.
In legal terms, Visa International is a corporation with a board of directors made up of representatives of its member organizations. It is incorporated in Delaware, which is known for its liberal incorporation laws, and headquartered in San Francisco, CA. It is owned by the member banks who issue its cards and who pay for their ownership in the corporation in the form of service fees based on the volume of transactions their merchants and cardholders generate. The Board of Directors is made up of board members from legally separate regional Visa organizations, and in turn there are national and group member corporations under these regional entities. For a map of the entities and the flow of service fees between them, see Figure 5.5. Membership is granted to any organization that is "fit" for membership as outlined in the By-Laws (e.g., the organization must be a lending institution), but each member must agree to abide by the By-Laws and Operating Regulations of the Visa International Corporation. Violating this agreement is grounds for revocation of membership.
Conceptually, Visa can be thought of as a number of things, and indeed it is viewed through many lenses. Dee Hock calls it an inverse holding company, yet notes that it has properties in common with a government such as taxation, delegated authority, and rights; the General Counsel refers to it as a joint venture; a board member calls it the Association;⁽¹⁰⁾ it might also be called a consortium. In many ways, the organization is whatever you want it to be depending upon your vantage point because it is purposefully loosely defined. The By-Laws are simply a collection of meta-rules that specify how regulations will be made, and where the authority to do so resides. The majority of the document specifies rules for meeting and voting procedures and still it is a scant 62 pages, testimony to the fact that it tries not to be more specific, and therefore more rigid, than it needs to be.
The Structure as Set Forth by the By-Laws Although Visa is decentralized, it is also a hierarchy of regional organizations; the Visa International organization is at the top of the hierarchy, and under it are regional organizations that help manage the member institutions and help reach local consensus among them. In some cases there are additional sub-regional organizations below the regional corporations, again to manage member institutions if there is a sufficient number to warrant it. The hierarchy is a fascinating part of Visa and its purpose is explained more fully in Chapter Six. However, it is not a traditional hierarchy in the sense that there is no superordinate layer; each layer of the hierarchy has the authority it needs to coordinate the system at that level, but each also concedes some rights to the other layers. The specific rights and obligations of each group is outlined below,⁽¹¹⁾ however, it should be noted that there are exceptions to almost all these rules. Each regional organization has certain grandfathered rights, but overall these are the rules that govern sub-structural behavior. In most cases, the By-Laws are paraphrased to avoid the confusing and detailed legalese. Table 5.1 summarizes these details at the end of this section.
Issuing Institutions or Member Banks: This layer is very autonomous, and has more responsibility and thus accountability to the customer and the government than any of the other layers. It has the right to devise and market any set of products so long as they conform to the By-Laws and Operating Regulations (e.g., the card must have the Visa logo and hologram on it), and all the rights not specifically delegated to governing corporations or their boards. Otherwise it is beholden only to its own corporate policies and those of its local government.
National Organizations: In some cases, the number of issuing institutions in a single country does not warrant a sub-organization under the regional structure, but in some countries there is such a need. In most first-world countries, there is a Visa national organization that is chartered by approval of Visa International, the regional board, and a vote of the national institutions. Visa International retains the right to manage the staff of these national organizations, but can also grant autonomous management with a two-thirds vote. These organizations have the following rights and responsibilities: have the authority (i) to develop and implement products, services, systems, programs, and strategies to address the unique market conditions in each country, (ii) coordinate member activities, (iii) promulgate rules, regulations and policies applying to members operating within such a country (1-45) have the responsibility to maintain appropriate records (1-19) must ensure that the board is made up of a representative cross-section of members operating within the country (1-46) are accorded votes based on sales volume (1-46) and has the right to ratify changes to the By-Laws with a membership vote (1-20) may assess service fees and other fees to cover cost of operations members must conform the rules set forth by the national organization so long as the rules comply with those of the region in which it is located by legal contract, are liable for its actions.
The grounds for revocation of authority are as follows: if the group is unfit (e.g., insolvent) if the national group makes unreasonable terms of membership so as to prevent a bank becoming a member if the board membership represents less than 51% of the sales volume if eligibility requirements for voting and directorships are materially changed from those approved by the board
Group Members: In addition to the rights accorded the national organizations: may consist of one to many national member(s). This grandfathers Visa USA and Visa Canada as both group and national members. has rights to products, services, systems, software and intellectual property of Visa International is entitled to license the software know-how, and other proprietary information necessary to interface with the systems must agree to license to other members the technology and products it develops has the right to request services from other organizations upon reasonable terms and conditions rights of national group membership supersede obligations as a regional group if the organization fulfills both capacities (as happens in the U.S. organization Group USA) cannot refuse membership to any fit institution wanting to become a Visa issuer
Regional Boards: Fundamental Principles (1-42) guiding the authority and responsibility of Regional Boards: The authority to regulate purely interregional matters resides exclusively with the Board of Directors of Visa International. The authority to regulate intraregional matters resides exclusively with the Regional Board. The authority to regulate intraregional matters that may effect the whole Visa program resides with the Regional Board until preempted or regulated by the Board. The Board of Directors of Visa International has the right to decide the nature of a matter. In evaluating matters submitted for its consideration the Board of Directors shall be guided by the general principle that it is in the best interest of the corporation and ultimately of its members that an environment most conducive to the continued development and enhancement of the corporation's worldwide payment systems be maintained.
Rights and Obligations (1-43) establish policies and promulgate rules and regulations regarding the administration ( including but not limited to the admission, termination, change of class and conditions of membership and/or ownership of any organizations headquartered in the region,) operations and development of the the corporation's programs within its region which are consistent with Visa International. ensure that products, services, systems conform with the standards set by Visa International use its best effort to promote the products services and/or systems of the corporation through its region may administer membership may manage operations may set services fees so long as the aggregate Service Fees are not less than those which would have been payable pursuant to the service Fees established by Visa International may spend corporate funds for the benefit of the Program within the region.
Appointment of Regional Board Members (2-2) any bank that makes up 25% of total service fees paid by the region gets one member, 50% gets two members, 75% gets three members the regional shall be divided into subregions based on volume and each subregion shall elect a number of directors based on volume a regional advisory board can be appointed by the Regional Board
Conflicts and Controversies (1-43) If a conflict (i) violates the Bylaws and Operating Regulations, (ii) adversely effects members in other regions, it may be submitted to the Visa International Board of Directors for consideration. A ruling in the matter, once it is deemed interregional, shall be binding.
Visa International: Number, Qualification, and Election of Directors (1-23...25) must be a ranking officer in a member institution elected by and from the Regional Boards
In general, the number of Board member elected from each region is based on percentage of sales volume; special "at large" directors may be elected by regions in certain cases; the President of Visa International shall be a Board member; the Bank of America shall retain the rights to appoint one director; the Board of Directors may appoint nonvoting Board Advisors of the Board of Directors (up to five).
Powers (1-27...28) may establish a national, group, or regional board which has the rights listed above (1-24) may set minimum service fee may manage business of Visa International may establish regional boards may rescind regional boards may enforce payment of fees may admit or expel members may amend International Operating Regulations by 2/3 vote may amend By-Laws by 3/4 vote may form committees made up of members of the board to deal with issues A summary of these facts appears below:

The Board Meeting Cycle
Visa International's business is largely determined by the Board meeting cycle. Issues and budget approvals start at the functional advisory board level, a network of committees that have knowledge in specific functional areas, e.g., debit cards. Visa International staff prepare highly structured documents (prepared in the Queen's English rather than American English to reflect Visa's international nature) that are presented to the appropriate advisory Board. If the Board approves the project, the Visa International staff must then go on a circuit to all regional Boards to present and to gain acceptance. Finally, the project is presented to the International Board for final approval. At this point the project is well understood and will probably be passed without much debate. The typical cycle from initial presentation to approval is six months,⁽¹²⁾ and according to Visa employees, it is this cycle that drives the business and the internal organization of the Visa International Corporation.

The Governance Process

The important governance process at Visa International and within all the substructures is largely the same. Each uses a standard board process to consider issues of the organization and then make and implement decisions based on the authority outlined in the By-Laws. Because each level of the board hierarchy has similar powers, these board activities can be thought of a specializations of the generic "Govern Visa Entity" diagram below:

Figure 5.4: Govern Visa Entity

Each level of the hierarchy performs these functions. They indirectly affect membership and products via their responsibility for managing the corporate staff of the entity that implements programs and member services. While there are some subtle differences between, say, the responsibilities of the national board versus the regional board, overall the system and activities are the same---so much so that board members are elected at each level to serve on the next level higher, and can do so with little difficulty.
Within the board process and activities themselves, the major dependency that needs to be managed (represented by the arrows) is usability of information which is accomplished through standardization both of the board process and of the documents used therein. The Board meeting cycle is clearly understood and constant as is the structure of the documents that are prepared for presentation to the various boards. Therefore, no matter how complicated or unpredictable the issues are, the process for dealing with them helps to standardize the data in such a way that it can be constructed into knowledge as quickly as possible.
Service Fee Flow through Visa It is not entirely apparent in the By-Laws how the fees flow through Visa, but it is basically a pyramid structure. The member banks determine whether or not to charge an annual fee to their cardholders, and also determine how much that fee will be. They also may offer any interest rate and grace period on the cards. Their relationship with their customers is unregulated by Visa. Similarly, the member banks may set up any agreement with merchants for accepting the card. Usually this amount is 3% of the purchase price. The member banks then pay a quarterly service fee based on volume to their national, group or regional organization at the rate set by Visa International plus any surcharge fees established by National, Group, or Regional organizations between the member bank and Visa International. Each level of the hierarchy takes its board-approved "cut" and passes on the proper balance on to the next level of the hierarchy, all based on volume.
Although each organization in each level of the hierarchy is set up as a for-profit entity, all strive for zero profit as a result of unfavorable tax consequences of making a profit which is then distributed to the member-owners and taxed twice.A diagram of the service fee flows follows:

Figure 5.4: Service Fee Flows through Visa

It should be noted that there are also interchange fees that flow from the "acquiring" bank, i.e. the bank that acquires the merchant as a card-accepting institution, to the "issuing" bank, i.e. the bank that issued the card to the card holder. The specifics of how these fees flow between member institutions is set at the regional level and therefore varies by region.⁽¹³⁾
The Significance of Visa International's Structure Visa's structure is interesting because of the balance it strikes between centralization and decentralization, cooperation and competition, and because of the number of problems inherent in the old franchise structure that the Visa International structure solves. A description of these strengths and weakness follows with the trade-offs they embody summarized in Table 5.2 below.
Strengths Visa itself does not issue cards, therefore it is not in competition with member institutions as was Bank of America. This fact alone facilitates much more cooperation. Visa does not itself extend credit, which frees it from the archaic and arcane bank regulations in numerous countries. Visa gives great autonomy to banks---specifically the ability to establish their own products and services. By leaving the power and authority at this level, a great deal of coordination and consensus building is avoided while the benefits of competitive forces, such as diverse and rapid product innovation, are preserved. Visa must earn its service fees, as banks are not required to buy any services from Visa International. This keeps Visa International staff from becoming complacent and gives an incentive for innovation at the International, Regional, Group and National level. The democratic voting system keeps any one bank, nation, group or region from becoming dominant and able to act in its own self interest. That is not to say that there aren't dominant forces, but there are also some checks and balances. Because Visa International can create new levels of hierarchy, different regions and subregions can be raised or lowered to the appropriate level of the hierarchy in which they will find peers. For example, Visa Europe may soon be split as Eastern Europe and Western Europe because the volume in Eastern Europe has put it on par with the other regional levels. Visa allows for emergent product innovation at the lower levels so that optimal local solutions are reached, but also has the infrastructure in place to react fairly quickly to threats introduced from competitor. Visa's decentralized architecture is supported by a decentralized information system, keeping operations aligned with governance and diminishing central control. For example, intraregional interchange is cleared intraregionally;⁽¹⁴⁾ the European system only communicates to Visa International's systems in aggregate form the interchanges involving banks in two regions. Visa International's control over membership means that Visa has a way to control the "Prisoner's Dilemma" within the Visa program: the natural incentive for Bank A in one geographic area to try to keep other banks within its area from gaining membership, giving Bank A a Visa card monopoly. Instead, if all banks cooperate, then there is greater potential for a higher volume of transactions because all customers of Bank A can purchase from Bank B's merchants and vice versa; everyone is better off since banks make money on each transaction, as well as on total dollars spent. Visa International has the power of the purse; that is the money from the service fees gives it the autonomy it needs to develop strategic initiatives such as the central interchange system or new technologies without having to build consensus from the bottom up each time.
Weaknesses When asked about the weaknesses of Visa's system, each person interviewed used the same word: inefficient. Those inside the organization felt that they couldn't get decisions made quickly. Using a political analogy, Bennett Katz reflected that the most efficient form of organization is a dictatorship in which a strong leader makes a decision and the whole organization reacts quickly moves in one direction.⁽¹⁵⁾ Visa does not have that kind of mobility. However, there are many other organizations that never reach consensus, such as standard setting bodies in telecommunications or software. Perhaps more regularly, standards are set, and one major competitor sets a proprietary standard anyway, giving in to the temptation to take advantage of those who cooperated. It may be inefficient, but Visa seems to have avoided pitfalls of this type.
Another weakness is that strategic decisions have to be made with the lowest common denominator in mind. For example, smartcard technology has been around for years, and Carte Bleu in France implemented it long ago. In determining how Visa International could encode information on a card, however, it had to go with a technology that fit the needs of the countries with the poorest infrastructures. As a result, the magnetic strip was chosen because it was "serviceable technology"⁽¹⁶⁾ that best fit the kind of telephone infrastructure that was available in most countries.
Table 5.2: Centralization/Decentralization Trade-Off Matrix
Dee Hock was well aware that running a large organization by consensus would be inefficient, but he thought it would be tremendously effective. Given the Visa logo is recognized and the Visa card is accepted anywhere in the world, I would have to say he was right. The distinction between efficiencies and effectiveness will re-emerge when I look at Visa as an adaptive complex system in Chapter Six.
Federalism and Visa International The parallels between Visa and forms of Federal government are unmistakable and entirely intentional. Dee Hock based most of his organizational ideas on the wisdom he garnered from his reading of philosophy, the classics, science, etc. Similarly, Bennett Katz, Visa's General Counsel and one of the main authors of the By-Laws stated that he relied heavily on the concepts embodied in the U.S. Constitution to construct the By-Laws.
Jeffersonian Federalism stated that the Federal government should only have the powers to regulate interstate matters while leaving the authority of intrastate matters entirely to the state governments. The goal was to establish a set of principles by which the larger community agreed to conduct itself. No one could predict what types of conflicts would arise, but they knew that in order to settle them or make further legislation, they would need to evaluate issues in light of the agreed-upon principles. Visa was set up in much the same way. This topic will be explored further in Chapter Six.
Cooperation and Competition In Hock's view, a critical part of the organization would be the way it dealt with the notions of cooperation and competition. Hock felt that these two things were two sides of the same coin, and that properly managed, members working both against and with each other would build a powerful organization. Thus he built in cooperative and competitive forces at all levels of the organization. In general, Hock skillfully used cooperative forces where he wanted effectiveness, and competitive forces where he wanted efficiency. The interplay of the two seems to bind the system together the way positive and negative charges in a molecule are always attracting and repelling. This is a point that will be explored further in the Chapter Six.
How Might Visa's Method of Coordination Be Improved? It is difficult to imagine a way to structure Visa that would better fit its need to preserve banks' autonomy while coordinating their activities. One possible change in structure would be to move away from a geographically-based hierarchy. Visa's network is more logical than it is physical, conceivably the subgroups under the international structure might better be arranged along some other dimension. For the moment, however, the cultural and regulatory forces in the banking industry are still quite strong, and are best classified by geographic location. There may well come a day when some other logical organization makes sense that might require a dramatic change in Visa's structure. The By-Laws provide for such a change, and it seems likely that the guiding principles are broad enough that they will still apply.
Looking into Visa's Future In trying to discern if Visa's structure is truly able to withstand change, I imagined a situation that would still fit within Visa's defined purpose, but which Visa doesn't currently do today. What if Visa allowed cardholders to both make and accept charges? That would still be a form of exchanging electronic value, yet it would mean new operating procedures and further responsibility for the bank. However, I could not see how a new function like this would upset Visa's structure in any meaningful way. It may well be that smartcard technology will enable such transactions soon, and Visa will be well-positioned to operate such a new service.
< Ch. 4 Ch. 5 >
Footnotes (1) Jeffrey Kutler, "Metal Plates to Duality: The Shaping of an Industry," American Banker, September 9, 1994: 9. (2) Steve Green, "Power pyramids falling: Founder of Visa speaks of future," Ogden Standard-Examiner, June 14, 1994: Section A, page 5. (3) Kutler, "Metal plates." (4) Green, "Power pyramids." (5) United Press International, April 5, 1995. (6) Dee W. Hock, lecture, "15.563: Inventing Organizations of the Future," MIT, September 28, 1994. (7) Dee W. Hock, "Out of Control and Into Order," seminar, MIT Center for Coordination Science, September 27, 1994. (8) An observation made by Jon Wilcox, Sloan Master's student, in class discussion in course 15.579 at the MIT Sloan School, Spring, 1995. (9) David Wagman, Personal interview, March 22, 1995. (10) Deborah Rossi, Personal interview, March 23, 1995. (11) Visa International By-Laws and Regional Board Delegations, Visa International, November 15, 1994. All parenthetical page numbers refer to this document. (12) Scott Loftesness, Personal interview, February 25, 1995, and Dee Hock, Personal interview, March 23, 1995. (13) From discussions with Center for Coordination sponsors National Westminster Bank, May 15, 1995. Further research into the regional Visa organizations would yield more specific details. (14) Scott Loftesness, February 25, 1995. (15) Bennett Katz, Personal interview, January 25, 1995. (16) Dee Hock, Personal interview, March 23, 1995.

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The Visa Governance Process

The Governance Process

The Significance of Visa International's Structure

Federalism and Visa International

Cooperation and Competition

How Might Visa's Method of Coordination Be Improved?

Looking into Visa's Future