In his youth Chambers had no interest in technology--until an IBM recruiter suggested that he think of it as a tool for helping customers transform their businesses. Then stints at IBM and Wang taught him that even great companies are imperiled if they miss a market transition, such as the shift from mainframe computers to minicomputers or from minicomputers to PCs. In the 20 years since he became Cisco's CEO, a whole series of transitions have occurred in the kinds of technology companies rely on and in how organizations consume solutions. Anticipating those transitions and getting ahead of them has driven Cisco's evolution from routers and switches to mobile and video technology to application-centric infrastructure and cloud computing. The company has three ways to adapt: (1) If it sees a shift early enough, it develops the new technology in-house, as part of the traditional R&D process. In addition, its Entrepreneurs in Residence program financially supports and mentors early-stage entrepreneurs working in areas where Cisco sees huge potential, such as big data analytics and enterprise security. (2) It may make an acquisition--as it has done 174 times. (3) It may use a "spin-in," assembling some engineers and developers to work on a specific project outside the company, as if they were at a start-up. "You have to be bold," Chambers writes. And you need "a resilient culture with an appetite for change."

During his nearly 14 years at the helm of networking giant Cisco Systems, Chambers has developed an uncanny ability to sense market trends long before others do. He predicted, for instance, that voice transmission would become free long before computer networks could even carry it. And Cisco was one of the first to shift from call centers to web-based customer service. Seeing the future is essential for a company that must start developing a product some six years before it goes to market. How does Chambers do it? He looks for what he calls "market transitions" - subtle social, economic, or technological signs of an impending disruptive shift - which, he says, start turning up five to seven years before the market actually grasps their significance. The move to open-source software development was one that Chambers saw and Microsoft did not. Early on, Chambers learned to sense market transitions by listening closely to customers, connecting individual dots of behavior into patterns that indicated future trends. Later, he realized he needed to turn Cisco's management processes upside down to benefit from that foresight. In this interview, Chambers describes how he was able to surrender his role as a command-and-control CEO and institute a collaborative decision-making model that allows the company to respond speedily to emerging transitions. Managers throughout Cisco now form cross-functional teams, working together to identify and exploit new opportunities quickly. The model allows Cisco to simultaneously implement 22 major sales initiatives as effectively as most companies do one or two.