John Thomas Chambers is the former executive chairman and CEO of Cisco Systems and founder of JC2 Ventures. Chambers served as Cisco’s CEO from 1995-2015 and executive chairman from 2015-2017. He is an investor in companies around the world that are disrupting major industries. Chambers, 69, is the author of Connecting the Dots: Lessons for Leadership in a Startup World, providing hard-won insights and critical tools to thrive during the accelerating disruption of the digital age. In an exclusive interview to CNBC-TV18, Chambers said that digitisation combined with artificial intelligence will destroy 20-40 percent of jobs. He also said for the first time, India is becoming an innovation leader and it can be the startup capital of the world.

Watch: India can be startup capital of the world, says former Cisco CEO John Chambers

Edited Excerpts:

It has been an amazing journey for you, but what would you crystalise as being the key to your success in the marketplace?

I learned the hard way that market transitions are what you have to focus on. While I always like to talk about the good transitions, it is also how you handle your setbacks. I learned growing up in West Virginia, the US, they got left behind. It was the chemical center of the world. Then I went to Boston, went 28 with MIT there. We were the Silicon Valley of the world for three decades and because we did not change, Silicon Valley took off.

I learned by being in mainframes at IBM, mini computers at Wang, then to the PC to the internet, you must move ahead of the market transitions and if you do it right, you have a chance to lead in that area. However, my view is you never compete against competitors, that is the way you keep scores. You compete by getting market transitions right.

What we often do in sessions like this we talk about your successes, and you were very kind to mention a number of those, and we were the best at acquiring and we were fearless about moving into new markets and we never had a competitor to get above 20 percent market share and our target markets out of 18 of them that we went after.

What will be a lesson for each of you and I always try to put myself in your spot, I would argue we were as much a product of how we handled the disruptions or the disasters as we were the successes. Jack Welch (former chairman and CEO of General Electric ) thought me that.

So how we win through the challenges and how we took the criticism when we did our first acquisition which most people thought was a mistake. We ended up being a $13 billion market force per year. How when we got knocked on the dotcom bubble of 2001, it was my hardest year ever as a CEO, but Jack Welch said that at the end of it, it was probably my best year. I said, "Jack, you are the only one that has ever said this," and he was the only one that ever did.

However, he was right, it is when you develop your characters and leader, it is when your startups go through those challenges and most startups and most big companies when they get knocked down hard and never get back up. So, it is market transitions, it is learning from experience. If I have a talent it might be identifying the market transitions by pattern recognition and then connecting the dots and then building a great team that focuses on it.

What helps you do that?

I think it is the lessons in the past. It is watching what happens when you don’t and then I love to compete and I love to build great teams and that is what I am doing. My current role is building great startups that have the potential to dominate their segment of the industry. So for me, it is listening constantly.

I am in a business-to-business (B2B) environment most of the time. I can be okay at business-to-consumer (B2C), but B2B, I listen to the customers. They help us identify the trends ahead of time and you got to listen constantly. An example would be in switching, we were routing company and all of sudden four motor companies said there is this new technology called Ethernet Switching and this is so important, the technology here, it is the takeaway. I got it, I had it explained to me, a week later I was at Boeing and they said there is this new technology and I said yes Ethernet Switching, can I have your order, please.

They said no, go buy our company and that is how I did my first acquisition. So, it is listening to all the time to trends and then taking the products that we get passionate about and focus on the outcomes, GDP growth, the ability to change business models, and the ability to change society in a positive way.

Since you are talking about connecting the dots and you are looking at the past to be able to predict the future or at least build together a pattern for the future, what excites you about what you are seeing today, not just in India, but globally and what are the key trends that people should watch out for?

Both the excitement and the key trends to watch out for are in parallel. The excitement is it is going to be a digital world and every company and every business and every government agency will be a technology capability whether you are in defence, whether you are in retail or healthcare. What also excites me is with this digital world, we can move with tremendous speed and it will cause us to live longer, it will cause to be dramatically more productive, and preferably higher standard of living.

The challenge is the disruption is going to be brutal. 40 percent of the large companies are going to disappear in the next decade. Digitisation combined with artificial intelligence will destroy 20-40 percent of jobs. It is going to become a startup world and that was one of the reasons I wrote the book.

It was about if we do not dramatically change the pace of startups like you do here in India, you are not going to be able to employ the 1.2 million people that come into the market each month or in the US the ability to generate 250,000-300,000 jobs per month as well and that is before you take into those that have been put out by the new technology.

So what excites me is how this is starting to be a startup world and how India I would say for the first time is becoming an innovation leader. It is remarkable, I am a huge fan of Prime Minister Narendra Modi fan because he has a vision, he has a strategy and, how he executes all of it and how he and his team are blowing away the hurdles in areas such as how small companies can grow bigger and we are making progress. The huge improvement as you saw on the ease of doing business, moving in four years from 142 to 77.

However, what excites me most is you all. I do not want to put any pressure on you, but you are the future of this country. Your large companies will not add headcount over the next decade. How will you do this is a window of opportunity. Do you become the Silicon Valley of the future, and which I think you can and tremendous compliment to you, you have helped to be one of the players who believed in this before it became obvious to others. However, you only get this opportunity once. So the key is can you scale as a group.

It is fun watching India move from what I would call – please do not misinterpret my terms – following the US lead, almost cloning some of the US major companies to now you are starting to see India lead with new technology both in enterprise and consumer and example for the rest of the world.

So if I bet on one country in the world, it is this country. I think you will do 10 percent GDP growth and I think you will become the startup country for the world if you execute.

You talk about speed and you talk about the ability to deliver on a scale with speed. Now you have put this replicable playbook in place at Cisco which you sort of relied on to be able to pull off on each of the bets that you made. What are the criteria, what is the secret sauce as far as the playbook is concerned to ensure that you can act with speed and at scale?

Perhaps if you do not take anything away from the concepts I was trying to teach in the book and I did not want to write a book, I thought somebody could write it about me when I was dead and I am dyslexic. I do not like writing, it was very painful, but I saw the same questions in New Delhi or in New York or Silicon Valley or Dubai in terms of what the young companies wanted to know and also what the big companies wanted to know.

The key takeaway is identify market transitions and then develop a replicable innovation playbook for almost everything you do. So, we developed a playbook for acquiring that is taught today in schools, where there are six steps that you follow in terms of how to acquire and why did Cisco acquire 180 companies, two-thirds of which were successful in the acquisitions and exceeded our expectations in a market where 90 percent failed.

How do you develop a replicable playbook for digitisation and how do you put that in place in a way that you are going to work with the President of France Emmanuel Macron. I was with French Tech Ambassador and with Prime Minister Modi and I had the honour to be with him two days ago talking about startups and the direction in a one-on-one session with him on what we could do even more in India.

So the ability to develop that replicable playbook including which companies to invest in and how do I do it in startups and how do I get them to grow, I used to think is bureaucracy. It is the reverse. It allows you to move with speed and let me give you an example, I could get a call on a Thursday night from the head of NASDAQ and said, John, you are an idiot and I said I know that but what is the matter. He said you should be acquiring this company. I was pretty embarrassed, I did not even know the name of the company, and then he said your competitors have been in there for 6-12 months, it is public knowledge, John you are slipping.

Of course, he was teasing me, he was saying get off the chair and go look at them. Friday morning I had my head of business development talking to the CEO of that company, he called me up after an hour and said John, you get over here and in an hour and a half, we had an agreement that I was going to acquire the company for $3.2 billion. We put it through both board of directors through the weekend, we aligned up everybody for the announcement on Monday morning and we announced it and it was a tremendous success not just in the short term, long term. No other company in the world could do that.

Why did we do it? First, fearless, understood how important market transitions are, but it is that replicable innovation playbook – and I encourage you all to do that whether it is a simple innovation strategy or you are making an investment. How do you handle your setbacks and they are inevitable how you deal with them or how you recruit people or how when you lose somebody instead of just saying can we keep you here, you say no I have got twice the amount of money and a better title, and is there anything I can do to change your mind and you say no and then thank you.

When somebody starts to leave Cisco, we put a full replicable playbook and probably 75 percent of my leaders left at one point in time and yet we kept them. So instead of being bureaucracy, it actually is the speed of innovation.

First Published:Nov 1, 2018 9:24 PM IST