If you want a lesson in how to weather an economic downturn—even the catastrophic one of 2009—ask John Chambers for a peek at his playbook. The Cisco Systems Inc. CEO operates his company like a basketball coach calling for the fast break at Internet speed. His ability to time market transitions, change directions on a dime, and capitalize on downturns has become legendary in Silicon Valley.

These days Chambers is upbeat, saying Cisco should make its annual revenue growth target of 12 percent to 17 percent in its core product. His confidence comes from what he’s hearing from customers. It’s the customers’ needs that have always been his barometer; he sees them as the harbinger of change. It’s why Cisco looks very un-Cisco-like these days, as “the plumber of the Internet,” known for its routers and switches, acquires a number of businesses that are consumer-focused.

Cisco bought seven companies in 2009, including Norway-based videoconferencing equipment maker Tandberg for $3.4 billion. It has homed in on the virtualization market—cloud computing—partnering with companies such as VMware Inc. and EMC Corp. and setting its sights on data centers. Then there is Cisco’s recent venture into the energy marketplace, with its creation of a Smart Grid Business Unit.

Chambers continues to diversify Cisco’s direction, and he says repeatedly that technology is not a religion. When a company falls head over heels for its product, it sinks itself. He saw it happen to his two former employers, IBM Corp. and Wang Laboratories Inc. He watched IBM’s refusal to move away from its mainframe product cause it to miss the market transition and fall three decades behind. He saw it at Wang, which was so smitten by its minicomputers that it never recovered from the market’s shift and went bankrupt. That’s why Chambers describes Cisco’s culture as “technologically agnostic.”

“You have to move on market transitions. They wait for no one,” he says. “That doesn’t mean we don’t have a healthy paranoia that makes Andy Grove (Intel Corp. founder) look relaxed.”

Chambers views this approach of never remaining static as Cisco’s strength, and his formula has paid off for his employees, shareholders and customers. Since he took over as CEO in 1995, the company has grown from $1.9 billion in revenue to $36.1 billion in 2009. Over that same period there was only one year, 2001—the dotcom bust that Chambers equates to the “100-year flood”—when the company reported negative net income of $1 billion. Recently the company tendered $5 billion of notes in a debt offering that quickly sold out. The additional capital will help strengthen its already cash-rich piggybank and aggressive acquiring.

With his track record and uncanny ability, even after 137 acquisitions, to maintain a No. 1 or No. 2 market share in the sectors he enters, Chambers is the Business Journal’s 2009 Executive of the Year.

Let's Go to the Video

Under Chambers’ leadership, Cisco has grown to more than 65,000 employees worldwide. But Chambers has his critics. Some analysts who follow Cisco question whether he is spreading the company too thin. They question whether he is moving Cisco in too many directions at once—security, collaboration, virtualization, entertainment, and energy.

Chambers responds, “At first people were saying, ‘You are not innovative enough.’ Now they are saying, ‘Are you moving too fast?’ You always want to listen to your critics because there is always an element of substance. But actually I feel the reverse. I feel like we should be moving faster, not slower.”

To quicken the pace, Chambers continues to acquire companies he believes will enhance Cisco’s core business of routers and switches. At the moment, the big push is toward video. Cisco believes that by 2013, video will make up close to 60 percent of all data moving across mobile networks.

Helping to push up those numbers is Cisco’s internal product incubator. The effort created Telepresence, a high-definition videoconferencing technology that rolled out in 2006. It was developed, tested and perfected in-house. The face-to-face product is beginning to make inroads into various markets, including health care and entertainment, with a cost between $34,000 and more than $300,000 depending on the model.

The Telepresence technology also helped launch StadiumVision, now operating in 10 sports venues, including Yankee Stadium and the Cowboys Stadium in Dallas.

The average stadium has 1,100 to 1,200 IP high-definition screens using StadiumVision. The digital media goes beyond broadcasting the game. Screens can provide up-to-date scores, trivia and news as well as offer stadium information and touchscreen phones to order food or merchandise.