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Former Cisco CEO John Chambers’ New Book Rings Alarm Bells on U.S. Economy

Anyone who listened in to a Cisco earnings call during John Chambers’ 20-year tenure at the helm of the networking company will be familiar with the former CEO’s reassuring, Southern drawl. Even when describing the economy as “lumpy” during the last financial downturn, back in late 2007, Chambers managed to sound comforting and optimistic. But his latest project, a just-published business book titled Connecting the Dots: Lessons for Leadership in a Startup World, has some sobering words for corporate America and for our government.

“It’s easy to assume that America’s current advantages will last forever,” Chambers writes in his book, which calls for more innovative leadership. “But even the largest businesses can collapse, as we saw during the financial crisis.”

Indeed, between anecdotes from his childhood as a dyslexic kid growing up in West Virginia and lessons from his time as CEO of Cisco, Chambers convincingly argues that the U.S. sorely lacks an effective digital strategy—and, at the moment, effective leaders. “Enlightened leadership,” writes Chambers, “will be the most important factor in determining who thrives in the digital era.” What’s at risk? According to Chambers’ new book, if we don’t embrace digitization as an opportunity to improve people’s lives instead of “getting nostalgic for the past,” we risk being leapfrogged by countries like India and France.

In a wide-ranging, recent interview with Fortune, Chambers expanded on the concerns highlighted in his book (and, speaking of his Southern accent, managed to transform French president Emmanuel Macron’s last name into something more akin to “McCron.”)

While the U.S. economy is healthy at the moment, and Chambers (a self-described, life-long Republican) believes the current administration has made “major improvements” to the corporate tax system, he also says that there are plenty of warning signs for what’s to come. His most pressing worry? That we are no longer the world’s most innovative country.

The number of IPOs is the indication of the health of your total startup community,” says Chambers. “The number of IPOs during the mid-’90s was running over 700. Today, we’re struggling to get over 200, and this is an improvement over the last two years.” (To be sure, many of the startups that went public in the 90s are now defunct.)

Chambers also points to declines in the amount of venture capital that goes into U.S. startups as opposed to investment raised by companies in other parts of the world. “All these signals should be sending off warning bells to us that we have a problem that we need to address,” he says. “If you combine these [stats on startups] with digitization and artificial intelligence, you’re going to destroy 20% to 40% of the jobs that exist today.”

At least part of the solution, says Chambers, is betting on visionary leaders. But even he, the optimist, isn’t sure that’s a direction we’re heading toward anytime soon: “It’s hard to bet on enlightened leadership when neither political party has acknowledged the scope of the digital revolution we’re facing, never mind the need for a coordinated public-private effort and investment to thrive in it.”

A crackdown on immigration isn’t helping to jumpstart innovation either. “I’m a huge believer that for the U.S. to maintain its standard of living, to be the innovation nation for the world and to create increases in average household income, immigration—the best and brightest from around the world—is a must.”

The fact that the overall economy is doing well, argues Chambers, actually makes things harder for our current leaders to change course. “Who’s the hardest country to get to change? The one who’s doing well,” he says.

Chambers’ first book, however, isn’t all doom and gloom. The long-time tech exec, who now runs his own venture capital firm, JC2 Ventures, also passes on plenty of uplifting takeaways for business leaders of companies large and small. There is a chapter on how Cisco beat its competitors (its title: “Embrace your purpose, not your products.”) and another on how to successfully buy and integrate companies (Chambers oversaw 180 acquisitions while at Cisco).

“I love teaching, and this is the foundation for what I want to do next,” says the CEO-turned-VC. In his new capacity, Chambers is mentoring entrepreneurs, investing in companies and trying to jumpstart startup ecosystems in places like his home state of West Virginia. The ex-CEO says he didn’t plan on writing a book anytime soon: “I thought books would be written about you once you’re dead, and that was my full intention. And, being dyslexic, I sure as heck don’t like writing long things.”

Then again, things change. Perhaps one of the biggest takeaways from his new book, for the business and government sectors alike, is to change before you have to. It appears Chambers is taking a page from himself.