From the Corner Office: A Tech Titan Builds His Legacy

A hard-charging maverick in Silicon Valley, Scott G. McNealy is equally aggressive in his pastimes. An avid golfer and amateur hockey player, it took a broken leg in his early 50s to bench him from the ice.

Even as he resigned in 2006 after more than two decades as Sun Microsystems CEO, McNealy has stayed busier than he had imagined, traveling the globe as chairman of the company’s board of directors. And although retired from playing hockey, he says, “I spend a lot of time behind the bench now with my four boys and their buddies, coaching hockey, having a ball.”

McNealy, 53, has become more of a mentor since relinquishing the top job at Sun, and not just to his kids’ hockey team. Co-founder of what’s now a world-leading producer of business computer systems ringing up $13.8 billion in revenue last year, McNealy has adjusted his professional focus from taking his best shots to helping younger players score.

He meets regularly with his successor of choice as CEO of Sun, 42-year-old Jonathan Schwartz, a longtime lieutenant of McNealy. Previously the president and chief operating officer of Sun, Schwartz was promoted to CEO by the Sun board after McNealy nominated him. Since then, McNealy and Schwartz have engaged in regular mutual consultation, usually in private. “I’ve been very careful not to interfere with Jonathan. I don’t go to his staff meetings, and I don’t do the strategy meetings, other than at the board level,” McNealy says. “I don’t get into managing his staff or usurping his power or direction or whatever. We do our one-on-ones confidentially and quietly, and then I’m very good about supporting the party line and corporate direction. I try to be a good employee.”

Leading nowadays more by inspiration than administration, McNealy also plays an important business-development role by preaching the benefits of membership in the Sun congregation. As a public figure in the high-tech industry who has been interviewed frequently by such cable television networks as CNBC, McNealy is using his celebrity—and his frequent-flyer miles—to find new converts while keeping existing Sun patrons happy.

Since giving up the CEO position to become the “chief evangelist of Sun,” as he puts it, McNealy has spent an average of three to four nights away from home each week on business trips. “I spend most of my time on the road developing relationships and partnerships, helping sales reps open doors that they wouldn’t necessarily be able to walk through. I think I did 150,000 miles last year,” he says, fresh from a trip to Sacramento to meet with California Governor Arnold Schwarzenegger and the state’s chief information officer. “I’ve taken, I think, the active chairman role to hyperactive.”

McNealy has a treasure trove of experience to share. His 22-year tenure as the company’s CEO spanned the development of personal computers in the 1980s, the explosion of the Internet in the 1990s, and the failure of countless dot-com companies near the turn of the century—a widespread slump that threatened Sun. “That was a real bubble, so it was a real problem after,” McNealy says. “The company got into a little bit of trouble. The biggest problem was that we were doing so well, we over-hired, we over-subscribed to real estate, we didn’t pay enough attention to quality, and we forgot that our roots were around openness and sharing. We fixed all that up.”

As the company trimmed fat from its expenses, Sun also launched initiatives to share information and collaborate with a wider circle of business partners. For example, the company encouraged third-party development of software compatible with its Solaris operating system by making publicly available the system’s previously secret source code. Sun today has “probably the most partnered strategy in the world,” McNealy says. “All of our interfaces are open, and we’re open-sourcing all of our source code, so that provides basically infinite interoperability with anybody else and everybody else. Our software can run on anybody’s platform. Our hardware can run on anybody’s software. The product line is wonderful. We’re back to our open and sharing strategy.”

Make that open, sharing and daring. McNealy is a tech exec who puts a high priority on profitability, not just product compatibility, and prefers risky incursions to safe retreats as a means to make money. Consider the back-story of a pivotal four-year project that culminated in 1995 with Sun’s public release of its Java computer language for Internet-based software applications. Sun got a huge lift that same year when Netscape Communications announced that its popular browser software for visiting world wide web sites was designed to work with programs written in the Java language. Java “really allowed us to move from client-server to network-based applications to Web-based applications,” McNealy says. “It really has become what I think is probably the most ubiquitous programming platform.” But he also says Java didn’t succeed without controversy—including internal squabbles at Sun over the cost of developing the computer language. “About four times during the process,” he says, “I had senior managers who tried to kill the project to save money.”

While avoiding unnecessary expense is vital for Sun as it competes with IBM, Dell, Hewlett- Packard, Microsoft and other tech industry giants, investing in unique products is the key to long-term success in such a competitive climate, McNealy says. So he advises younger professionals in the information technology industry to take calculated chances on unseen opportunities.

“I think it gets down to a basic philosophy of having a little bit of a controversial strategy. If you do everything the same way the big gang is doing it, then they’ll just beat you with more muscle, more manpower, more marketing air cover,” he says. “So you’ve got to find a different angle, a different perspective, and one that’s not entirely obvious to everybody. If your strategy isn’t controversial, you have no chance of making a profit, because if everybody thinks it’s a good idea, everybody will do it.”

McNealy has also applied his maverick analytical approach to altruistic efforts to help teachers and students worldwide through an online curricula initiative. It began several years ago, when McNealy’s oldest son needed dad’s help in doing a science project on electricity. After searching the Internet and finding few helpful sites, McNealy saw a crying need for an online depository with freely downloadable educational curricula. He took his idea to his colleagues at Sun, and what began as a project within the company was spun off as a not-for-profit organization called Curriki.

Curriki’s mission is to provide an affordable online alternative to school textbooks for kindergarten through 12th grade. So far, McNealy says, more than 11,000 downloadable learning assets have been deposited on the organization’s Web site (www.curriki.org). With enough support, he says, Curriki could dramatically reduce the multibillion-dollar annual cost of purchasing standard educational curricula in the form of textbooks and other printed material.

“Why do we spend $130 on a third-grade math textbook and gratuitously revise it every four years?” McNealy asks. “The textbook you and I learned on would work just fine for every kid today. We learned it, didn’t we? Why isn’t it online and self-paced? And why don’t we use science to evolve it? Nothing has changed since Newton got hit on the head with an apple: 10 plus 10 was, is and will be 20 for a long time.”

McNealy also envisions the spreading use of online tests and homework assignments that Curriki grades automatically, relieving teachers of the task.

“What kids don’t like is taking a test and then finding out a week or two later how they did,” McNealy says. “Think about video games: What do kids love about them? The score is right there, screaming at them milliseconds after something happens. That’s the kind of resource that could really make education fun.”

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