| Scott McNealy |
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Only a few companies know how to manufacture new CEOs. Scott McNealy has done it again and again. More than 75 people--including a number of women--who have wound up as chief executives at
Only a few companies know how to manufacture new CEOs.
More than 75 people--including a number of women--who have wound up as chief executives at technology companies trace their managerial roots back to time spent with McNealy, who was one of Sun Microsystem's four co-founders in 1982.
Currently McNealy is chairman of Sun as well as deeply involved with the nonprofit Curriki.org, which makes grade-school curriculum available for free on the Internet.
McNealy has long been a study in contrasts: He has a blue-blood education pedigree that includes an undergrad degree from Harvard University and an MBA from Stanford University, but he delights in an aw-shucks demeanor and named his children after models of American cars, like "Maverick" and "Dakota."
His managers by and large admired him--in no small part because he trusted them. "We weren't punished for making mistakes. We were encouraged to try bold moves," recalls Laurie Yoler, an investment banker at GrowthPoint Technology Partners who worked at Sun in the 1990s.
Carol Bartz, who has just taken on the top job at
Forbes spoke with McNealy recently about how to hire talent, how he advises managers and what he thinks of Carol Bartz and Eric Schmidt.
Forbes: What was different about how you managed Sun in contrast with other Valley companies?
Scott McNealy: I tended to manage by clear delegation. People got to be in charge of things. My decision-making process was not to make the decision but to decide who got to decide. And therefore I'd say, "Alright, Eddie, you're in charge of this decision. Go off and run a process and come back to us with your decision." If you hire really, really great people, they're going to know more about the problem they're dealing with than you will.
What did that leave for you to do?
I spent a lot of time helping and coaching people. When you make a decision, you have to, first of all, outline the problem. Then you have to consider the alternatives. You then have to be incredibly participative in the problem definition and problem proposal--get everybody's input--and then you have to decide quickly. You can't just grind it out and think about it and wait until it becomes explicitly obvious what the answer is. You've got to come up with the answer before the competition does. And so I put a lot of pressure on my managers to be quick decision makers.
Is that "consensus" management?
I call it participative but not consensus. One thing I always told them is: Everybody shouldn't necessarily agree with your answer. And nobody should be surprised. I always said, "I'll be very upset if you don't know how people are going to react to your decision." So that forces them to go out and talk to a lot of people.
How did you make people accountable?
We had a very strong annual planning process where we had a set of deliverables … including … an "interdependencies" section. It said: To make my plan I need to do the following but here's what I need out of my peers.
A lot of negotiation and conversation happens when you have an interdependencies sheet. And when [a manager] didn't make the plan, they'd go back and say, "Well, so-and-so said he was going to deliver on this and he didn't." That would provide some fairly interesting accountability inside the organization.
We had a million little management tricks and techniques that we used [in growing Sun from zero to more than $10 billion in revenues run rate]. You require some management tricks--structure, process, culture--to do that. And good feedstock. We made sure we were hiring good people and doing good reference checks … We had a thing called "sunscreen" that was our process for checking whether the resume facts were correct and whether someone had a police record. Just simple things like that. It's a really good idea.
What if a hire didn't work out?
It doesn't mean they're not good people. They were all good people when we hired them. Sometimes they'd leave on their own if they didn't feel that they were being appreciated. Sometimes they'd settle into a role more attuned to what they were doing. Sometimes we had to let them go because it wasn't working out right. But we never mistreated anybody out the door.
When was the last time you heard someone got "fired" at Sun? If they break the law, they're fired like crazy. But our view is that everybody is trying hard, everybody's working hard, everybody's talented in their own way … and if they're not in the right role we should treat them with respect.
You might remember a situation where a company missed a quarter and publicly fired a couple of people on the earnings call. And laid the blame right at their feet. And the CEO says, "We're getting stuff done here. We're delivering accountability." That's just not the right way to go do it. Can you image the next staff meeting? You bring in the two new executives and say, "Here's a towel. Wipe the blood off. Have a seat, and, you know, good luck. Have fun."
How did you pick who to hire?
My interview process … wasn't very scientific. Usually by the time they got to me they were pretty talented people. I would interview the person and--unless it was such a brain-dead obvious decision--I wouldn't let the moment get me. I'd let my mind process it while I was asleep. I'd wake up the next morning, and if I was thinking about the person that next day at work, I'd hire them. If I went two days, and [someone] came back and said "What did you think of so-and-so?' and I said 'I haven't thought about 'em for a nanosecond. I'm not interested' [then they weren't hired].
I know that's a weird way ... and I wouldn't say it was 100% but whether they were on my mind the next day would have a huge impact on whether I hired someone or not.
What's Carol Bartz like?
She's tough, she can make a decision, she knows what she wants to get done. She's got a big smile, a big laugh, but she can be tough, too. (See "When Scott Promoted Carol.")
She'll have a lot of competitors--including Eric Schmidt at Google.
Oh yeah.
How do you think that's going to play out?
[McNealy laughs.] I don't know. [Laughs again] Eric's super bright, too. Eric's got an intellect that goes forever. But you know, there's two kinds of smarts: There's intellectual and then there's street smarts. Carol's a real street smart person--not that she's not smart intellectually. She makes really smart moves. Eric makes very intelligent moves. It's very funny to watch. They have very different styles.
What else has been a key to Sun's culture?
We always had a cause. We always had a clear set of enemies. We always wanted a diversity of backgrounds, ideas and cultures. But we wanted to have commonality of purpose. A lot of those good leaders who came out of Sun understood and knew what I was trying to do when I picked an enemy, or when I picked a cause or when I put all the wood behind one arrowhead. It was about trying to align a bunch of really different people around a commonality of purpose. That's what really great leaders do. Steve Jobs does that with insanely great products. We did it with our commitment to eliminating the digital divide without doing harm to the planet and our focus on sharing. Those are very powerful ideas that can align a lot of different people with different backgrounds.
You were famous for "top 10" lists. What are your top 10 rules for managers?
I'll give you a few:
--Kick butt and have fun
--Be participative but not consensus
--To ask is to seek denial
--The right answer is the best answer, the wrong answer is second best. No answer is the worst.
--Yes or no?
I used to beg people to answer a yes or no question with a "yes" or a "no." If you watch any CEO ask a simple yes or no question of somebody on their staff, I don't care who they are, 999,999 out of a million won't say "yes," or "no." They'll launch into an answer. I used to laugh and say, "I'll take that as a 'no.'" or "Was that a 'yes'?
