Abstract

Scott McNealy had been the CEO of Sun Microsystems, a company that he had co-founded in 1984, for 22 years. In April 2006, he announced his decision to step down in favor of Sun’s president and COO Jonathan Schwartz. This case study discusses the various events at Sun under McNealy’s leadership. It traces the company’s growth from a small startup in the mid 1980s to one of the driving forces behind the internet economy in the 1990s. It also talks about the events that led to Sun’s decline in the early 2000s, and McNealy’ failure to arrest this decline. The case concludes with a discussion of the leadership change at Sun and whether Schwartz was the right person to give the ailing company a new lease of life.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Study the rise and fall of one of the major companies in the IT industry, and the role of its founder in its initial success and later troubles
• Analyze the relationship between leadership and growth
• Appreciate the effect of changing business environmental scenarios on companies and the need to respond to these changes rapidly
• Examine the relationship between innovation and success, and to understand that developing cutting edge products does not automatically translate into financial success
• Understand the importance of flexible business models, especially in markets with rapidly evolving technologies.

Keywords

Scott McNealy, Sun Microsystems, UNIX, Solaris, SPARC, Java, Linux, Microsoft, Windows, Intel, Dotcom Crash, Networking, IBM, HP, Leadership