A 40-Year-Old Software Giant Disrupts Itself from Within
Agility and lean development rule within CA Technologies’ internal incubator program.
This program was produced by the Marketing Department of WIRED and Ars in collaboration with CA Technologies.
Innovation—true innovation—is the elusive Holy Grail of tech startups. Take Forty2.io, for example: It’s a genuinely innovative startup, using analytics and pattern recognition to provide real-time cybersecurity protection to online businesses. But perhaps the most innovative aspect of Forty2.io isn’t what the business does, but how and where the business was created: in the belly of CA Technologies, a 40-year-old software company around since the early mainframe days.
Today, technology moves breathtakingly fast. Advances in software driven by open-source tools, the red-hot app economy and practices such as DevOps are disrupting businesses left and right, but perhaps none more so than the software industry itself. Since last September, CA Technologies has been running what it calls its CA Accelerator. Part accelerator, part incubator, the program is one powerful way CA is staying ahead of technology and market changes, seeking to grow innovative ideas into legitimate startups.
Some ideas we hope will open new markets completely. Those are the gems. We want all ideas, but those are the ones we’re really looking for in this program.
— George Watt, CA Technologies
“As a company we want to continue to grow, and we want to do a lot of our growth organically. We also want to have the freedom to innovate and maybe take a big swing now and again on something truly transformational,” says George Watt, VP of strategy at CA Technologies Office of the CTO. “So we developed this program—it’s half accelerator, half venture capital investment—so that we can give these new ideas the best possible chance to succeed.”
To date, one startup has already exited the program and three others—including Forty2.io, which is headquartered in the company’s Santa Clara, Calif. office—are making their way through the program. Two more are due to enter soon. Not bad for a program that, according to Watt, wasn’t intended to begin until April 2016.
10 Minutes, One Piece of Paper
The program is based on the world of venture capital, but runs according to the guideposts of lean startups. Watt, who is given to referencing Eric Ries (author of “The Lean Startup”) and Ash Maurya (author of “Running Lean”), likes to say that CA’s internal incubator is meant to be “a resource, not a tax.” Ideas come from CA employees—from anywhere in the company, not just the software engineering teams—and when employees arrive at pitch events, usually held twice a month, they’re expected to have a single, 8.5 x 11-inch sheet of paper with the lean canvas written on it.
Anyone with an idea can show up, but individuals and teams get 10 minutes, and only 10 minutes, to present an idea. Top executives, including CA Technologies’ CTO Otto Berkes, listen to the ideas and then take 10 minutes to ask any follow-up questions. To enter a pitch event, all that’s needed is a solid idea. Teams should have also considered five crucial, initial questions: What problem are you solving? Who has that problem? How are you going to solve that problem? What value would solving that problem provide for the people who have it? And could you solve that problem in a way that isn't easily bought or copied? “The whole idea is to be lightweight and supportive on intake, and to have a robust program if they come in,” Watt says.
A Lean Startup Within a Giant Company
Once teams are brought into the program, it runs in a fashion similar to some of the more well-known startup accelerators out there, such as DreamIt and TechStars. Each team is run like its own startup, even though it’s within the corporate structure of CA. The people on those teams are called founders. Founders are given advisers after their skills have been assessed to determine where gaps are in their thinking and talents.
Investment money for each team comes from a pool CA Technologies has allotted specifically for this program, and each startup receives a budget—that way they know exactly how much money they have to take their startup from the idea stage to the execution phase. Every month, founders have “Pivot/Pause/Persist” meetings with their advisers, during which they determine whether a new business should shift its approach, keep on going, or stop entirely.
“Some ideas we hope will open new markets completely. Those are the gems. We want all ideas, but those are the ones we’re really looking for in this program,” says Watt. “It’s all about building stuff that matters, and learning what works quickly.”
Indeed, perhaps the most striking aspect of CA Technologies new incubator program is just how quickly the team that set up the incubator learned what would work. From the start, Watt says, those on board knew the program would have to be established according to lean principles. There would be no room for 70-page pitch decks that are assembled, read once, and then tossed into the garbage can. The incubator got a big boost early by pulling in four businesses that had already been incubating inside CA Technologies.
But the truly interesting thing, Watt says, is that once word got out about a new incubator starting up, everybody wanted to help. Teams across the company—in engineering, legal, marketing, sales and human resources—started jumping into the effort.
“CA attracts a lot of really innovative people, and people are passionate about things like this,” Watt says. “Once they saw it and understood what it was, there was no convincing to be done.”