How the founder of Xbox spins up start-ups within a 41-year-old software giant

How the founder of Xbox spins up start-ups within a 41-year-old software giant

CA Technologies’ internal accelerator program is already bearing fruit

Otto Berkes

Otto Berkes

Otto Berkes knows firsthand how an idea dreamt up by a small bunch of engineers can change the course of one of the biggest companies in the world.

He was one of four founders of the Xbox, whom in 1998 convinced Microsoft’s management that the company had, as he puts it, a “unique opportunity to compete in the living room”.

XBox’s first architect is now CTO at CA Technologies, where he is taking on the responsibility of encouraging an internal wave of innovation with a unique company accelerator programme.

While Microsoft took a hands-off approach to the Xbox, giving the team the “freedom to pursue the idea on our own”, Berkes says, at CA the company's ‘intrapreneurs’ follow a repeatable process.

And it works: as long as you’re careful not to kill the start-up with cash.

Orchestrating innovation

Until recently, innovation at CA happened 'organically' or more commonly was simply acquired. Since 2010 CA has bought 20 companies.

“While acquisitions are a great way to do that and I think we've done a really great job with bringing in products that are at the right place at the right time – the fact is there are some areas where even if I want to buy the solution today it doesn't exist,” Berkes tells CIO Australia at CA’s Silicon Valley offices.

“It’s those green-field opportunities where you really have to build it yourself. We need to be looking ahead, and making sure that we're investing some amount of resources to really anticipate the future need of customers.”

The CA Accelerator was launched at the beginning of last year. Although the right culture and general executive approval can aid innovation – take Google's famous 20 per cent rule (which has since been abandoned) – Berkes sought a repeatable pipeline, an “orchestrated and intentional approach”.

Anyone can enter, by coming to a program meeting with a one-page lean canvas of their idea. They then need to pitch the concept to a panel, including – no pressure – the CTO himself.

“I think initially it was [pressure for participants]. But I don't stand on ceremony or position and so hopefully you know, certainly I don't get a sense that they're that intimidated anymore,” Berkes explains.

If successful, projects enter a Seed One phase where they are required to prove the problem exists and what people are saying about it, by interviewing at least 50 potential customers.

During Seed Two, they focus on proving their solution fits the problem with rapid pivots to keep them on course.

Employees are permitted to dedicate their full-time to the effort and their positions are held open in the meantime: a concept known as Incubation Rotation. Salaries are funded by the office of the CTO.

“It becomes their full time job,” Berkes explains. “We realise that to really make this work it requires absolute focus. [Incubation Rotation] was a big part of setting up the accelerator, to make sure we really carved out people’s energy and bandwidth to be able to do this.”

If successful, projects advance to Startup Series A where they build a minimum viable product. Startup Series B focuses on solution-product fit and Startup Series C concludes with product-market fit.

“Startups fail when new businesses are treated like mature businesses,” says Berkes. The CA Accelerator, he says, functions more like an internal venture capital firm, financed after achieving various milestones.

“The model ensures business incubations are making appropriate investments and building things customers will pay for,” Berkes adds, “or they are shut down.”

It's personal

Berkes lights up when he talks about his accelerator, compared to his almost trademark state of serenity. He is still a developer at heart. Beneath his business shirt he still wears a dev-issue black tee.

Programming has always been my first love” he admits. After all, in his early career he re-wrote Microsoft's OpenGL implementation using optimised C and assembly language. He later led Microsoft's OpenGL and DirectX graphics development groups.

In his free time he doesn’t play Xbox but has been learning Swift, to “keep my hand in”. As such, for the intrapreneurs, he proves to be a very interested CTO.

“I'm personally involved with each and every one. I participate in all the monthly reviews. I love being involved,” Berkes says.

A number of internal start-ups are in the later stages of the program. There’s Instant Agenda, a mobile app for ‘super-productive meetings’; which provides modeling for DevOps teams; container analysis tool and; Qubeship which provides toolchains for Docker teams, to name but a few.

Only one project has exited the program so far – Jarvis – and not in the conventional sense. Jarvis is an analytics engine which is based open source technology and industry gold standard architecture.

“Jarvis ultimately didn't pass the market test and just couldn't get market traction. But we stepped back and said ‘what are our assets?’” Berkes says.

In Jarvis’ case the asset was a 'killer' analytics engine. It was marketed internally and was found to be a great fit for a number of CA products.

“Indirectly it found its way to the market,” Berkes explains. “So it was a little bit, you know, not the traditional route to market but at the end of the day we try to be pragmatic and if we build something that is valuable to the company let's use it.”

CA will, of course, continue to make acquisitions. It will continue to fund advanced research (the company recently partnered with Swinburne University of Technology and the University of Melbourne to research advanced service virtualisation). But the accelerator is generating the kind of ideas that are not available anywhere else.

“There's a real framework in place that I can operate at scale across the company that I think gives us a real leg up,” says Berkes. “We're very open minded. You know ultimately we are trying to get to a solution that's going to work for our customers – whatever the path is to that, we'll just find the optimal path.”

The author travelled to Santa Clara as a guest of CA Technologies.

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