Paper on driving_innovation_in_large_corporationsDocument Transcript
Harnessing the Power of Proven Entrepreneurial Techniques to Drive
Innovation in a Large Company
By William K. Aulet (MIT Entrepreneurship Center), Ricardo dos Santos (Qualcomm), Stig Poulsen
(Danfoss Ventures) and William R. Wagner (Hewlett Packard)
March 17, 2010
Innovation is the key to sustainable competitive advantage, and its pursuit is the holy grail of most
companies with global ambitions. Innovation comes naturally to most small, entrepreneurial
companies because it is vital to their survival and growth. Innovation in large companies presents
more significant challenges, since they tend to be more financially driven and less tolerant of risk.
In this paper, we look at this issue and how three companies, Danfoss1, Hewlett-Packard2, and
Qualcomm3, have stimulated innovation in a relatively short time period by harnessing the power of
the business plan competition, a concept that was leveraged from the world of entrepreneurship.
The Power of Entrepreneurship
The power and impact of entrepreneurship is becoming increasingly evident. In February 2008, a
report released by MIT and the Kauffman Foundation4 on the impact of entrepreneurship arising out
of MIT alone revealed stunning results. Nearly 26,000 currently existing companies have been
founded by MIT alumni. These companies have created approximately 3.3 million jobs and
generated approximately $2 trillion dollars in annual revenue. To put this achievement in
perspective, as a standalone economy these companies would comprise the world’s 11th largest
economy, positioned behind Brazil and ahead of Russia. It is readily apparent that entrepreneurship
is a powerful engine that is driving economic growth.
The Needs of Corporations
Corporations are continually seeking organic growth by building new businesses and reinvigorating
existing ones, looking to innovations in products, business models, processes, and customer
experiences as the source of growth. Many of them are looking for new practices to spur innovation.
Innovation and intrapreneurship (i.e., the entrepreneurial spirit to create new businesses within
existing organizations) have become mantras often expressed by top management.5 They look
enviously at the often explosive growth created by entrepreneurs and wonder how they can harness
this powerful force for their company’s benefit, with the goal of opening new markets, refreshing
existing products and being more globally competitive.
Inhibitors to Innovation at Large Companies
Danfoss is a Danish manufacturer of valves and fluid handling components for HVAC and industrial applications with
approximately $5B in annual revenue (www.danfoss.com).
Hewlett-Packard Co. is a global provider of IT products and services, with 2008 revenues of $118B (www.hp.com).
Qualcomm is a developer of advanced wireless technologies, products and services with 2008 revenues of
approximately $11B (www.qualcomm.com).
The 12 Different Ways for Companies to Innovate. Mohanbir Sawhney, Robert C. Wolcott and Inigo
Arroniz, MIT Sloan Management Review, Spring 2006 Vol. 47 No. 3
While companies want to innovate and become more entrepreneurial, they face five major obstacles
in attempting to do so:
1. Fear of Cannibalization – As documented by Clayton Christensen6, companies with
existing revenue streams are reluctant to risk cannibalizing them by creating new products
whose market performance is uncertain. As a result, new ideas are not pursued with the
same passion applied by entrepreneurs when starting a new venture.
2. Structural Obstacles to Invention – As highlighted in Howard Anderson’s work in articles
such as “Why Big Companies Can’t Invent.”7, the traditional model of research in large
companies is failing for structural reasons. Henry Chesbrough agrees and offers other
solutions8, but the point remains that with large corporations, structural inhibitors to
innovation are commonplace.
3. Desire for Predictable and Consistent Results – Mature companies have investors with
large amounts of deployed capital who value and expect predictable, consistent financial
results. As could be deduced by logic and evidenced in the experience at 3M Corporation,
this expectation conflicts with the inherently unpredictable and disruptive nature of
4. Lack of Training – Traditionally, the employees of large, mature companies are trained and
expected to manage existing businesses rather than to create new businesses. They gain
proficiency in the practices of gaining market share, adding incremental new product
features, and leveraging and optimizing existing competitive advantages. Entrepreneurs, on
the other hand, learn to create new markets, to create entirely new products, and to build
competitive advantage from a clean canvas.
5. Personal Risk/Reward Profile – In large companies, failure is often not well received.
Career advancement most often results from the careful management of successes and
avoiding association with conspicuous failures, for which the penalties can be severe. As in
scientific laboratories, entrepreneurial ventures use experimentation and failure as an
important part of the innovation process. There are large potential financial and personal
rewards, and correspondingly high risks, associated with entrepreneurial ventures. In large
companies, the potential upside financial benefits are not commensurate with the downside
career risk that can accompany failure, a situation that inhibits the pursuit of innovation.
This resulting situation creates a dilemma within large companies. The innovation that is necessary
for growth is inhibited by the very nature of the enterprise. The question is how to meet this
challenge. Described here are three case studies in which major corporations have experimented
with repurposing a proven technique from academic and other entrepreneurial environments – the
business plan competition – to promote innovation and “entrepreneurial spirit.”
Business Plan Competitions – Definition and a Brief History
Business plan competitions first started in the early 1980’s with the University of Texas at Austin
Business School’s Moot Corp® competition10, built to emulate the existing moot court competition
“Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail”, Harvard Business School Press, 1997.
Reference MIT Technology Review, May 2004.
“Open Innovation”, Harvard Business School Press, 2006.
See BusinessWeek, June 11, 2007, “At 3M, A Struggle between Efficiency and Creativity”
of its law school. In 1989, Moot Corp became a national competition, and others began to emerge
in business schools around the world. Today, the MIT $100K Entrepreneurship Competition11 is
celebrating its 20th year. It has attracted thousands of participants and has resulted in the creation of
more than 120 companies. They have over $10B in aggregate market capitalization, have raised
over $700 million in venture capital funding, and have created over 2,500 jobs. The business plan
competition concept has been embraced outside the halls of academia and has many close cousins
run by various private and public organizations.12
Where the business plan competition has been adopted, the benefits are typically threefold:
1. Create New Companies - The competitions can create new ventures as a result of the
motivation created through financial or recognition incentives.
2. Foster Enhanced Skill Development – The competitions serve as both motivators and tools
to enhance overall business acumen and entrepreneurial behaviors.
3. Build Cross-Functional Teams – The competition can be a platform whereby people with
different skills and the common goal of creating a new venture can meet and become
partners. The resulting social and professional networks enhance the ability of individuals
to realize their goals.
The following table summarizes the three corporate business plans we will review. Each
competition was independently created to uniquely reflect the goals and culture of their respective
Danfossi Hewlett-Packardii Qualcommiii
Man on the Moon Flashpoint Venture Fest
History • Run annually since 2004 • Run twice since 2006 • Run annually since 2006
• Promote entrepreneurial • Develop business acumen • Develop corporate
culture • Develop entrepreneurial skills entrepreneurs
Stated • Develop entrepreneurial skills • Develop presentation skills • Promote innovation
Objectives • Identify of new business • Identify new business • Business breakthroughs
opportunities opportunities • Explore management
Management • CEO sponsored • Business unit and CTO • CEO sponsored
• Managed by corporate sponsored • Managed by dedicated team
and Executive venturing staff • Managed by a volunteer staff in R&D
• Open to all employees (but • Open to all employees • Open to all employees
each applicant must pass a • Team event • Team or individual event
competency test) • Three finalists chosen through • Two rounds of down-
Design • Team or individual event two rounds using judging selection to 10-15 finalists
Summary • Five finalists chosen through panels • Finalists present to
two rounds of judging panels • Finalists present to executive executive judges
• Finalists present to executive judges
• Budget $700-900K • Budget $150-200K • Budget $1M
Resources • Budget per finalist team $10K- • Coaches from business units • Funding to develop business
$100K+ • Web portal with methodology, plan, research, demos,
The best known example may well be the X-Prize competition (www.xprize.org)
• Coaches from Danfoss templates, and educational travel, consultancy, IP, etc.
Ventures and business units resources ($5-$75K)
• Web portal with methodology • Coaching from competition
and tools mgt team
• Funding to develop business • Mentorship from executives
plan, research, demos, travel, • Formal educational
consultancy, IP, etc. programs during bootcamp
• Mentorship from executives • Web portal with templates
and other educational
• Opportunity to start a new • Opportunity to incubate start up • Opportunity to start a new
business business ($200K of startup business
• Attend MIT EDPiv funding and three months) • Contextual educational
• Educational opportunities • Attend MIT EDP experience, networking &
• Executive-level visibility and • Networking and mentorship mentorship
Incentives recognition • Executive-level visibility and • Executive-level visibility
• New, formal career paths recognition and recognition
• Opportunities for continued
ownership (no formal career
paths to date)
• In first five years, 21 proposals • 152 competing teams in year 2 • 200 entries in 2009 (up 50%
incubated, integrated, or spun (up 100% y/y ) y/y)
out • 23 countries represented in year • Surveys show marked
• Approximately 55 participants 2 (up 100%) improvements in
in each competition • Year 2 winner beta launched entrepreneurial skills and
Results • 10 countries represented totally internally attitude
• Enhanced culture of • Surveys show enhanced • 75% of plans are investigated
entrepreneurship business acumen and further; ~20% of plans are
entrepreneurial skills ultimately implemented
Danfoss: Man on the Moon
Danfoss has become a mature company operating in mature
markets. Entrepreneurship and radical innovation, formerly
hallmarks of the company, have been on the wane. In an attempt
to change this trend, the company’s CEO sponsored a number of
initiatives before the idea of an internal business plan competition
emerged. “Man on the Moon”, inspired by MIT’s $50K
competition13, was started in 2004 and has since become an
The original objectives of the competition were to stimulate cultural change that embraced
entrepreneurial skills and behaviors. It was eventually discovered that great business ideas were
emerging from the competition, which now includes radical business innovation as a goal. The
competition has created additional deal flow for the corporate venturing unit and has helped to
identify employees with entrepreneurial talents for their most promising new ventures. Man on the
Moon and related activities are coordinated and sponsored by the Danfoss Ventures department.
Danfoss Ventures reports directly to a group of the Danfoss C-level executives and is led by the
Now the $100K Business Plan Competition.
The competition is open to all Danfoss employees. Competitors retain the responsibilities of their
normal jobs while competing on a spare time basis. The competition seeks proposals of three types:
(1) those that create an entirely new line of business; (2) those creating new businesses adjacent to
current lines; and (3) improvements to existing business with either a 5-10X improvement in
features and performance or cost reductions of >50%. Each year a specific theme is chosen based on
challenges the company is expected to face in the coming years. For example, the 2008 competition
theme was “Buildings of the future.” The theme in 2004 was “Oil at $100 per barrel.” These themes
are only suggestions, and any proposal consistent with company strategy is invited.
Employees compete in teams of 4-5 people created during an initial selection period. Functional and
personal diversity within the teams is strongly encouraged. Teams apply for participation by
submitting a summary of their business proposal and a description of each team member’s skills and
anticipated contributions. Based on a one-page summary, about 12 teams are chosen to compete in
the first round. During this phase, the focus is on strengthening the ability of the teams to articulate
their value proposition through a strong one-minute elevator pitch. A one-day networking, training,
and team building event kicks off this first phase. After a six-week development period, a two-page
executive summary and a ten-minute pitch are presented to a jury of Danfoss senior executives and
external judges, who choose the five teams that advance to the competition’s second phase.
During this next six-week phase, the focus shifts to business concept development. The teams work
to build a strong business model, incorporating customer insights and commitment, financial
forecasts, and a solid understanding of the resources required for execution. Instruction in
entrepreneurship and business acumen is provided as the competing teams finalize their entries
through a mix of live training classes and online courses, as well as coaching from Danfoss
Ventures. The second round culminates in a ten-minute presentation to Danfoss Ventures’
Investment Committee (the CEO, COO, CFO and divisional presidents), which selects two
proposals based on the criteria of market potential, market entry strategy, value proposition
sustainability, and the quality of the presentation. A winner and runner up are chosen. Both teams
are awarded the opportunity to attend the MIT’s one-week Entrepreneurship Development Program
The participants receive development resources for needed travel, market analysis, demos, patents,
and consultants. In the initial stages, the costs for these services average $10-12K per team. In
latter stages of development, this can increase to over $100K. Teams are allowed to use internal
and external resources. Possibly the most valuable resource arises from leveraging the global
resources of the Danfoss Group and its 23K employees. The competition has minimal formal rules
to allow for creativity and to encourage initiative.
One incentive to participate is increased visibility among company executives. The competition is a
valuable career development opportunity. At the conclusion of the competiton, participants can
choose to pursue a more entrepreneurial path within Danfoss. Approximately 10% of participants
shift their career focus in the company and embark on a new path within venturing or new business
creation. For many other participants, the commercialization of their idea is the most important
Danfoss Ventures accepts the most promising of the competition’s business proposals for further
investigation towards the ultimate goal of launching them as new businesses. Team members have
the option of participation in this incubation phase. Each proposal is developed using established
corporate venturing processes, which ultimately lead to a decision to either incubate as stand-alone
businesses, integrate into existing businesses, spin out, or reject. To date, two ventures have been
funded in incubation, three have been funded and formally launched as new businesses inside
existing businesses, and on average one proposal is spun out after every other year of the
2004 2005 2006 2007 2008
Teams 3 4 10 13 12
Competitors 9 12 44 58 55
Countries represented 1 2 5 8 10
HP’s Flashpoint business plan competition began as a
grass roots initiative from the inspiration of a member
of the company’s new business creation team. Inspired
by the MIT $50K competition, he set out to create a
corporate business plan competition that could deliver the business and organizational benefits of
those commonly held in academic programs. The competitions are run entirely by volunteers under
the sponsorship of the Chief Technology Officer and a senior executive responsible for technology
and product development.
The competition has been held twice. It seeks to teach and promote entrepreneurial behaviors such
as passion, resourcefulness, flexibility, and skillful promotion. It also aims to improve overall
business acumen and presentation skills, particularly among the scientific and engineering
community. The first competition, Flashpoint 2006, offered an opportunity to benefit from that
competition experience but made no advance commitment to the incubation of winning proposals.
The second competition, Flashpoint 2.0, focused on a specific business area of strategic importance
to HP. Teams were challenged to develop business proposals targeting that area of business. $200K
in incubation funding was offered as the top prize. This proved to be a far more attractive
competition structure, and participation doubled as teams found the lure of seed funding a
HP employees compete in Flashpoint in teams of 3-5 people. After registering, the teams create
two-page executive summaries, a simple format that presents a low barrier to entry. Since it is a
primary goal of Flashpoint to teach business planning skills, it is important to attract potential
competitors who do not already possess those skills. The executive summaries are distributed to an
internal network of business planners and managers for judging, using a template that grades on a
variety of criteria.14 Each summary is graded by multiple judges, whose scores are averaged to
select 10-15 proposals which advance to the next stage of the competition, during which full
business plans are developed.
A Flashpoint web portal was created, through which employees can access information about the
competition as well as a variety of resources on innovation, entrepreneurship, business planning,
presentation skills, and company strategy. Competitors who progress to the second (semifinal)
round are provided with a coach, typically a business manager with experience in business plan
writing. Teams are provided with a business plan template describing each required section of their
submission. Business plans must be no longer than ten pages including all text, graphics, and
supporting materials. The plan must be accompanied by a brief PowerPoint pitch of no more than
seven slides. Three months are allotted for business plan writing. Brevity in the plan and
presentation are required as a way to encourage clarity and focus. Teams learn that they must be
able to present a compelling picture in just a few minutes, and they are encouraged to develop a
strong elevator statement as a means of distilling their messages.
Three finalist teams are selected by a panel of judges including company executives, venture
capitalists, and business school professors, who meet to review all of the business plans. The
judging criteria employed in the semi-final round include the overall quality of the business plan
document, business attractiveness, addressability by HP, technical feasibility, and the perceived
ability of the team to successfully incubate and launch the proposed business. To address this last
criterion, teams are interviewed by at least one of the judges, who then presents her findings to the
rest of the panel. The three finalist teams are given one month to hone their plans and presentations
Criteria incude the clear identification of a target customer set, a quantified value proposition, preliminary financial
assumptions, and clarity of presentation.
in advance of the final judging, which takes place at a formal banquet. Each team presents a ten
minute pitch, followed by a Q&A session with the judging panel of senior executives who select the
A variety of incentives is offered to participants. Volunteers receive certificates and trophies
acknowledging their service. The banquet event held at the end of the competition offers
competitors and participants an opportunity to be recognized by senior executives in a lively social
atmosphere. In addition to the incubation funding, members attend MIT’s one-week
Entrepreneurship Development Program at MIT.
Flashpoint has proven to be a widely popular event that attracts participants from every part of HP’s
business and geographic locations. Through the competition’s web portal and the competing team’s
own websites, blogs, and wiki pages, all behind HP’s firewall, employees follow the progress of the
competitors and access the professional development materials provided. During the final stages of
the competition, the Flashpoint webpage is routinely in the top ten internal websites in terms of
daily visitors. Team blogs have proven to be an effective way of engaging direct participation by
employees as they offer suggestions and volunteer assistance. Surveys show a high level of
enthusiasm for the competition and a strong desire to participate in future rounds.
Flashpoint 2006 Flashpoint 2.0
Teams 72 152
Competitors 256 488
Countries represented 11 23
Qualcomm: Venture Fest
Qualcomm created its internal business plan competition, Qualcomm
Venture Fest (QVF), in 2006 to add a formal selection mechanism to its
online idea management system, the Qualcomm Innovation Network
(QIN). There are four main objectives behind QVF:
1. Develop entrepreneurial leaders (most important) who can
articulate ideas into plans, build a coalition of support, and execute
expediently and frugally
2. Promote the company’s culture of shared responsibility for
3. Discover potential breakthrough opportunities for the company
4. Experiment with management innovation practices (e.g. collective
intelligence, self-forming teams, and internal markets).
QVF is managed by a small team of experienced new business development professionals housed in
corporate R&D. The QVF management team reports on a dotted-line basis to the company’s CEO,
who champions the program.
QVF is a yearly competition open to all full-time employees. Each competition has either an
internal or external “opportunity identification” theme. For example, QVF’09 had an internal
“Fusion” theme, seeking new combinations of existing products and capabilities while QVF’10 has
an “Out Sight” theme, seeking external innovations that can be enhanced by Qualcomm.
To compete in QVF, an employee submits a short business plan summary into a section of the
company’s QIN web tool. The submission period is open for approximately six months. The
down-selection process for the 10-15 finalists consists of two rounds of ”collective intelligence”
mechanisms lasting four to six weeks.15
When an employee’s business plan summary is selected to be a finalist, he or she must recruit a
diverse team of 3–10 volunteers. The teams undergo a three month “Boot Camp” on a spare-time
basis. The Boot Camp includes a series of core and elective courses (~40 hours over three months)
in corporate entrepreneurship and innovation. The core courses are taught by specialist consultants
and university professors. The elective courses are taught by internal subject matter experts in
fields such as financial analysis and intellectual property. The teams entering the QVF Boot Camp
are provided with a micro-fund, which can be used for internal or external expenses such as demo
equipment, market research, and expert consulting. Teams also recruit a VP-level mentor and
expert advisors, similar to the process followed by a start-up company. Teams prepare a full
business plan for 20-minute presentations, including Q&A, to the judges, who include the CEO,
President, CFO, COO and CTO. The judges select the top three prizes among the finalist teams and
announce the winners at an all-employee finale event.
The key incentive for participants in QVF is the opportunity to work on real business plans. The
program offers a uniquely contextual educational, networking, and mentorship opportunity in the
key principles of corporate entrepreneurship, including the art of discovering breakthrough concepts,
and moving them forward through internal and external networking and early-stage bootstrapping.
QVF also offers competitors unique visibility in the company and official recognition for their
efforts. Finally, there is a genuine chance that the proposed venture will become a reality in some
form, and that selected team members will continue to work on their project after the competition’s
conclusion. This has been the case with several QVF concepts.
The top three teams are granted a second round of modest seed funding to take them through a more
in-depth proof-of-concept or diligence phase. The remaining teams do not have this guarantee of
seed funding but many have been successful in securing funding through existing departmental
innovation budgets. Executive judges are kept abreast of developments and receive periodic
updates so they can determine the ultimate home for the various teams, whether inside an existing
business unit or in a temporary incubator like corporate R&D. Expectations are set that not all
teams will succeed in securing funding or reaching market launch.
Results of the QVF have been promising. Participation has increased 50% y/y. The number of team
members in the finalist teams in nearly 100. The QVF Boot Camp is producing high quality
business plans and well trained future corporate entrepreneurial leaders. About 75% of the business
plans receive funding for proof-of-concept activities. Ultimately, about 20% are implemented as
Mechanisms include peer and expert ratings and a decision market game.
new businesses with continued involvement from their original champions. Some plans also become
incorporated into existing projects or result in the filing of significant IP for future use. The most
prominent success to date is the Zeebo wireless gaming console – a disruptive gaming solution
targeting emerging markets recently launched in Brazil and Mexico.16
Venture Fest Participation
QVF’07 QVF’08 QVF’09
Initial Submissions 82 128 196
Submitters 134 186 338
Countries represented 8 11 16
QVF’07 QVF’08 QVF’09
Finalist Teams 10 14 14
Team Members 68 78 96
Countries represented 1 5 5
Conclusions and Lessons Learned
In each of these cases, for a relatively low cost the Corporate Business Plan Competition (CBPC)
has a high impact on improving the innovation culture, the skills of the organization and even
producing tangible results from new lines of business. Will this happen in every case? The answer
is clearly no, and so we look at the characteristics that first make an organization a good candidate
for such a competition:
1. Is innovation fundamental to your company’s business strategy?
2. Does the CEO believe this and aggressively push for innovation?
3. Is your company willing to take a long term view of innovation programs?
4. Will a CBPC complement existing innovation programs in your company today?
5. Is your organization willing to make a significant investment in a CBPC program? (>$500K
out of pocket plus a material time commitment of senior executives)
6. Will your company take seriously ideas that come out of such a competition?
7. Is there an identified champion who is passionate about running such a CBPC program?
If your company fits this profile, then the lessons learned from our case studies would indicate the
following are key design points for a successful CBPC:
1. Clear and Aligned Objectives: The objectives of the CBPC need to be clear and directly
related to the overall strategy of the company. As such, they should be consistent with the
objectives that have been met by successful traditional independent business plan
competitions, as well as being an effective catalyst to change corporate culture. As
mentioned earlier, traditional business plan competitions offer three main benefits: creation
of new companies, fostering of skill development and building of cross-functional teams.
Importantly, it will take even longer to create new companies in a corporate setting: perhaps
a few years because of the additional challenges in that environment.
2. Strong Support at the Top: In our case studies and other analysis, this is the most critical
aspect for success of a CBPC. It is easy to criticize a corporate business plan competition,
and it will likely be a target for incremental managers who do not want their homeostasis
threatened or resources reallocated from lower risk projects. The only solution is to have
active and committed support from the very top. Since there will be failures before
successes, CEO advocacy is critical.
3. Sufficient Resources: It is imperative that sufficient resources are committed to the
program. The first and most visible will be the incentive for the winners. Is it meaningful to
them? Does it show commitment from the company? If not, everyone may be polite but
they will notice it, no matter what the decibel level of the cheerleading. In addition, there
must be sufficient resources to run the operations of the program for items like the web
portal, programs and market research, which requires microfunding. In our cases, we found
a budget of at least $500K was necessary to have a positive impact. Finally, is there an
agreement or understanding on how other non-monetary company resources will be allowed
to be used for the competition? Will the employees be encouraged and given time to do this,
even if it takes place after hours? Will other company resources be made available? Will
executives willingly and gladly spend meaningful time judging, mentoring or helping the
teams? This is necessary to back up the objectives and strong top-level support for the
4. Good Plan: A solid plan must be developed that involves careful scheduling to fit with and
not disrupt the schedule of the company’s core businesses. In addition, the plan should
include a web site for communicating the program broadly, consistently and at low cost. An
outreach component of the plan must also be developed to generate the awareness and
excitement needed to create deal flow for the program. Of course, the overall plan needs to
involve the key stakeholders at the appropriate time and level and have their participation
locked in on their schedules. The plan should be updated annually. We have also found it
valuable to produce a theme for each year, but it should be a guideline and not a restriction.
5. Avoid Too Much Detail in Plan: Entrepreneurship is a creative problem-solving skill, and
if the competition becomes a fill in the blanks exercise without forcing the participants to be
creative, the proper skills will not be developed. Initiative and commitment to creatively
break through walls should be encouraged. Danfoss has explicitly designed this lack of “too
much detail” as one of the explicit guidelines in their competition.
6. Strong Team to Execute: In each instance, the CBPC takes strange, unpredictable and
sometimes scary turns and twists. It is therefore essential to have a visible, respected,
passionate and committed team to lead the execution. The team will have to make
adjustments to navigate through choppy waters, especially in the early years, but in the end
it will be great leadership training.
7. Support Tools for Participants: In reviewing the factors for success, having good
mentors/coaches was very important, which seemed obvious. It was less obvious that
having a high quality web site with information, tools and communications capability was
extremely important as well – and potentially even more important. In the case of our three
companies, this helped to tie together disparate geographic groups and foster cross-
disciplinary teams. It was also important since much of the work had to be done after hours.
8. Exit Strategy: There needs to be a clear strategy and concrete plan for what happens when
the competition is over, and the exit strategy must be embraced by the executives, the
organizers and the participants. Without it, the CBPC will become an event rather than part
of an integrated innovation plan. Consequently, its value will be dramatically reduced and
its longer-term impact will be disappointing.
9. Willingness to Involve Outside Parties: In our competitions, if expertise was lacking
internally and even times when it was present, the willingness to engage outsiders to help in
evaluating new ideas was critical. Beyond generating new thinking and discussion -- which
is the essence of innovation – this commitment sends a clear message that the company is
open to ideas and scrutiny of their efforts by outsiders. Another corporate business plan
competition is now planning to take this a step further, opening its CBPC to outside
participants. This will be based on the model of the MIT $100K competition, where
outsiders can participate as long as there is one central player from the sponsoring
organization. With a strong foundation from the other items on this checklist, this
development can inject new thinking into the company. CBPC designers should consider
incorporating this new feature.
10. Celebrate Wackiness and Even Failure in the Participants: True innovation involves a
process of mutation that at first might seem crazy, but it expands the boundaries and
ultimately might (or might not) turn into a valuable innovation. Out-of-the-box thinking
should be celebrated, and entrants who “fail” should be given credit and encouraged to
determine what was learned in the process. Failure to encourage such learning may cut off a
valuable line of thinking that could produce breakthrough innovation. History shows us that
the much maligned Apple Newton product failure was a seed that ultimately contributed to
the DNA of the game-changing iPod and iPhone products.
When looking at these three examples and others the authors have reviewed, it is clear that CBPC,
as traditional business plan competitions have proven outside the corporate structure, can be a
powerful program to promote innovation. It is not, however, a silver bullet in all situations. At best
it is a valuable tool in a more comprehensive tool box that corporations should use to achieve their
innovation goals. If you choose to use this tool, consider carefully the ten points of guidance we
have recommended in this paper and your benefits could be remarkably like they have been for the
good venture capitalists who get 5X or more return on their money. However, it is important to
note that a venture capitalist approaches this process from a long-term perspective. The innovation
process is like a plum tree that at first drops many green, hard, inedible plums to the ground. Unless
you are willing to wait, you may miss the tasty, ripe plums that the tree will eventually produce.
Implementers of CBPCs must likewise have patience to see the full rewards of their efforts and
Entrepreneurship Development Program, MIT-Sloan (http://entrepreneurship.mit.edu/edp.php)