Less planning, more legwork. That’s the formula some business schools are using to overhaul the competitions they conduct each year to test their students’ mettle as entrepreneurs.

The contests, which have been an academic rite of passage for decades, typically involve teams of students submitting written business plans, then following up with a short presentation to a panel of judges. The winner might receive a cash prize of tens of thousands to hundreds of thousands of dollars and even the chance to mingle with potential investors.

But most of the business plans emerging from these competitions never become full-fledged businesses. Critics say that’s because the competitions don’t encourage budding…