Here’s a head-scratcher when it comes to scaling innovation: What happens when your innovative product is a hit with customers, but you still fail spectacularly? Just ask the folks behind Smashmallow, the gourmet marshmallow company that went from sweet success to sticky situation faster than you can say “s’mores.”
The Recipe for Initial Success
Jon Sebastiani sold his premium jerky company Krave to Hershey for $240 million and thought he’d found his next billion-dollar idea in fancy French marshmallows. And initially, it looked like he had.
Smashmallow’s artisanal, flavor-packed treats weren’t just another fluffy, tasteless sugar puff – they created an entirely new snack category. Customers couldn’t get enough of their handcrafted, churro-dusted, chocolate-chip-studded clouds of happiness. The company hit $5 million in sales in its first year, doubled that the next, and was available in 15,000 stores nationwide in only its third year.
Sounds like a startup fairy tale, right? Right! If we’re talking about the original Brothers Grimm versions. Corporate innovators start taking notes.
The Candy-coated Vision
Sebastiani and his investors weren’t content with building a successful premium regional brand. They wanted to become the Kraft of craft marshmallows, scaling from artisanal to industrial without losing what made the product special. It’s a story that plays out in corporations every day: the pressure to turn every successful pilot into a billion-dollar business.
So, they invested. Big time.
They signed a contract with “an internationally respected builder of candy-making machines” to design and build a $3 million custom-built machine and another with a copacker to build an entirely new facility to accommodate the custom machine.
Bold visions require bold moves, and Sebastiani was a bold guy.
The Scale-up Meltdown
But boldness can’t overcome reality, and the custom machine couldn’t replicate the magic of handmade marshmallows. It couldn’t even make the marshmallows.
Starch dust created explosion hazards. Cinnamon wouldn’t stick. Workers couldn’t breathe through spice clouds. The handmade ethos of imperfect squares gave way to industrialized perfection. Each attempt to solve one problem created three more, like a game of confectionery whack-a-mole.
By 2022, Smashmallow was gone, leaving behind a cautionary tale about the gap between what customers value and what executives and investors want. The irony? They succeeded in their mission to disrupt the market – by 2028, the North American marshmallow market is projected to more than double its 2019 size, largely thanks to the premium category Smashmallow created. They just won’t be around to enjoy it.
A Bittersweet Paradox
For so many corporate innovators, this story hits close to home. How many promising projects died not because customers didn’t love them but because they couldn’t scale to “move the needle” for a multi-billion dollar corporation? A $15 million business might be a champagne-popping moment for an entrepreneur, but it barely registers as a rounding error on a Fortune 500 income statement.
This is the innovation paradox facing corporate innovators: The very pressure to go big or go home often destroys what makes an innovation special in the first place. It’s not enough to create something customers love – you must create something that can scale to satisfy the corporate appetite for growth.
Finding the Sweet Spot
The lesson isn’t that we should abandon ambitious scaling plans. Instead, we must be brutally honest about whether our drive for scale aligns with what makes our innovation valuable to customers. If it doesn’t, we must choose whether to scale back our ambitions (unlikely) or let go of our successful-but-small idea.
After all, not every marshmallow needs to be a mountain, but every mountain climber (that’s you) needs a mountain.
‘Twas the night before launch day, when throughout HQ, Not a worker had left, there was too much to do; The plans were laid out by the whiteboard with care, While our Innovation Chief Sarah planned with great flair;
The team was all nestled all snug at their posts, While visions of success inspired them the most; And Sarah in her blazer, so sharp and so bright, Had just settled in for a long working night,
When out in the hall there arose such a clatter, She sprang from her desk to see what was the matter. When what to her wondering eyes should appear, But the CEO and board, spreading holiday cheer!
“Now, ARCHITECTURE!” they cried, “We need strategy and rules! Now BEHAVIORS and CULTURE!” – these ABC tools. “Tell us Sarah,” they said, “how you’ll lead us to glory, Through bringing new value – tell us your story!”
She smiled as she stood, confidence in her stance, “The ABCs of Innovation aren’t left up to chance. Architecture’s our framework, our process and measure, Our governance model not built at our leisure;
“The Behaviors we foster? Curiosity leads, With courage and commitment to meet future needs. And Culture,” she said, with a twinkle of pride, “Is how innovation becomes our natural stride.”
Her cross-functional team gathered ’round with delight, Each bringing their skills to help win this big fight: “From concept to testing, from planning to more, We’re ready to launch what we’ve worked toward before!”
The CEO beamed and the board gave a cheer, “This is exactly the progress we’d hoped for this year! With Architecture to guide us, and Behaviors so strong, Plus Culture to fuel us – well, nothing could go wrong!”
Then Sarah exclaimed, as they turned out the light, “Happy launching to all, and to all a good night! For tomorrow we share what’s been worth all the wait, Guided by ABCs, we’ll make something great!”
‘Tis the season for “year in review” and “top 10 lists.” As fun (and sometimes frightening) as it is to look back, it is just as fun (and sometimes frightening) to look ahead. After all, as innovators, that is what we naturally do. So, in anticipation of the year ahead, here are 5 Must Reads to make 2025 far more fun than frightening.
(listed in alphabetical order by author’s last name so I can’t be accused of playing favorites)
Pay Up! Unlocking Insider Secrets of Salary Negotiation by Kate Dixon
This book is for everyone, especially… people who want to earn what they deserve
This book solves the problem of…the black box that is compensation and the fear of negotiating for what you’re worth
This book creates value by… Outlining a step-by-step system to:
Understand key terms and concepts and apply them to your situation
Research the information you need to confidently and competently negotiate
Know what to say and do (and NOT say or do) in the moment
Why I love this book: Full disclosure – Kate and I are friends, so I’ve had a front-row seat to her wisdom and humor (how many compensation books invoke Beyonce?) and the jaw-dropping impact she gets for her clients. I’ve even gifted this book to others because I know it works!
Disrupt Yourself: Putting the Power of Disruptive Innovation to Work by Whitney Johnson
This book is for everyone, especially… people who are rethinking their careers and are ready for change
This book solves the problem of… knowing how to start redefining your career (and yourself)
This book creates value by… Turning Clayton Christensen’s Theory of Disruption into four principles for self-disruption, including:
Identifying your disruptive strengths
Stepping backward or sideways to grow
Patiently waiting for your career (and legacy) to emerge
Why I love this book: Two quotes: (1) “Disruption starts as an inside game” and (2) “Constraints can be the perfect remedy if you are having a difficult time.”
Live Big! A Manifesto for a Creative Life by Rochelle Seltzer
This book is for everyone, especially… people who want to experience daily joy and creativity
This book solves the problem of…feeling stuck in the day-to-day reality of life, uncertain whit how to begin, and afraid to make big, drastic changes
This book creates value by… Offering 20 tips for:
Becoming a person who Lives Big, including slowing down, aligning to your purpose, and being patient
Acting big, including listening to your intuition, embracing change, and carrying on
Savoring the small joys of life, including the gorgeous design of the book
Why I love this book: Rochelle’s Discovery Dozen exercise is a game-changer. I learned this tool when she was my coach, and I have continued to use it for everything from naming my business, to deciding if/when/how to act on an opportunity, and writing articles.
The Coaching Habit: Say Less, Ask More & Change the Way You Lead Forever by Michael Bungay Steiner
This book is for everyone, especially... busy managers who want to be better people leaders
This book solves the problem of…balancing hands-on management with team empowerment and individual development
This book creates value by… Guiding you through seven questions that help you:
Work less hard while having more impact
Break cycles of team overdependence and workplace overwhelm
Turn coaching and feedback from an occasional formal event into a daily habit
Why I love this book: A copy of the 7 questions sits just below my monitor, reminding me to be curious, dig deeper, and that every decision is a choice to do one thing and not another.
Readers Choice!
Version 1.0.0
It’s audience participation time! In the comments below, drop YOUR recommendation for a 2025 Must Read.
Last week, InnoLead published a collection of 11 articles describing the root causes and remedies for killers of innovation in large organizations. Every single article is worth a read as they’re all written by experts and practitioners whose work I admire.
I was also inspired.
In the spirit of the hustle and bustle of the holiday season, I gave into temptation, added my own failure mode, and decided to have a bit of fun.
The 12 Killers of Innovation
(Inspired by the 12 Days of Christmas yet relevant year-round)
On the twelfth day of innovating, management gave to me:
12 leaders short-term planning
11 long projects dragging
10 cultures resisting
9 decisions made too quickly
8 competing visions
7 goals left unclear
6 startups mistrusted
5 poorly defined risks
4 rigid structures
3 funding black holes
2 teams under-staffed
And a bureaucracy too entrenched to change
Want to write a happier song?
Each of the innovation killers can be fended off with enough planning, collaboration, and commitment. To learn how, check out the articles:
