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Effective Leadership

Could Your Company Pass the Marshmallow Test?

Passing the Marshmalow Test

The Marshmallow TestDuring the late 1960’s, Stanford University psychology professor Walter Mischel began a series of interesting experiments that tested people’s ability to exert self-control and resist the urge for instant gratification.

Essentially, a four-year-old child would be brought to a room where some treat got provided – sometimes a marshmallow, sometimes a cookie or something else. The child was then told that while there was only one treat for them now, the researcher would return in 15 minutes, and if they haven’t eaten the treat already, they’ll be given another one as well, so they’ll have two treats instead of just one.

After testing more than 600 four-year-old, the Stanford researchers found that less than a third of them could actually resist this temptation, but the amazing thing was what they found next. When they tracked these same children through their later lives, they found that the self-controllers tended to have a variety of better, more successful life outcomes, from educational attainment and SAT scores to body mass indices (BMI’s).

Marshmallow-Test

The “marshmallow test,” as it became known, is now widely regarded as a workable gauge of a person’s ability to delay gratification, and an important marker for emotional maturity, which requires being able to control your impulses and master your desires. (To watch an adorable video of young children trying to resist an enticing and perfectly good marshmallow sitting in front of them, click here.)

Many businesses today would flunk the marshmallow test outright. Very few businesses, in fact, have enough self-control to resist the instant gratification of extracting an immediate profit from a customer, even when by doing so they will create more value in the form of an increase in that customer’s lifetime value. Delayed gratification just isn’t natural to the vast-majority of profit-making entities.

And if you think about it, this means that many businesses have about the same emotional maturity as the vast-majority of four-year-old children have.

There are some notable exceptions, of course:

  • Try to buy a book on Amazon that you’ve bought from them before, and they’ll warn you first. Amazon knows that declining that marshmallow you offered them is in the company’s own long-term interest.
  • A few years ago, Apple’s call centre agents famously counselled customers not to buy an early version of the Power PC Mac when it first came out, even when they were ready to buy, because the not-yet-released version was due to have a much more powerful microchip.
  • Try to buy more property insurance than you actually need, and USAA will counsel you that you don’t need as much coverage as you’re asking them for (such as, for instance, when the land your house sits on represents a substantial part of the house’s value).
  • And Jet-blue doesn’t make you jump through self-help hoops to claim a refund when you’re due one. They automatically credit the correct amount of the refund to your account, without your having to do a thing.

These exceptions are notable, however, because they are exceptions.

Indeed, one of the most pernicious problems afflicting businesses today – and particularly large, publicly traded companies – is rampant, largely unchecked short-termism.

Emotional immaturity. It’s a plague on the free-market system.

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