In 1972, a professor at Stanford named Walter Mischel conducted a famous study which would become known as the “Stanford marshmallow experiment”.
Children were left in a room for 15 minutes with a single marshmallow, and offered the choice of either one immediate reward, or two rewards (as long as they didn’t eat the marshmallow by the time the researcher returned). If they were able to resist eating the single marshmallow, they were rewarded with another snack of their choice.
The beauty of this study was not quite so much the insight about kids and marshmallows, but that it was a quite extensive study that actually followed up on the child’s progression through life for years.
It turned out that the children with delayed gratification (those who were able to hold out for 15 minutes for an extra reward) were distinctly more successful in life. Children with delayed gratification had higher SAT scores, completed better degrees, had lower BMI, and in general had a more fully developed prefrontal cortex.
What is most interesting to me are the reasons why these children had better delayed gratification. The researchers were curious about this as well, and as it turns out, the children’s familial background had a significant part to play in how patient and “forward thinking” the children were. Children with stable families (non-divorced parents, higher income) scored far better than children from unstable families (divorced parents, lower income).
In general, follow-up studies reinforced the results of the original Mischel study, and expanded on the results by showing that often differences in culture played an even greater part in how a child would “turn out” in terms of life accomplishments.
The important takeaway about delayed gratification is not that it is bad to get something now. It is that sacrificing current desires in order to achieve even greater desires in the future is hard, but well worth it.
We have a difficult time thinking about the future because it is abstracted. It is very easy to think about what you need to do today, because your needs today are very obvious (I am hungry now, I am poor now). It is very difficult to fast-forward several years into the future and consider what your needs may be (I may be hungry, I may be poor) — even more so if you take unknowns into consideration (I may have more mouths to feed, I may not be able to work in manual labor, the dollar may be inflated, my pension may not be there).
How does this apply to building business?
I co-run a small PPC agency. We run digital ads for mid-size companies. We have a very simple service-based business model. A company wants to sell more widgets, so they pay us to run ads. We sell more widgets. Repeat cycle.
I often talk to fellow agency owners. To be honest, I know within a few moments if this owner is going to succeed, or if he is going to fail. There are a half-dozen instant signals (one of those is if they showed up to the meeting on time).
But the signal that is more important than any other — what time horizon is this person worried about?
(At the very beginning there are always a lot of little short-term questions. I’m talking about strategy, big decision-making approaches).
The short-term statements are things like this:
How do I convince this client to work with me
I need to make $50,000 within 30 days
I’ve got an offer that no client can refuse (revenue guarantees, money back, percentage)
I know my worth, I have to charge more than that
I want to work in a glamorous niche (yacht rentals, luxury condos, watch dealers)
The long-term statements are things like this:
I’m trying to hire better employees
I need to reduce client churn
How do I start increasing my fees
How much of a buffer do I need in the bank account?
I want to reach $X annual profit in 5 years
So often, I see agency owners worrying about this week, when they really should be worrying about next year or even what happens in 2028?
Of course there are emergencies, and sometimes this week really does need some attention.
But — if you had thought about this week five years ago, we probably wouldn’t be having this discussion.
Preemptive beats reactive every single time.