The psychology student in me was pleasantly surprised the other day to see BlackRock Chairman and CEO Larry Fink make reference to the Stanford Marshmallow Experiment in a recent blog post about companies sacrificing long-term success by concentrating too much on short-term results. (For those of you that need a refresher on the Marshmallow Experiment, it involves offering a preschool aged child a marshmallow and telling them that if they can wait to eat it for a certain amount of time they will be rewarded with additional marshmallows. If the kid eats the original marshmallow too soon, they get no future reward.) I think Fink is spot-on with his lament that Corporate America’s obsession with next quarter’s performance is rendering it unable to make sensible commitments to long-term strategies and investments.
This is probably especially true in the realm of leadership development. Companies may pay lip-service to developing talent, but they often get skittish when their programs cost time and money that will have a negative effect on short-term earnings and profitability. They sometimes pull the plug on initiatives that need time to work or fail to actually create a solid talent development system in the first place. As the head of GE’s vaunted talent review process recently pointed out in an HBR post, the most important ingredient in any leadership development program is the time and resource commitment to making it work. If a company can’t forsake the lure of slightly better short-term results, they will likely never reap the additional long-term rewards of a deeper and more effective talent pool.