Before doing it right, make sure you’re doing the right thing.

We tell founders all the time to not do scalable things.

But how do you know when to start scaling? Let's talk efficacy vs efficiency.

It's tempting to want to scale from day one. Scalable means predictable means efficient, so founders try to do everything efficiently and scalable. They try to build the company they want to see on the public markets when they make their big exit.

I call it "the efficiency trap", and it'll kill your business.

In fact, 74% of startups fail because they try to make things scalable before they should.

In other words, they try to do things the right way before figuring out the right things to do. It's so dangerous because it's a colossal waste of time, money, and effort to get really good at doing things if they aren’t the right things to do in the first place?

We can use design thinking to ensure we're on the right track first. It's three steps:

1. Prove your idea is desirable. Don’t build something no one wants.

2. Prove it's viable. Don’t build something no one will buy.

3. Prove it's feasible. Don’t try building something you shouldn’t.

It's what Steve Blank was talking about when he said a startup is an organization in search of a business model. They are in search of efficacy.

You don't have efficacy until you can prove your product is desirable, viable, and feasible.

One you have efficacy, efficiency is easy — and boring.

Having efficacy means that you have consistent data showing that you are no longer searching for a business model, but have found the best one available.

Far fewer startups actually fail at the efficiency stage, because efficiency is the easy part. It's so easy that there are entire industries geared toward teaching organizations how to be efficient.

Innovators create extraordinary new value outside the building. Efficiency can only increase value inside the building. So many startups are so anxious to do efficiency, thinking that this is where the real work of entrepreneurship happens. It's not. In fact, they're skipping right over the entrepreneurship part and heading into the management part.

To put this into practice: do you have compelling evidence you’re doing the right thing? Until then, don’t try to do it right. It just doesn’t matter yet.