Chapter 1.
What If Your Business's Biggest Problem Isn't Where You're Looking?

The Story of One Company and WERT Thinking

Eighteen years ago, Reinhard started with almost nothing.

He had an old van, a small set of professional tools, one assistant, and a good enough reputation for people to start recommending him to others.

The company specialized in interior finishing and renovation: bathrooms, tiling, drywall, painting, flooring, and small-scale complete renovations.

In the early years, everything was simple. Reinhard visited clients himself, estimated the work himself, ordered the materials himself, assigned the tasks, and personally checked the results.

Then a second craftsman joined.

Then the first full crew.

Then another one.

A few years later, the company rented a small warehouse and office. An employee was hired to answer calls. Then came a site manager. Then another one.

Today, the company employed twenty-seven people.

Several crews were working on different sites at the same time. New inquiries arrived at the office every day. Jobs were scheduled weeks in advance. Accounting was handled in specialized software, quotations were prepared on computers, site photos were shared via WhatsApp, schedules were partly managed in Excel, and a few years earlier the company had even implemented a CRM.

From the outside, it looked like a success story.

But Reinhard himself saw the situation somewhat differently.

The company was growing.

And he had less and less free time.

Every day began with questions.

Materials had failed to arrive at one site.

At another, the client wanted to change the original order.

A third crew urgently needed to reschedule its work.

At the office, nobody could find a photo of damage that had been taken a week earlier.

The client claimed one thing had been promised, the site manager said something else, and the office manager knew nothing about it at all.

Reinhard made a decision.

Then another one.

Then another.

He had long since grown used to it. This was how business worked. At least, that was what he thought.

A New Person

Michael arrived at the company on Monday morning.

In the job advertisement, his position had been described somewhat vaguely:

assistant to the managing director for business development.

Reinhard himself was not entirely sure what exactly this person was supposed to do.

But there were more than enough tasks.

The website finally needed to be redesigned.

The old one looked as if it had been created ten years ago — which, in fact, was almost true.

They needed to sort out the advertising.

Take a look at the CRM.

Automate some processes.

Bring some order to incoming inquiries.

Possibly introduce artificial intelligence.

Reinhard had heard a lot about how much could now be automated with AI, and it seemed obvious to him that a modern company should be using it.

On Michael's very first day, he called him into his office.

— So, here's the situation, — Reinhard began. — We have plenty of work. The website is old. We have a CRM, sort of, but people only use it half the time. I'd also like to get the advertising running properly. We need to see what we can automate. These days, everything is done with AI anyway. First take a look around, then we'll make a list.

— All right.

— When can you suggest something?

Michael thought for a moment.

— In a week.

Reinhard had expected to hear something like “in two days,” so the answer surprised him a little.

— You need a week to look at the website?

— No. I need a week to look at the company.

Reinhard shrugged.

— All right. Have a look.

The Week in Which Nothing Happened

For the next five days, Michael changed almost nothing.

He did not start a new website project.

He did not search for a new CRM.

He did not build automations.

He did not create KPIs.

He did not install new software.

He observed.

In the morning, he sat next to the employee who answered incoming calls.

He watched as a new client inquiry was first written down on paper, then some of the information was transferred to a computer, and finally Reinhard decided who should visit the site.

The next day, Michael went out with one of the site managers.

He watched how the site manager received information about a job.

He saw WhatsApp messages, photographs, voice messages, a PDF quotation, and several handwritten notes.

He asked:

— How do you know that the client chose this particular tile?

— Reinhard told me.

— And where is that recorded?

The site manager scrolled through his phone.

— It was here somewhere.

At another site, the client asked to have some electrical sockets moved.

The craftsman called the site manager.

The site manager called Reinhard.

Reinhard called the client back.

Then he called the site manager again.

After that, the craftsman continued working.

On the third day, Michael sat in the office and watched how the crews' schedule was created.

Part of it was in Excel.

Some changes existed only in Reinhard's calendar.

One job had been rescheduled, but the employee in the office did not know about it.

Another client should have received a call the day before.

On the fourth day, Michael spoke with the workers.

On the fifth, he reviewed old quotations, invoices, complaints, and correspondence with clients.

He was not trying to find someone to blame.

He was interested in something else.

How does the system actually work?

Not how it is supposed to work.

Not how it is described.

Not even how the owner imagines it works.

But how it works in reality.

In WERT Thinking, understanding comes before management. First, a system must become observable, then understandable, and only then does it become possible to make conscious decisions and optimize anything.

“So, Which CRM Are We Going to Implement?”

The following Monday, Reinhard invited Michael into his office again.

There were two cups of coffee on the table.

Reinhard sat opposite him.

— So?

— So what?

— The week is over. Which CRM are we going to implement?

— None for now.

Reinhard smirked.

— Fine. Then shall we start with the website?

— Not yet.

Reinhard was no longer smiling.

— Michael, let me make sure I understand you correctly. You've spent a week walking around the company, and the conclusion is that we're doing nothing?

— No. The conclusion is that I now have a rough understanding of why certain things happen here.

— For example?

Michael opened his notebook.

— You said you want more orders.

— Of course I do.

— How many additional orders can the company actually handle next month?

— Depends on the jobs.

— Let's say ten medium-sized projects.

— We'll manage.

— Who will decide which crew goes where?

— I will.

— If two clients want to reschedule at the same time?

— I'll decide.

— If additional work comes up on three sites?

— The site managers will call me.

— Who determines the new price?

— Usually me.

— Who knows the actual workload of every crew three weeks from now?

Reinhard thought for a moment.

— I have a rough idea.

— And apart from you?

A pause.

— Probably nobody has the complete picture.

Michael closed his notebook.

— Then I'm not yet convinced that your main problem is a lack of orders.

What Exactly Are We Trying to Improve?

Reinhard leaned back in his chair.

— All right. So what is our problem?

— I don't want to name one problem yet.

— Why?

— Because a “problem” is often only what we can see on the surface.

— What do you mean?

— You say: too few inquiries — so we need advertising. Employees keep asking questions — so we need more independent employees. Information gets lost — so we need a new CRM. The website is old — so we need a new website.

— Sounds logical.

— Except that every one of those solutions assumes that we already know the cause.

— And you think we don't?

— Exactly.

In WERT Thinking, a problem is viewed first and foremost as a system signal. A visible disruption may be the consequence of a deeper systemic mismatch. The task, therefore, is not to eliminate the symptom as quickly as possible, but to understand the architecture that produces it.

— Imagine, — Michael continued, — that the oil-pressure warning light comes on in your car.

— All right.

— You could cover the warning light with duct tape.

— Very funny.

— But then the light wouldn't bother you anymore.

— That wouldn't make the car any healthier.

— Exactly.

Reinhard remained silent for a few seconds.

— Fine. Let's assume you're right. Where do we start?

— We've already started.

Business Analysis: First See the Real Business

Michael called the first step business analysis.

But not in the conventional sense of creating spreadsheets or compiling a list of requirements for some future software system.

The purpose of business analysis was different:

to build the most accurate possible model of the existing system.

How does an order move through the company?

How is a decision made?

Which actions depend on a specific person?

Where do delays occur?

How does information move between the client, the office, the site manager, and the craftsman?

Where are there rules?

And where are there habits instead of rules?

What happens when an unusual situation occurs?

Why does the same problem keep happening?

In WERT Thinking, business analysis is first and foremost a way to understand an organization as an interconnected system and reconstruct the cause-and-effect relationships within it.

— So you spent a week doing analysis? — Reinhard asked.

— Observing.

— What's the difference?

— A big one. If you decide in advance what you're looking for, it's very easy to find evidence that confirms your own hypothesis.

— So what were you looking for?

— Nothing yet.

— Strange approach.

— I wanted to see what was happening without imposing my own explanation on it.

Clarity: A Business That Can Be Understood

Michael took a sheet of paper and drew several blocks:

• Client.
• Office.
• Reinhard.
• Site manager.
• Crew.
• Supplier.
• Accounting.

Then he connected them with arrows.

Within a few minutes, the sheet was covered in lines.

Reinhard looked at it.

— What's that?

— For now, a very rough model of how information and decisions move through the company.

— It looks terrible.

— Exactly.

— What do you mean?

— You manage this system in your head every day. That's why it seems clear to you.

— I've been doing this for twenty years.

— I know. But if only one person fully understands the system, then the system itself is not transparent.

In WERT Thinking, this state is contrasted with the concept of business clarity.

A business becomes truly manageable not when its owner has accumulated a great deal of experience, but when the company's structure, processes, relationships, constraints, and the causes of what is happening can be seen and understood.

Understanding does not mean having a large amount of data.

You can have dozens of reports and still not understand your business.

Business clarity emerges when it becomes apparent:

• what is happening;
• why it is happening;
• which elements influence one another;
• what consequences a change in one of them will produce.

— So you want to create even more spreadsheets?

— The opposite. I want you to have to keep less of the company in your head.

“We Have a People Problem”

Reinhard thought for a moment.

— All right. But I can tell you right away where half the problem lies. People don't want to make decisions. They call me or the site manager about every little thing.

— Are they allowed to make decisions independently?

— Of course.

— Which decisions?

— Well... ordinary ones.

— Where do ordinary decisions end?

Reinhard frowned.

— Michael, an adult should understand these things.

— All right. A client on site asks to switch to a more expensive material. Can the craftsman agree?

— No.

— Can he change the deadline?

— No.

— Can he order additional materials?

— Depends on the amount.

— Up to what amount?

— Well, that depends on the situation.

— Can he give the client a discount?

— Of course not.

— Can he change the sequence of the work?

— If it doesn't affect anyone else.

— How is he supposed to know whether it affects anyone else?

Reinhard looked at him.

— What are you getting at?

— Perhaps employees keep asking questions not because they don't want to think. Perhaps the system does not define the space within which they are allowed to make decisions.

Business Architecture: Behavior Begins with Structure

This was the first time Michael used the term business architecture.

An organizational chart shows who reports to whom.

Business architecture answers a much broader question:

• How does the business mechanism work?
• How is responsibility distributed?
• Where are decisions made?
• Which processes connect different parts of the organization?
• Which rules determine the behavior of the system?
• Which dependencies make one process possible only after another?
• What information is required to make a particular decision?

In WERT Thinking, a business is viewed as a collection of interconnected elements with a structure, rules, behavioral algorithms, and mechanisms of development.

— You want to regulate everything? — Reinhard asked.

— No.

— That's what it sounds like.

— I want to understand where the system genuinely needs rules and where rules would only get in the way.

— What's the difference?

— Good architecture does not force a person to constantly consult instructions. It creates clear conditions within which the right action becomes natural.

The Information Exists. But Where Is It?

— All right, — Reinhard said. — We'll deal with the processes later. But we still need a CRM. The information really is scattered everywhere.

— What exactly should the CRM solve?

— It should put everything in one place.

— Why?

— So people can see the information.

— What information?

— The information they need.

— Who needs it?

Reinhard laughed.

— Are you deliberately making everything more complicated?

— The opposite. I'm trying to make the question precise.

Michael opened one of his notes.

— On Thursday, a client changed the wall color on site.

— And?

— The craftsman told the site manager. The site manager sent you a voice message. That evening, you wrote to the office employee on WhatsApp. The next morning, she was already working on another order and didn't see the message. Two days later, the original paint was ordered.

— These things happen.

— Could a CRM have prevented it?

— If the change had been entered into it.

— Who should have entered it?

Reinhard fell silent again.

Information Logistics: Information Must Move

WERT Thinking does not view information merely as data that needs to be stored somewhere.

Information has value only when it moves correctly.

This is described by the concept of information logistics.

The right information must reach:

• the right person;
• at the right time;
• in the necessary amount;
• in an appropriate form;
• and with enough context to make a decision.

From this perspective, the construction company's problem was not a lack of information.

There was too much information:

• Photographs.
• Messages.
• Emails.
• Calls.
• Documents.
• Spreadsheets.
• Notes.

The problem was how it moved.

Sometimes an important message reached the wrong person.

Sometimes it arrived too late.

Sometimes it existed only in an employee's head.

Sometimes the information reached the right person, but without the context required to make the right decision.

— So we need a system that transmits everything automatically? — Reinhard asked.

— Maybe.

— Finally, we've arrived at automation.

— No. We've arrived at an understanding of what actually makes sense to automate.

“If I'm Not Here, Everything Will Fall Apart”

Reinhard looked at the clock.

They had been talking for almost an hour.

— All right. You're saying sensible things. But let's be realistic. This is a family business. A lot of things will always have to go through me.

— Why?

— Because I'm responsible for the result.

— Those are not the same thing.

— What do you mean?

— The owner's responsibility for the result does not mean that the owner must personally participate in every decision.

— Easy to say.

— What if you leave for a month tomorrow?

— They'll call me.

— And if you don't answer?

Reinhard smirked.

— Then we'll really have problems.

— That's one of the problems.

— So now I'm the problem?

— No. The problem is that the system uses you as a mandatory component in too many processes.

Architectural Management: Manage the System, Not the People

In WERT Thinking, management is not viewed merely as making decisions or controlling employees.

A more mature form of management is architectural management.

Instead of constantly intervening in individual events, a manager designs:

• structure;
• rules;
• processes;
• algorithms;
• information flows;
• feedback;
• boundaries of responsibility;
• conditions for decision-making.

The goal is not to remove the manager from the system.

The goal is to reduce the number of situations in which the normal operation of the business requires the manager's manual intervention.

The more advanced the architecture, the more decisions the system can make independently at the appropriate level.

— So a good manager should manage less?

— A good manager should do less manual management.

— Sounds nice.

— Nobody forces a tree to grow every morning.

— We're not trees.

— Of course not. But the principle is interesting. A mature system contains mechanisms for its own behavior.

The Company Grew. But Did It Develop?

Reinhard stood up and walked over to the window.

Several vans bearing the company's logo were parked outside.

— You know, — he said, — all of this is interesting, but twenty years ago there was nothing here at all. We grew from two people to almost thirty. So I must have done something right.

— Absolutely.

— Then why do you talk as if the system is wrong?

— I didn't say that.

— Then what are you saying?

— That a system which was excellent for a five-person company is not necessarily suitable for a company of twenty-seven.

Reinhard turned around.

— Explain.

— When there were five of you, you could personally know every order.

— Yes.

— Every employee could ask you directly.

— Yes.

— You could keep the schedule in your head.

— More or less.

— WhatsApp handled most of the communication perfectly well.

— Yes.

— At that time, that architecture was appropriate for the company's scale.

— And now?

— The company changed faster than some of its management mechanisms did.

Growth Is Not the Same as Development

This distinction is one of the central ideas in WERT Thinking.

Growth means quantitative increase:

• More clients.
• More employees.
• More vehicles.
• More branches.
• More revenue.

But development means a qualitative change in the system itself.

As a company grows, the following must develop alongside it:

• processes;
• structure;
• management;
• communications;
• information flows;
• digital infrastructure;
• competencies;
• the organization's own ability to cope with a new level of complexity.

When some parts of the system grow significantly faster than others, an imbalance emerges.

WERT Thinking describes the opposite state as harmonious development: the coordinated evolution of key subsystems that enables the organization as a whole to move sustainably to the next level of capability.

— So you think we grew too quickly?

— No.

— Then what?

— You grew faster than some parts of the company were able to change.

Systemic Mismatch

Michael looked at the diagram again.

The number of orders matched a company of twenty-seven people.

So did the number of employees.

But a significant part of the management mechanisms still resembled those of a company in which the owner could personally control almost everything.

WERT Thinking describes this kind of gap as a systemic mismatch.

A system does not necessarily encounter problems because one particular element is bad.

Each individual element may work perfectly well.

The problem arises when the level of development of one part of the system no longer matches the complexity of the organization as a whole.

This produced symptoms:

• Owner overload.
• Loss of information.
• Errors.
• Repeated questions.
• Rescheduling.
• Conflicts.
• Inability to accurately estimate future workload.

None of these symptoms, taken individually, represented the entire problem.

They were signals of a deeper mismatch.

System Maturity: How Well Does the System Match Its Scale?

Every company has a certain level of system maturity.

This is not a judgment of “good” or “bad.”

It is the degree of alignment between the scale of the business and the development of its internal mechanisms.

A company may have an excellent product, a strong team, and a good reputation, yet still face management constraints simply because its internal architecture no longer matches its current complexity.

High system maturity means that an organization can operate sustainably at its current level and is ready to move further without encountering critical internal constraints.

— And how do we determine our level? — Reinhard asked.

— That's exactly what we need to find out.

System Evolution: The Next Level Requires a Different System

Reinhard's company had once consisted of Reinhard himself and one assistant.

Then it became a small crew.

Then a construction company.

Now it was gradually becoming an organization in which the owner was physically no longer able to participate in every process.

Each transition required more than simply adding more people.

It required a different architecture.

WERT Thinking describes such qualitative transitions through the concept of a level of system evolution.

Each new level makes it possible to solve problems that the previous system could not solve sustainably.

But the challenges of a new level cannot be solved indefinitely using the mechanisms of the old one.

— So we need to rebuild everything? — Reinhard asked.

— No.

— Good.

— We need to understand what needs to evolve and what already works perfectly well and requires no intervention.

And Where Does the Website Fit into All This?

Reinhard returned to the table.

For a few seconds, he leafed through the papers.

Then he suddenly smiled.

— Michael.

— Yes?

— I hired you partly because we need a new website.

— I remember.

— We've been talking for an hour and a half.

— Yes.

— And we've barely talked about the website.

— Now we can.

— Finally.

Michael turned the laptop toward him.

The company's homepage was open on the screen.

A photograph of a beautiful bathroom.

Below it was the promise:

“Reliable. On time. Everything from a single source.”

— Good copy? — Michael asked.

— Well... it's fine.

— Do you always complete your work on time?

Reinhard said nothing.

— Most of the time.

— Why not always?

— Because it's construction. Things happen.

— Of course. But some of the delays I saw this week did not originate on the construction site.

— Where did they originate?

— In the system.

Reinhard looked at the screen again.

The Website Is the Interface of the Business

A website is often treated as a separate marketing product.

But in WERT Thinking, that perspective is too narrow.

A website is the visible digital part of the business system.

It is the interface between the company and the outside world.

Through it, a client tries to understand:

• who you are;
• what you can do;
• who you are right for;
• what you promise;
• how you work;
• why you can be trusted;
• what happens after they contact you.

But the website shows only the tip of the iceberg.

Beneath it are:

• positioning;
• processes;
• actual production capacity;
• the sales system;
• communications;
• responsibility;
• information flows;
• service;
• analytics;
• management;
• the ability to deliver what has been promised.

If you design only the tip without understanding what lies beneath it, you can create a beautiful interface for the wrong system.

— So the website depends on how the company itself is structured? — Reinhard asked.

— How could it be otherwise?

— Usually a web designer asks us what colors we like.

— That's exactly why a good website does not begin with color.

The Digital Business System: Technology Stops Being a Collection of Tools

The same applies to all the other technologies:

• CRM.
• Automation.
• Analytics.
• Artificial intelligence.
• Website.
• SEO.
• Enterprise systems.

Individually, they are simply tools.

In WERT Thinking, they should become elements of a unified digital business system.

Digital infrastructure should reflect and support the business architecture:

• The CRM should perform a clearly defined role.
• Automation should serve specific processes.
• Analytics should increase observability.
• AI should expand the capabilities of people and the system.
• The website should serve as the interface of the business.

Technology does not determine the architecture.

First, the business objective and the structure of the system are defined. Only then is the technological tool selected.

— So you're not against CRM? — Reinhard asked.

— Absolutely not.

— Against AI?

— Not at all.

— Against a new website?

— Even less so.

— Then why aren't we implementing them yet?

Michael smiled.

— Because I don't want to automate something that we may later decide to change.

Expanding System Capabilities: The Main Criterion for Change

Reinhard thought for a moment.

— All right. Then why are we doing all this? Just to reduce the chaos?

— That would be a good result. But it isn't the ultimate goal.

— What is the ultimate goal?

— For the company to become capable of doing things it cannot do today.

— Such as?

— Operating without your constant involvement. Taking on more orders without sacrificing quality. Opening a new business line. Training employees faster. Seeing constraints before they turn into crises. Introducing new technologies without disrupting existing processes.

In WERT Thinking, this is called expanding the capabilities of the system.

Optimization is not an end in itself.

The purpose of change is not simply to perform existing actions faster.

A well-designed system should acquire new capabilities and, as a result, become ready for the next stage of development.

That is why:

growth is a consequence;

optimization is a tool;

the system is a means;

and the goal is to expand capabilities and move to the next level of development.

What Is WERT Thinking?

Reinhard remained silent for a while.

Then he looked at the sheet covered in notes.

A week earlier, he had seen a fairly ordinary list of problems:

• an outdated website;
• weak advertising;
• a chaotic CRM;
• employees who lacked independence;
• too much manual work.

Now the picture looked different.

In front of him was a system.

With a history.

With an architecture.

With relationships.

With information flows.

With a certain level of maturity.

With constraints that had not existed before but had emerged as the company grew.

And with capabilities that the company was not yet able to realize.

This is how WERT Thinking looks at a business.

It is a system of thinking designed to understand, design, and develop complex systems.

It does not begin with a tool.

Not with technology.

Not with a ready-made solution.

It begins with observation.

Then comes understanding.

From understanding, cause-and-effect relationships emerge.

Those causes reveal systemic mismatches.

Only then does it become possible to design the architecture.

And the architecture, in turn, determines the processes, information logistics, digital system, automation, website, analytics, artificial intelligence, and all the other tools.

WERT Thinking does not view development as an endless increase in metrics.

Its purpose is the harmonious development of the entire system, increasing its maturity, expanding its capabilities, and moving to new levels of system evolution.

And in this picture, technology does not replace people.

It helps people understand systems better, design them, and create what was previously impossible.

“All Right. What Do We Change First?”

Reinhard looked at the clock.

Almost two hours had passed.

The phone had rung several times outside the office.

The old website was still open on the computer screen.

— All right, — he finally said. — Let's say you've convinced me.

— Of what?

— That we shouldn't go out tomorrow and buy the first CRM we come across.

— That's already something.

— And that first we need to bring all of this into some kind of system.

— Possibly.

Reinhard looked at the diagram again.

— So what do we change first?

Michael did not answer.

— Well?

— Nothing yet.

Reinhard laughed.

— I'm starting to get used to that answer.

— Because now we have the next question.

— What question?

Michael closed his notebook.

— We're beginning to understand why the company works the way it does.

But before we change anything, we need to understand something else.

He looked at Reinhard.

— Is your business ready for the changes you want to introduce?

Reinhard was about to answer, but Michael continued:

— Because the right solution, applied to the wrong system or at the wrong time, can sometimes create more problems than it solves.

Outside the window, one of the vans pulled into the parking lot.

A worker got out, took out his phone, and called someone.

A few seconds later, the phone on Reinhard's desk rang.

He looked at the screen.

Then at Michael.

— Apparently, the next problem.

— Maybe, — Michael said. — Or maybe just another signal.

To be continued: why a good solution can harm a business.