Insights from biology, physics and business shed light on the nature and costs of complexity and how to manage it in business organizations.
In business, complexity gets bad press. That’s not surprising. It can be cognitively demanding to understand how a system or organization made up of many very different interconnected elements actually works. But the fact that such systems or organizations are difficult to understand doesn’t make them inherently bad. In addition to its more obvious costs, complexity confers critical benefits, especially in dynamic and uncertain environments. In the following pages we draw on our experience and perspectives in business, biology, and physics to offer some reflections on the nature, benefits, and costs of complexity and provide some guidance on managing it in business organizations.
More in The structure of innovation
A theoretical model of recursive innovation suggests that new technologies are recursively built up from new combinations of existing ones.
The distribution of product complexity helps explain why some technology sectors tend to exhibit faster innovation rates than others.
The usefulness of components and the complexity of products inform the best strategy for innovation at different stages of the process.
Firms can harness the shifting importance of component building blocks to build better products and services and hence increase their chances of sustained success.
In systems of innovation, the relative usefulness of different components changes as the number of components we possess increases.