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. The authors draw on their 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. Their recommendations: In growing your organization, make sure that it remains modular in structure and that all components and connections conform to a small number of simple operating principles. Embed a bias for change, avoid imposing too many controls on your people, and let the market judge which changes work. Finally, always optimize your organization globally and keep fixing, repairing, and pruning.

Corporate executives need to move beyond only managing their own companies and become active influencers within broader systems.

U.S. public companies are dying at faster and faster rates; in fact, they have a one in three chance of being delisted in the next five years. Why? They are failing to adapt to the growing complexity of their environments, the authors argue--misreading those environments, selecting the wrong approaches to strategy, or failing to support a viable approach with the right behaviors and capabilities. Drawing on their research at the intersection of business strategy, biology, and complex systems, BCG's Martin Reeves and Daichi Ueda, along with Princeton biologist Simon Levin, describe six principles that confer robustness in what's known as "complex adaptive systems"--principles that are directly applicable to business. Firms should: (1) Maintain heterogeneity of people, ideas, and endeavors; (2) Sustain a modular structure of loosely connected components; (3) Preserve redundancy among components; (4) Expect surprise, but reduce uncertainty; (5) Create feedback loops and adaptive mechanisms to ensure the variation, selection, and propagation of innovations; and (6) Foster trust and reciprocity in their business ecosystems. Rising corporate mortality is an increasing threat, and the forces driving it are likely to remain strong for the foreseeable future. Understanding and implementing the principles that create robustness in complex adaptive systems can mean the difference between survival and extinction.