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.

The authors analyzed the mathematics of innovation as a search process for viable product designs across a universe of components. They then tested their insights using historical data from four real environments and concluded that companies can have an advantaged innovation strategy by using information about the unfolding process of innovation. But there isn't one superior strategy. The optimal strategy, they found, is both time-dependent and space-dependent. Based on their findings, the authors developed a five-step process for constructing an information-advantaged innovation strategy. Step 1. Choose your space: Where to play? It's not enough to analyze markets or anticipate customers'needs, the authors say. To innovate successfully, you also need to understand the structure of your innovation space. Step 2. Select your strategy: How to play? Measure the evolution of complexity in the space by analyzing the distribution of product sizes in terms of the number of unique components in products. If complexity is low and stable, the authors say, it's an indication that the space is still in its infancy, which argues for an impatient strategy. If complexity is high, then the space is maturing and a patient strategy will be the best approach. Step 3. Apply your strategy: How to execute? If you follow an impatient innovation strategy, the objective is to adopt or develop components that enable the company to bring relatively simple products to market quickly. Managers should ask themselves how they can be first. However, if the characteristics of your chosen innovation space imply that a patient strategy is more appropriate, your objective should instead be to maximize future innovation options. Step 4. Sense shifts and adapt: How to extract a switch signal? You need to monitor the complexity of your innovation space and compete on access to information in order to detect valuable strategy-switching signals before competitors.