In business, complexity both drives innovation and also hinders it.
Complexity is like energy. In the biosphere, for example, the "life potential" of a species is proportional to its complexity. Its fitness is proportional to its complexity. This is why the biological evolution is equivalent to an increase in complexity because this means an increase in functionality, which, in turn, means the ability to better cope with the uncertainties of a constantly changing environment, however, simplicity is ultimate sophistication, does complexity drive or hinder innovation?
In business, complexity both drives innovation and also hinders it. When a business becomes overly complex and people get frustrated and annoyed by not being able to accomplish things easily, this drives the search for simpler concepts and methods, which is the need to take the innovative initiative. At the same time, however, over-complexity in a business may be hiding simple and innovative ways to achieve things because the people involved just don't get the time to step back from the complexity and hence, they continue to follow the old routine to do the things, lack of the out of box creativity.
Manage complexity in structural ways. A lot depends on having someone in the business who recognizes that complexity is a problem and looks for solutions to this. Functionality implies capability to make a work (a classic definition of energy), then complexity can be seen directly as energy. In order to make new things you will need additional functionality (that depends on new staff, funds, and other resources), or to turn old functions into new ones. New functions can be simpler than old ones, but be more innovative. Some reactions can be spontaneous and release energy under certain conditions. With innovation, we are modifying the product and processes of the business but if mass-energy must be kept, a simpler structure will produce extra complexity (due to the useless resources) and the surplus must be released. When we are talking about a simpler business we expect that the extra complexity will be always released out of the organization.
The business is complex, the people are complex, and the world is complex, there’s no such thing as absolutely good or bad, you just need to have the special eyes to discern it; the system mind to untangle it and the strategy to manage innovation portfolio out of complexity more effectively.