The Role of Design Complexity in Technology Improvement
James McNerney, J. Doyne Farmer, Sid Redner, Jessika E. Trancik

TL;DR
This paper models how the complexity of a technology's design influences the rate of performance improvement, revealing a power-law relationship between cost reduction and innovation attempts, with complexity slowing progress.
Contribution
It introduces a simple, analytically tractable model linking design complexity and technological progress, highlighting the impact of component interactions and bottlenecks on improvement rates.
Findings
Cost reduction follows a power-law with respect to innovation attempts.
Higher design complexity results in slower improvement rates.
Bottlenecks can cause periods of stagnation and sudden progress.
Abstract
We study a simple model for the evolution of the cost (or more generally the performance) of a technology or production process. The technology can be decomposed into components, each of which interacts with a cluster of other, dependent components. Innovation occurs through a series of trial-and-error events, each of which consists of randomly changing the cost of each component in a cluster, and accepting the changes only if the total cost of the entire cluster is lowered. We show that the relationship between the cost of the whole technology and the number of innovation attempts is asymptotically a power law, matching the functional form often observed for empirical data. The exponent of the power law depends on the intrinsic difficulty of finding better components, and on what we term the {\it design complexity}: The more complex the design, the slower the rate of…
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