The aim of this study was to investigate the relation between innovation and system complexity, and suggest improvements for an organization to handle innovation and complexity better. The analysis was based on theoretical models about organizational structure, development models and knowledge management. To significantly improve how complexity and innovation are managed it isn’t sufficient to focus on improvements in one part, such as processes. Organizational goals, external environment, organizational structure, development model, knowledge management and internal culture have to be considered and balanced to achieve significant improvements. For the organization studied it was clear that there was a difference in the official description of the organization and how it worked in practice.