Industrial Logic

The information age has transformed the economy. The financial service industry has been a tremendous beneficiary with huge financial rewards for innovation and engineering. The financial services sector grew to at least 2nd largest in the US on at least 2 occasions, and that’s not counting banking and securities brokerage*.

Financial engineering created such large returns in the investment industry that it absorbed a large number of top talent from the global workforce for a generation. The industrial world, through automation and logistics applications has changed, too, but not like the financial markets.

Financial engineering has matured and the breakthroughs for systemic outperformance and securitization are harder to find. There is still obvious room to improve how to tailor services for individuals, but you know what I’m saying. Rather than choosing to innovate in the financial services, more engineers will see the best opportunities in industry.

And that gets me to the point: As the information age matures, I think we will see that financial engineering will give way to industrial logic as the most powerful force in the economy. Now that capital is being allocated so efficiently, productivity gains will increasingly come from industrial logic: information systems tied to production and services.

APIs** will be a catalyst for industrial communications. Companies can become part of a global network of improving efficiency, production, services, and innovation.

Reading my Clay Shirkey book from Christmas has me all optimistic.

Happy New Year. Get back to work,
– Dan

* based on my recollection of Value Line data from over the years…

** It stands for Application Protocol Interface. Just like consumers have been blessed with this new smartphone app phenomenon, developers have been blessed with APIs. APIs let companies talk to companies over the internet. They can send data and receive responses with other data. It’s great.

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