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CONTRIBUTORS

Matthew Moberg 

Portfolio Manager
Franklin Equity Group
United States

Emily Elott

Portfolio Analyst
Franklin Equity Group

Preview

The past 50 years of innovation were about the byte. We think the future will be about the atom and the gene. Our focus in this paper is the atom, specifically how advances in production may alter the physical world—transforming cars, robots, drones, medical devices and drugs and creating new modalities never considered before. These products will be variable and complex and upend the manufacturing status quo. With this shift in mind, we make the case that the new heroes in business will be producers. We try to break the myth that production is unprofitable, commoditized and largely not investable. In this paper, you will find three business models selected to show production as an engine for long-term profitability and value creation: technological competitive advantage, scaled economies shared and personalization.

Key takeaways:

  • In the Fourth Industrial Revolution, production will play a key role. New technologies will disrupt current ones, creating new winners. The general-purpose technologies we have identified so far include electric vehicles, clean energy, artificial intelligence, robotics, and genomics.
  • We are already seeing production gain in importance in the case of the big tech companies, who were once asset-light and are now spending heavily on capital expenditures.
  • The skillsets are different for inventors and producers. A successful innovation requires both.

This is an optimistic time—that technological progress compounds on itself has never been more apparent. Yet, if the digital revolution was a disappearing act, where the world dissolved into the computer, the wonders of this next era will spill back out of the machine, coming to transform our physical world. We have always needed both dreamers and producers, but the stories of innovation have tended to favor the former. Now, the pendulum of history is shifting toward the Boschs, Cooks and Changs—those talented individuals who take inventions out of the lab and into the world.

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