Software Factories: From Outputs to Business Outcomes
Daniel Jones and Mike Gehard explore the sudden rise of agentic software factories, where humans are prohibited from writing or reviewing code. Drawing from Mike’s background in chemical engineering, they discuss applying industrial feedback loops and the theory of constraints to software development. The conversation shifts from technical implementation to the economic and psychological impacts of AI-native engineering. They examine how architecture, testing, and developer roles must evolve when software becomes a commodity and the primary bottleneck moves from output to specification and outcomes.
Episode Transcript
Daniel Jones (00:03) You are listening to the Waves of Innovation podcast and I am DJing your host. In this week's episode, I am talking to Mike Gayhard, a previous guest on the podcast. And this one's a little bit more unusual. Normally I invite people on and we talk about their work and that kind ...
Episode Highlights
- •The Industrialization of Logic: Software is moving from artisanal process to closed-loop system modeled after chemical refining, requiring engineers to act as systems designers managing automated loops.
- •The Theory of Relocated Constraints: With code generation solved, the primary hurdles are clarity of specification and rigor of validation—encoding human intent into high-fidelity prompts without ambiguity.
- •Architecture as Context Management: Traditional architecture managed human mental limits; in the agentic era, it prevents LLMs from getting lost mid-file. Structure optimizes the agent's attention.
- •The Economic Collapse of Software Value: As software becomes a commodity generated for token costs, proprietary codebases lose competitive advantage. Future value resides in proprietary data and human relationships.
