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Panama: The Future Hong Kong of Latin America?

I just came back from conducting my program in Panama, and while I have been through the Panama City airport several times, I had never stepped outside its walls. This is a fascinating country. We had 150 attend the seminar including government leaders, CEOs, and entrepreneurs.

I just came back from conducting my program in Panama, and while
I have been through the Panama City airport several times, I had never
stepped outside its walls. This is a fascinating country. We had 150
attend the seminar
including government leaders, CEOs, and entrepreneurs. The conversation
showed me how seriously Panama is taking its opportunity to innovate o
n
a national scale. I don’t mean “spur innovation” as we are framing the
challenge in the United States, but rather, Panama is looking at itself
as an innovation and trying to understand the unique role it can play
in the region and world.

This
fact was reiterated on my flight back home. I found myself sitting next
to the CEO of a specialty chemical company that distributes chemicals
around the world. As we talked about Panama’s evolution over recent
years, he grew animated, explaining why, after looking at several
options in Latin America, his company decided to make Panama the
logistical center of their Latin American operations. 

Panama,
he said, has the largest free zone in the region; the country requires
everyone to learn English in school so it is easy to find English
speakers; and it is easy to find well-educated, skilled logistics
experts. He said, “Panama is becoming the Hong Kong of Latin America.”

This view was then
supported that evening by a friend of mine. At a wine shop in
Greenwich, Conn., which had been closed down for a private happy hour,
I talked with a close friend and his wife. He is the head of Latin
American sales for the animal health division of a major pharmaceutical
firm. He said they had recently completed a broad study to analyze
where they should base their logistical hub in Latin America, through
what port should they funnel their distribution train and hold their
inventory. They decided on Panama. 

So
how has Panama achieved this respect from and allure to businesses?
Like many of the thriving companies we review here, Panama’s government
and businesses are following at least two time-tested strategies.

Befriend your enemies 

One
perspective we’ve seen is that it is easier to grow by helping your
competitors than by fighting them. This cuts against an instinctive
desire to “beat the competition
.As Sun Tzu and Mahatma Gandhi have both suggested in their own way – befriending an enemy is a far better approach.

During my Panamanian presentation, a participant,
who heads a government agency, talked about Panama’s opportunity to be
the “service” for the world’s “products.” Most other Latin American
countries are staking out product positions.
For example, Colombia is known for coffee, Peru for gold, etc. All of these goods need a path out of the region and the Panama Canal can provide that.

By
working with neighboring countries and offering the service-side of
business, Panama can be seen as an ally to all South American
governments and corporations.

Coordinate the uncoordinated

Innovation builds on innovation. For example, Disney’s skill at early
animation gave it a unique advantage at designing theme parks. Circuit
City’s experience running retail stores (the company was once the
leading electronics retailer) parlayed well into selling used cars
(CarMax is a spin-off of Circuit City).

Panama is seeking to consolidate the skills it has developed by operating its canal to become the worldwide center of logistics. Its banks, insurance firms, lawyers, and other experts, if coordinated correctly, could form a unique cluster of logistical experts and a strong infrastructure. The plan, as it was briefly described to me, is to cultivate this cluster in a national advantage.

This focus on building innovation was brought up at dinner that night with some close friends of mine.  As we sucked on clams sautéed in garlic and picked at spicy ceviche, one of my friends – the former Panamanian Ambassador to Singapore – talked to me a bit about the parallels between Singapore and Panama.

Both Singapore and Panama are small countries on the outskirts of large, diverse, economically robust
regions. They both cluster experts that make them a natural gateway for
the region to reach the world. They are both relatively easy for
foreigners to navigate. And as you drive under the towering, dense
skyscrapers of Panama
City you cannot help but think – could Panama engineer in Latin America what Singapore has done in Asia?

Keep a lookout on Panama. Next year – I was told – could be the year when the rest of the world comes to realize its potential. And
ask yourself the questions below to see if you can use some of the
strategies that Panama is employing to grow innovation in your own
business.

1. What is the biggest time-waster of my business or process?

2. What is the number one complaint from my customers and clients?

3. How could I work with another company to streamline inefficient processes?

4. Who can I coordinate to provide a better service or product?

About the author

Author of Outthink the Competition business strategy keynote speaker and CEO of Outthinker, a strategic innovation firm, Kaihan Krippendorff teaches executives, managers and business owners how to seize opportunities others ignore, unlock innovation, and build strategic thinking skills. Companies such as Microsoft, Citigroup, and Johnson & Johnson have successfully implemented Kaihan’s approach because their executive leadership sees the value of his innovative technique.

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