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Panama: The Future Hong Kong of Latin America?

I just came back from conducting my program in Panama, and whileI have been through the Panama City airport several times, I had neverstepped outside its walls. This is a fascinating country. We had 150attend the seminarincluding government leaders, CEOs, and entrepreneurs. The conversationshowed me how seriously Panama is taking its opportunity to innovate ona national scale.

I just came back from conducting my program in Panama, and whileI have been through the Panama City airport several times, I had neverstepped outside its walls. This is a fascinating country. We had 150attend the seminarincluding government leaders, CEOs, and entrepreneurs. The conversationshowed me how seriously Panama is taking its opportunity to innovate ona national scale. I don’t mean “spur innovation” as we are framing thechallenge in the United States, but rather, Panama is looking at itselfas an innovation and trying to understand the unique role it can playin the region and world.

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Thisfact was reiterated on my flight back home. I found myself sitting nextto the CEO of a specialty chemical company that distributes chemicalsaround the world. As we talked about Panama’s evolution over recentyears, he grew animated, explaining why, after looking at severaloptions in Latin America, his company decided to make Panama thelogistical center of their Latin American operations. 

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

This view was thensupported that evening by a friend of mine. At a wine shop inGreenwich, 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 LatinAmerican sales for the animal health division of a major pharmaceuticalfirm. He said they had recently completed a broad study to analyzewhere they should base their logistical hub in Latin America, throughwhat port should they funnel their distribution train and hold theirinventory. They decided on Panama. 

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

Befriend your enemies 

Oneperspective we’ve seen is that it is easier to grow by helping yourcompetitors than by fighting them. This cuts against an instinctivedesire 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.

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During my Panamanian presentation, a participant,who heads a government agency, talked about Panama’s opportunity to bethe “service” for the world’s “products.” Most other Latin Americancountries 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.

Byworking with neighboring countries and offering the service-side ofbusiness, Panama can be seen as an ally to all South Americangovernments and corporations.

Coordinate the uncoordinated

Innovation builds on innovation. For example, Disney’s skill at earlyanimation gave it a unique advantage at designing theme parks. CircuitCity’s experience running retail stores (the company was once theleading 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.

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Both Singapore and Panama are small countries on the outskirts of large, diverse, economically robustregions. They both cluster experts that make them a natural gateway forthe region to reach the world. They are both relatively easy forforeigners to navigate. And as you drive under the towering, denseskyscrapers 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. Andask yourself the questions below to see if you can use some of thestrategies that Panama is employing to grow innovation in your ownbusiness.

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?

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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. Kaihan has delivered business strategy keynote speeches for organizations such as Motorola, Schering‐Plough, Colgate‐Palmolive, Fortune Magazine, Harvard Business Review, the Society of Human Resource Managers, the Entrepreneurs Organization, and The Asia Society

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