Panamanian Innovation

by Scott Bowden

The country of Panama, which gained its independence from Colombia in 1903, is best known as the home of the path between the seas – the Panama Canal.  The Canal was started by a French consortium in the late 1800s and completed by the United States in 1914.  The Canal, with twin sets of locks on the Atlantic and Pacific sides, continues to serve thousands of transits per year, well over 100 years after its opening.  In 2016, Panama completed an expansion of the Canal with new wider and longer lanes designed to serve the larger cargo ships that ply the seas with thousands of containers on board (as well as other mega-ships carrying chemicals, cars, or even vacationers).

Miraflores Locks at the Panama Canal

The Panama Canal transformed global trade and continues to this day to make it easier to move goods from one ocean to another.  The benefit lies in the simple math of the Canal.  A typical Canal crossing, known as a transit, takes 8-10 hours, plus maybe a day of waiting to enter the Canal.  This compares to the 10-14 days it requires a ship to travel around the entire continent of South America, with the costs in fuel, crew, supplies, risks of traveling through rough seas, and the opportunity cost of getting one’s goods to market 10-14 days later than would be the case with a Canal transit.  Each year, nearly 17,000 ships use the Canal carrying over 300 million tons of cargo.  On a recent trip to Panama, I spent time examining locks on both sides of the Canal and experienced a transit in the Miraflores and Pedro Miguel locks on the Pacific side to get a feel for how this masterpiece of engineering works.  While exploring the Isthmus of Panama, I encountered a number of interesting perspectives on innovation that are worth exploring.


Trust the Natives

The first European to reach what is now known as Panama was the Spanish Explorer Vasco Nunez de Balboa who arrived on the Atlantic Coast in 1501.  Balboa was told by the indigenous population that there was a great sea to the south of their settlement and in 1513 Balboa was able to reach this sea, what we now know as the Pacific Ocean.  At its narrowest point, the isthmus is only 40 miles wide in this area, but the terrain in between the seas is mountainous and covered in dense, thick jungles filled with dangerous animals and insects.

Innovation Lesson – Having traversed the isthmus in an air-conditioned car on a paved highway in about an hour, what struck me was the sheer determination that must have been required of the Spanish explorers to hack their way through the hills and jungles of the isthmus to reach the other coast.  When one thinks about Panama, one assumes that the land is relatively flat (like a beach).  However, one has to remember that millions of years ago the isthmus of Panama rose up via tectonic forces to separate oceans that were once connected.  The explorers had no idea that there was an enormous ocean just 40 miles away.  They had no reason to believe that the indigenous population were telling the truth (especially given the poor treatment the Spaniards afforded the locals) or could tell the difference

Mountains Behind Old City Shoreline in Panama City

between an ocean and a large lake.  Nonetheless, the Spanish pushed through this terrain in difficult conditions and reached the other coast.  Upon discovery of this pathway, the Spanish quickly realized the value of this shortcut as a way to get gold from their conquered territories in modern-day Ecuador and Peru back to the King in Spain.

For the modern innovator, the lesson here is a reminder of the importance of trusting local sources of information.  When we arrive with a mandate to develop an innovative approach to solve a problem, we sometimes dismiss input from those individuals who have the most experience with the current environment.  We assume that these individuals will not be able to provide information that is useful for innovation because they are too connected to the old way of operating.  However, a true innovator will be able to glean input from these legacy sources that can be used to make the overall innovation project even more successful.


Just Because It Worked Once Doesn’t Mean It Will Again

Before the creation of the Panama Canal, the most famous canal in the world was the Suez Canal in Egypt, which connected the Red Sea and the Mediterranean.  That canal, built between 1859 and 1869 by a team of workers led by the Frenchman Ferdinand de Lesseps, fulfilled a dream that dates back as far as the Pharaohs of Egypt in the 2nd millennium BCE.  The Suez Canal is 121 miles long and its most important characteristic is the fact that it is a sea-level canal.  In other words, the Suez Canal for its entire length does not require any locks to raise or lower ships.  Basically, de Lesseps simply cut a channel from the Red Sea to the Mediterranean and allowed the seas to flow into the channel from both ends, effectively uniting those two great seas into a single, flowing body of water.  Nonetheless the construction was quite challenging, and thousands of laborers died from cholera and other diseases.  Yet de Lesseps remained persistent and completed the project to much acclaim.

De Lesseps next set his sights on the Panama Canal.  In 1878, he set up a company similar to the type of firm he used for the Suez project and gained a concession from the Colombian government (Panama was controlled by Colombia at that time) and started work on his project.  De Lesseps believed that he could replicate his success on the Suez project in Panama, and set out to build a sea-level canal, just as he had done in Egypt.  The spot he chose to cross the isthmus was only 40 miles long, which was one-third the length of the Suez Canal.  Moreover, technology had advanced in the decade since the Suez Canal was completed, and de Lesseps assumed he would triumph over nature.  As the Suez Canal took ten years to complete and the Panama Canal was shorter, de Lesseps thought he would be done in six years.

Unfortunately for de Lesseps, Panama proved to be a much greater challenge than Egypt for several reasons.  First, he had to cross the continental divide in Panama, which reaches a height of 360 feet on the Canal route.  Second, the terrain in Panama was a combination of rocks (which are harder to dig into and move than sand), jungle (which is harder to traverse than desert), and tropical downpours (some areas receive 16 feet of annual rainfall).  Third, the workers in Panama had to deal with tropical diseases such as malaria, yellow fever, and other ailments that

Culebra Cut at the Continental Divide

decimated the crews.  At the time, doctors did not know how these diseases were spread and the steps they took to try to contain the diseases, such as having bed posts sit in pails of water to keep insects from climbing up from the floor, actually became breeding grounds for malarial mosquitos.  By 1887, some ten years into the project, de Lesseps reluctantly acknowledged that his sea level plan would not work and changed his design to one that uses locks.  However, with over 20,000 workers dead over the decade of work on the Canal, the company finally went bankrupt and put the project on hold.

Innovation Lesson:  Perhaps the most difficult time for an innovation leader to exercise restraint is after he or she experiences a successful implementation of an innovative solution.  After all, the innovator has probably invested a tremendous amount of time and energy in the project and expended proverbial blood, sweat, and tears to make the project a success.  While one is experiencing the high of the winning project and basking in the glory of a fully-implemented innovation (which is rare, given the high rate of failure in our line of work), the last thing one wants to consider is how that same innovation might not work in another environment.  To the contrary, one is often eager to find another application of the innovation and deploy it as quickly as possible to continue experiencing the benefits of success.

Unfortunately, this can be a recipe for disaster, as the de Lesseps example shows.  In his case, the previous innovation (a joint stock company combined with a sea-level canal and French engineering) was applied to what was presumably an easier challenge (a shorter distance to traverse).  As history shows, the innovation failed in Panama and required completely new thinking and technology, as was brought by the Americans in 1904.  Had de Lesseps started from scratch in Panama and not applied the lessons of Suez, it is possible he would have come up with the appropriate set of innovations to complete the project.


Use Physical Demonstrations

Panama City today is a modern metropolis with huge skyscrapers filled with condominiums, offices, and banks.  The old city, known as Casco Antiguo or Casco Viejo, occupies a small area to the south of the modern city and consists of lovely colonial buildings with charming squares, restaurants, hotels, and shops.  While wandering the old city one comes across an interesting small plaza surrounded by brick walls of a building that once stood on the site.  This is the location of the ruins of the Church of Santo Domingo, which was built in the 17th century but was destroyed by fire in 1756.  After the fire, all that remained were the walls and one curious arch across the middle of the plaza, connecting the two sides of the structure.

This arch is known as the Flat Arch because, unlike a typical arch, it does not have much curve in its central arch structure.  The Flat Arch is 10 meters high and 15 meters long and is made of recessed bricks.  At one time the flat

The Flat Arch

arch supported the choir section of the church.  The arch seems to defy gravity because it is not shaped like a traditional arch, where each stone is locked into the structure by the keystone at the top of the arch, with gravity supplying the force to keep the arch together.

Legend has it that in the early 1900s when the United States was considering taking over and completing the stalled French Panama Canal project, Panama City was struck by a series of earthquakes that made the Americans nervous about completing the project.  After all, who would want to invest millions of dollars in canal infrastructure that could be destroyed in an earthquake?  These concerns over seismic activity led the Americans to consider an alternate path for the Canal that would have run through Nicaragua (though that route was plagued by the possibility of active volcanoes).  The locals wanted to keep the project in Panama so they took the Americans to see the Flat Arch and said that if earthquakes were such a problem, then there would be no way that a flat arch could remain standing since the 1600s.  Supposedly, this convinced the Americans that earthquakes were not as much of an issue as they feared and the project continued.  The site was declared a national monument in 1941, and the arch survived until 2003 when it unexpectedly fell.  The current arch is a reconstruction of the original.

Innovation Lesson:  In 1900 the people of Panama probably presented the United States with all sorts of information they had collected over the years about the prevalence of earthquakes in their region.  Presumably there would have been records of all the major quakes dating back as long as the area was settled by the Spanish.  Although this data would be nothing like what we could muster up today with seismic analysis, nonetheless it would have provided a solid foundation for understanding the impact of earthquakes in the area.  However, Americans were understandably still skeptical about the viability of the location for the Canal, and the alternative Nicaragua route was receiving strong billing as a potentially better route.  Yet the Panamanians understood the importance of physically demonstrating a point rather than simply relying on data.  A flat arch standing for hundreds of years spoke volumes about the stability of the land in the region compared to pages and pages of data about past earthquake activity and analysis of fault lines.  For the innovator, this story reminds us that physical demonstrations can sometimes provide exponential returns compared to dry data.


Always Consider Peripheral Innovations

As one approaches the Panama Canal entry channel from the Pacific Ocean side, one notices a large number of shipping containers and loading/unloading cranes on both sides of the channel.  While it makes sense that there would be a shipping port for the country of Panama (with a population of over four million people), these ports are much larger than one would expect to see for such a small country.  The same is true on the Atlantic side at Colon.  The reason these ports are so large is because of a vital service that the Panama Canal Zone also provides, which is a convenient way to transport a small number of containers across the isthmus to the other ocean.  After offloading containers at the port of Colon (Atlantic) or Panama City (Pacific), a company can transport the container to the other coast either via truck along the trans-isthmian highway or via the Panama Canal railroad.

Container Terminal at Pacific Entrance to Canal

Given the short distance, this trip can be completed in about an hour (in addition to time to offload and move the container to the transportation method and reload it on another ship).  This allows a company to use the advantages of the short distance of the isthmus without having to take their entire ship through the Canal, incurring high fees (ranging from $100,000 to $1 million, depending on the size of the ship).  For example, a company in Argentina might want to ship a large number of containers to the US East Coast, but a few of those containers might need to go to the US West Coast.  That ship could stop at Colon, offload the small number of containers, and move them via rail to the Pacific Ocean where another ship already heading in that direction could pick them up and continue to the US West Coast, while the original ship continues its journey to the US East Coast.

Innovation Lesson:  The fundamental purpose of the Panama Canal is to facilitate the movement of large ships from one ocean to another.  Its core innovation was finding a way to do this efficiently and quickly.  Yet beyond this foundational innovation, the Canal has other uses in terms of peripheral innovations, such as the railroad, the highway, and the container terminals on each end of the Canal.  These innovations provide additional utility for the Canal and give shippers more options in terms of how they move goods from one place to another, further cementing the importance of the Canal in global commerce.


Get a Pilot

As one approaches the channel that leads to the Canal near marker buoy 1, a small boat comes up alongside bearing the Canal Pilot.  Every ship that enters the Canal, no matter how large or small, must have a Canal Pilot onboard during the entirety of the transit.  From the smallest sailboat to the largest cargo ship, a Canal Pilot will always be on board in the Canal Zone.  The pilot is an experienced navigator with charts and communications equipment who coordinates every step of the voyage for that particular ship.

Pilot Ship Approaching Our Vessel

Innovation Lesson:  No matter how much experience one has in a particular subject, there is almost always someone with more expertise nearby who can assist.  In our case, on a tourist boat, the captain of our ship had probably made hundreds of transits in his career, but, no matter, the Panama Canal Authority required us to be boarded by a Canal Pilot.  It is likely that the pilot had little to do on our journey given the expertise of our crew, but he was still there.  One has to remember that the Canal is a multi-billion dollar operation and that the slightest mistake (for example, if a ship damaged a lock gate), could cause the loss of millions of dollars in terms of repairs and lost transit fees, not to mention delaying shipments of time-sensitive cargo.  The pilot is there out of an abundance of caution, but also brings expertise to bear that improves the performance of the crew of the ship in transit.  For the innovation practitioner, the lesson here is that expertise is often available and it is advisable to take advantage of this expertise when offered (or required) to help one along one’s journey.


Stick with the Methods that Work

Aside from navigating within the tight locks on either side of the Canal, the most difficult portion is certainly the navigation channel between the Pacific Locks (Miraflores and Pedro Miguel) and Lake Gatun.  This 7.8-mile-long, narrow stretch was carved out of the mountains of central Panama and is known as the Culebra Cut.  It is quite narrow, surrounded by mountains, and must be constantly dredged to stay in service.  The Canal Authority has an entire team in this location, known as Gamboa, whose job is to run dredging equipment at all times.  When navigating through the cut, one sees large white boards placed on the hillsides at various intervals throughout the

Navigation Boards

landscape.  These are navigation aids, similar to the visual aids used by aircraft to line up their approach to a runway.  The navigation aids in the Canal consist of vertical and horizontal white blocks that, when the ship is in the proper point of the narrow channel, line up perfectly to provide a visual aid for the Captain and the Canal Pilot to ensure the ship is in the middle of the channel where the water is deepest.

Navigation Boards

Innovation Lesson:  Modern cargo ships possess a tremendous array of sophisticated navigation tools that operate anywhere on the planet.  Using satellite-guided GPS, a ship’s captain can discern his or her position within a few feet.  After all, a ship is always within line of sight of a satellite.  Yet despite all of these sophisticated technologies, the Canal still relies on navigation boards that likely were in place soon after the construction of the Canal.  These boards provide precise, consistent feedback of a ship’s position and work for any type of ship.  Other than foggy conditions, which are rare in the tropics, these navigation signal boards are redundant and cannot fail, unlike a computer-aided system that could encounter errors.  The innovation lesson here is that one should not always trust new technology to solve a problem.  Older methods can continue to work and, in some cases, may work better for their purpose.  After all, navigation boards can be used by any ship, any captain, and in almost any conditions, whereas one might encounter slight differences in GPS technology used by different ships entering the Canal.


Anticipate Unexpected Uses for Technology

In 2016, the Panama Canal Authority inaugurated a new set of locks on both sides of the Canal.  The new locks were designed to accommodate larger ships (longer and wider, known as Neo-Panamax) than those that could traverse the early 1900s locks (known as Panamax).  This was needed because of the increasing size of cargo ships, both container vessels and car carriers.  One of the most important trade routes runs from Asia across the Pacific to the East Coast of the United States, and without the expansion of the Canal these huge ships were having to take much longer routes to reach their destination.  The best place to see the new locks in action is at the Agua Clara Locks Visitor Center on the Atlantic side of the Canal.  As we were driving towards the new locks, we needed to decide whether to go straight to the locks to see a ship transiting or whether to go to see other sights in the area, such as the 17th century Spanish Fort San Lorenzo, which once guarded the mouth of the Chagres River where it meets the Atlantic Ocean.  Our driver launched an application called “FindShip” which showed a map of the local area and identified all of the large ships

Ship Entering Agua Clara Locks – Located via Findship App

in operation, including metadata about those ships such as the name, owner, home port, cargo, destination, and speed.  We saw that a large ship was about to enter the Agua Clara Locks, so we headed straight to the visitor center to see the transit take place.

Innovation Lesson:  The people who designed and built the FindShip application probably never expected it to be used by tour guides in Panama.  It was likely built so ship owners or other interested parties could keep track of where their vessels were around the world.  Yet those whose livelihood depend on the movement of ships in the Canal quickly realized that this application could help them improve their performance with customers by determining the best way to tour different locations.  The application is also helpful when one is crossing the Canal by ferry near Colon so one can see if the ferry boat will be delayed because larger ships are transiting the area.  The innovation lesson here is that a great idea will always have additional, unanticipated uses that bring value in entirely new ways.  One of the jobs of the innovator is to think about these new ways when one is designing the original innovation.


Innovations Still Need the Fundamentals

One striking aspect of the new, wider locks on the Canal is how similar some of the fundamental components are when comparing the original locks from 1914 with the new ones completed in 2016.  The 2016 locks certainly leveraged advanced CAD/CAM design and modern engineering techniques.  The new lock gates were built in Italy by one of the best engineering firms in the world and shipped by barge to the Canal.  The new locks operate on tracks that allow a single moving part to open and close rather than two separate gates (like doors) that must open and

Old Locks – Dual Swinging Doors

close together to seal each lock.  Yet at its core the new locks still share two key elements with their century-old brethren.  First, the new locks still use gravity to move water in and out.  There are no massive pumps that move water in and out of the locks.  Rather, the effort is entirely handled by gravity.  This means that there are fewer technological failure points, as gravity will always work in the same way every time it is engaged.  A second common element between the old and new locks is the use of redundancy in the lock gates.  Every lock is protected by two gates, so if one is breached or fails, the second lock will continue to hold the water in place.

Dual Gates at New Locks

Innovation Lesson:  One could imagine that when designing the new locks, a particularly confident engineer might have thought that he or she could design a single, foolproof lock gate and obviate the need for redundancy.  After all, these new lock gates were enormous pieces of steel and were certainly expensive to build, transport, and install.  Yet the fundamental rule of redundancy must always come into play, no matter how innovative or technologically advanced a solution may be.  The lesson for the innovator here is to not forget the fundamentals when building something that is brand new, even if it seems to be extremely advanced.


Innovate by Doing More with Less

While the new and old locks share some common characteristics, the most striking difference between them lies in how the new locks are able to conserve water.  In the 1914 locks, fresh water enters from Lake Gatun and as each chamber is emptied as the ship is lowered to sea level, the fresh water contained in each lock is emptied into the sea, merging with salt water at the end of the set of locks.  This results in the loss of millions of gallons of water on each transit.  In fact, one often sees birds soaring near the lock exits because the fresh water often contains fish that, when they encounter salt water, are unable to live, resulting in a feast for the sea-birds.  Although this design worked in the past, given the huge size of Lake Gatun and the 16 feet of annual rainfall that replenishes the lake, the designers of the new Canal locks knew that they needed a more sustainable approach for the 2016 locks.  The result was the current design where each lock chamber contains water retention basins that save 40% of the water used in each lock, resulting in a smaller outflow of fresh water for each transit.

Water Capture Basins to Conserve Water

Innovation Lesson:  The mindset around the new 2016 locks was focused on doing what it takes to make them bigger.  The new locks needed to be wider and longer than the older locks to accommodate the larger vessels that had come to dominate global commerce.  Yet an innovative mindset also prevailed in the design to focus on making the locks better, not just bigger.  One of the most important ways to make the locks better was to make them operate with less water, especially given the enormous size of each lock.  The lesson here for the innovator is that it is always important to look at all elements of a design and not just focus on the core objective of a new initiative.


Innovate with the End in Mind

One of the challenges of having the Panama Canal bisect one’s country is the need to build bridges in several places to cross the Canal.  The bridges need to be high enough to allow some of the largest ships in the world to pass.  As Panama’s economy has thrived in recent years, the country has been on a building spree.  Evidence of this building boom is present on the Atlantic side near Colon, the Canal entrance, and the Agua Clara locks.  Currently this area is served by a small car ferry that can transport about 15 cars at a time across the shipping channel, and the ferry must wait to cross when any large ship is passing by to enter or exit the Canal Zone.  This new bridge, designed by the firm Louis Berger Group and built by the French firm Vinci Construction, consists of a 1,050-meter dual carriageway in a cable-stayed span.  The 530-meter main span is the longest concrete four-lane cable-stayed span in the world.  The goal of the bridge is to link the two regions of Panama to boost development and tourism.  The bridge was nearly completed when I visited it in April 2018.

New Canal Bridge under Construction

While the bridge itself is a marvel of modern technology and construction techniques, that attribute alone is not what makes it important from an innovation standpoint.  Rather, what is interesting is what is on the other side of the bridge, away from the heavily-populated areas around Colon.  The bridge ends in a dense jungle area that is known as the Fort Lorenzo Protected Forest.  The four-lane massive bridge terminates into a single, two-lane road that is heavily potholed and where the jungle grows over the sides of the road to the point that there are places where the road seems to be only a single lane.  That road goes through an old abandoned US Army Base, Fort Sherman, that is sparsely used by the Panamanian military, with dozens of abandoned Army buildings crumbling into the ground due to lack of use and maintenance.

Once one passes through Fort Sherman, the tiny road continues past a small marina (Shelter Bay Marina) with a single hotel, then the potholed and jungle-surrounded road continues for miles and miles until it dead ends at Fort San Lorenzo, a historic Spanish Fort that is a very rarely visited tourist site.  Turning the other direction from the new bridge, a two-lane road crosses the Chagres River by the dam that formed Lake Gatun then runs through jungle

Terminus of New Canal Bridge

and passes by a few small towns.  Years ago in the US, there was a Congressional scandal concerning a “bridge to nowhere” being built in Alaska, where millions of dollars were being spent to build a bridge to connect a small island with a few dozen residents to the mainland.  Presumably the dollars could have been better spent improving roads that were more heavily traveled.  The same may be true for this new bridge in Panama.

Innovation Lesson:  The lesson here for innovators is that no matter how spectacular one’s innovation may be in terms of technology, one must also think about, and prepare for, the eventual use of that innovation.  The sight of a giant

Two-Lane Road at Terminus of New Canal Bridge

four-lane highway terminating into a tiny, pot-holed two-lane road is quite stunning.  One would think that a visionary behind the project would have invested resources in starting to improve the infrastructure on the other side of the bridge.  Otherwise, hundreds of cars will cross over and encounter frustrating driving conditions, thus limiting the effectiveness of the new bridge.  The only thing I saw in terms of new development on the Western side of the bridge was ground cleared in the jungle to build a new visitor’s center for Fort San Lorenzo.  True innovators and visionaries must think well beyond their core innovation if they want to build something with lasting value.

Fort San Lorenzo


Innovate by Not Finishing

Some may think of the country of Panama as the halfway point in the drive from North to South America (or vice-versa) on the Pan-American Highway.  Yet Panama is more than just the halfway point – it is a dead end.  The Pan-American highway ends in Panama and resumes in Colombia, requiring a transfer by ship to complete the journey.  The reason for this is an area known as the Darien Gap.  This is a 60 to 100-mile wide swath of dense jungle that represents the only break in the 19,000 miles of highway that run from the Arctic Ocean to the Southernmost point of South America.  Indigenous people still occupy this region, but its lack of development and lawlessness make it a haven for drug-trafficking and human migration.  Some politicians have considered completing the highway through the Darien Gap, with the goal of improving economic development in the region, but they have brushed up against several objections.  First, the impact on the indigenous people with modern development would almost certainly be

Dense Jungle Terrain

negative.  Remote villages with little outside interaction could be flooded with tourists, impacting the culture in a way that would be difficult to turn back.  Second, deforestation would accelerate.  There are already cases where illegal logging of rosewood in protected forests is taking place in the Darien, and improved transportation links would only make this more profitable for smugglers and thus more prevalent.  Third, animal diseases, such as bovine foot and mouth disease, are prevented from spreading from South to North America by the gap, so removing that barrier could result in unintended propagation of these diseases.

Innovation Lesson:  Sometimes the most innovative thing to do is not to finish something.  In our daily lives, we are highly-attuned to the importance of finishing tasks or projects.  Every project plan shows a start and finish, and we often manage our to-do lists by crossing off, or finishing, tasks through the day, which gives us a measure of satisfaction.  Innovators focus energy on completing key elements of a project step-by-step, with an end-goal in mind.  Yet in some cases, the best thing to do may be not to finish a project, especially if one of the penultimate steps yields greater value that one would expect to obtain from reaching the final step.

Change Planning Toolkit Million Dollar Value


Photos courtesy of the author

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scott_bowdenScott Bowden is an independent innovation analyst. Scott previously worked for IBM Global Services and Independent Research and Information Services Corporation. Scott has Ph.D. in Government/International Relations from Georgetown University. Follow him on Twitter @sgbowden

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