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December 31, 1999, the day the US government handed back the Panama Canal, was a day of jubilation and celebration for the Panamanian government and the 3m people who live in the tiny Central American country.
But for the newly-created Panama Canal Authority (ACP), the state-run company which is responsible for turning the canal into a profitable enterprise and an important source of government revenue, it was also a daunting time.
“We had to change our business model from the break-even operation that existed under US management to one that made the canal as profitable as possible,” recalls Lilia Morales, training and development manager at the ACP. “It was a tremendous responsibility because we had to change the business model completely and we knew that the country’s economy depended on our success.”
Faced with such a gargantuan task, directors of the ACP decided early on that one of the starting points was to hire a business school to help design a tailor-made programme for ACP managers and staff members who showed exceptional promise.
The idea, says Ms Morales, was not only to teach ACP executives how to reshape the company to generate profit but also to ensure that they acquired an institutional vision that would guarantee best practice and continuity in the future. “We had to learn how to think and operate as a corporation and that required learning about good leadership and good planning.”
The result was a project carried out in conjunction with Incae, the business school based in Costa Rica and Nicaragua that teaches ACP executives about best business practices using the Harvard case-study model but that also incorporated the specific requirements of the company itself. Students not only learn about business but also study the history of Panama and the canal. Specific aspects of the shipping industry, a third element to the course, are taught by Sweden’s Malmo University.
Guillermo Selva, dean of the Incae business school and one of the professors involved in the ACP programme, says he and his colleagues worked hard to include specific case studies based on the operation of the canal itself. One of the many studies, for example, involves getting students to work out how best to programme the passage of the vessels passing through the canal every day.
“It is an incredibly complex area because there are bottlenecks along various stretches of the canal and you also have ships travelling in both directions at the same time,” he says. “Getting it right is not easy.”
Go up to the Miraflores locks on the outskirts of Panama, and it soon becomes apparent what he means. The growth of international shipping has placed a huge strain on the canal, which today operates with almost identical infrastructure to that used when it was first inaugurated in 1914.
In addition to the sheer weight of traffic, look out over the Pacific ocean from Panama City’s colonial district and the chances are you will see a long queue of ships waiting their turn to move through the system of locks – ships have grown in size. Indeed the modern, so-called post-Panamax vessels no longer fit in the antique locks: those that do often leave a hair-raising gap of less than 1m between their hulls and the sides of the locks.
The course began in May 2003 with 35 people. Since then, two more generations of ACP employees have graduated from the 16-month course, which is taught in a dedicated campus next to the ACP’s main office in Panama City. At least two more generations of students are expected to graduate in the coming years.
Prof Selva says a lot of the course is similar both in content and in structure to Incae’s flagship executive MBA course, which is taught in Managua. ACP students, for example, attend for seven consecutive days a month and study two modules during each of the 16 weekly blocks.
That is unusual for an executive MBA course, most of which tend to fall at weekends. But Prof Selva argues that Incae’s timetable brings important benefits. For a start, he says, students tend to be more focused because the study period is longer and the days are often exceptionally long: Ms Morales, who in addition to helping to design the course was also one of the first to graduate from it, says the day begins at 7 am and often does not finish until midnight.
Prof Selva insists that teaching exclusively at weekends, by contrast, tends to work less well in practice because students are still caught up in specific problems or tasks at work and therefore find it harder to give their undivided attention to the coursework. “It’s harder to get things done,” he says.
Ms Morales admits that she sometimes found the intense structure exhausting. “I would sometimes return to work absolutely exhausted,” she recalls. But she also says it proved invaluable for understanding the different aspects of running and operating the canal. It also provided a unique opportunity to meet and get to know ACP executives who worked in departments she probably would have had little contact with otherwise.
“We got to network within the organisation and that allowed me to understand areas of operation I would not normally have been that familiar with,” she says.
At $16,000 per student – the ACP pays for 80 per cent and the students pick up the rest – the course is not cheap, at least by regional standards. But to judge by the ACP’s results since it took over the canal at the end of 1999 it has been worth it. In the six years under ACP management, for example, income from the canal has risen from less than $800m a year to more than $1.4bn. Profits, meanwhile, have surged from $341m to $910m.
Of course, ACP directors admit that not all of that is the result of the executive MBA programme but they say the course has been one of the many elements in the transformation.
More generally, employees say the programme has provided the ACP with a solid backbone of staff that has a clear institutional understanding of the company and a shared philosophy about where it should be heading.
Given the ACP’s ambitious expansion plan, which aims to roughly double present capacity of 330m tons a year, that is something that is likely to come in more than handy.
As Ana María Chiquilani, the ACP’s human resources director, puts it: “We are now a company that does not have to rely on just a couple of people – we have 95 people who are guarantors of institutional continuity.”
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