Guest blog by Franklin Morales, Head of Commercial and Economic Affairs at the Embassy of Panama in the United States.
This is a blog series written by the alumni of the Leading Economic Growth Executive Education Program at the Harvard Kennedy School. 65 Participants successfully completed this 10-week online course in May 2021. These are their learning journey stories.
A few years ago, I became a diplomat of my country in the United States. Over time, I gained more responsibility until I became the Head of the Commercial and Economic Section. I am responsible for investment promotion and building partnerships with the American private sector. Although I had previous experience in partnership building, I realized I needed additional tools to tackle some of the policy challenges I was facing. I wanted to affect change and create public value, but I was uncertain about how to proceed.
Over the last 20 years, Panama has been a success story in terms of economic growth. The country attracted over 150 multinational headquarters, and its income per capita almost tripled in the same period. Although Panama made significant progress in reducing inequality while growing, distribution of income and opportunities remains a challenge in the eyes of most of its citizens and leaders. Furthermore, growth in the last few years has stagnated, bringing a heightened risk of social dissatisfaction. The same risk that has affected other countries in the region. That is why Panama’s leaders want to promote growth through different avenues. Two of those strategies include the Digital Hub Strategy and the Advanced Manufacturing Strategy. Both seek to diversify Panama’s exports to advanced sectors. Although these are not the only efforts in place, they are the ones that relate most to my job.
The United States is Panama’s most important trading partner. Therefore, it behoves the Embassy of Panama in the United States to take a proactive approach to support the diversification effort. Panamanian authorities understand this and thus requested that the Embassy propose “a plan” of how the Embassy could contribute to the digital hub and the advanced manufacturing strategy. The question in my mind at that point was: how could I propose a plan (as commonly understood) when there was so much uncertainty about how to achieve the objective?
I joined the Leading Economic Growth Program at the Harvard Kennedy School to gain the knowledge and skills that would allow me to answer this question. I did It too because I believe that those in positions of public trust and responsibility owe it to those who trust them to make informed decisions and act to the best of their abilities. I was serving to the best of my abilities, but I knew I could be better informed. Specifically, I expected to learn how to structure my thinking and what how to narrow down the task to make it manageable to my team and others. The course did not disappoint. In just ten weeks, I was able to grasp concepts that were directly applicable to my job. Week after week, after I finished the lectures and peer-group discussions, I went back to my office and immediately tried implementing new ideas.
Here are some of the concepts I found most valuable:
The course provided me with a new paradigm on how countries diversify their exports and leverage their existing capabilities to develop new ones. By using Harvard’s Atlas of Economic Complexity, I learned about Panama’s exports dynamics and trends. I also reviewed the movements of other countries of interest. I gained a better understanding of some of the critical capabilities available in the country and the opportunities available to us if we decided to act strategically. This concept alone allowed me to narrow down the scope of challenge.
Problem Driven Iterative Approach (PDIA)
The Problem Driven Iterative Approach focuses on the problem instead of on the potential solution of those problems. The iterative part of this method emphasizes the need to engage in active discovery and identification of new paths and opportunities while avoiding premature conclusions. This management approach was utterly different from that I had seen in public administration. I learned how to deconstruct a problem, identify key entry points and maintain and expand support. The method helped me deal with unknown and complex challenges like the one I was facing.
Along with the concept of PDIA came that of understanding how high-bandwidth organizations operate. We learned from case studies how teams tackling policy challenges are more effective when they can manage many interactions that lead to new ways in which different actors can engage and discover new solutions. Through peer-group discussions, I understood that among some of the traits of these high-bandwidth teams and organizations were clarity of purpose, access to authority, individual autonomy, focus on results, and commitment to customer satisfaction.
When working in government, it is easy to become overwhelmed with all the issues that need attention. International benchmarks and indicators contribute to this sense. They point to many areas where any particular nation should focus on without giving clarity on how to address those issues. A country may improve its indicators without really solving its problems. In Leading Economic Growth, we took a deep dive into Growth Diagnostics. We learned how to evaluate economic trends and indicators, perform sophisticated benchmarking, and identify binding constraints to growth. By focusing on those constraints that may affect growth, we also learned how to use public time and resources efficiently.
The course also tackled some questions regarding economic inequality and economic inclusion. It provided an alternative view of the reasons for poverty and exclusion by presenting case studies and data. The new outlook shifts responsibility away from the individual and towards other societal actors whose power can transform the lives of others. It points to the lack of connectivity and physical mobility as sources of poverty. It also points to market failures as the culprits and public goods as the solution. In this new scenario, public-private partnerships are one of many tools available to ensure more people can access opportunities. This approach focuses on enabling individuals to live to their fullest potential instead of continuing to leave them behind while extending handouts and giveaways.
I applied many of these concepts as soon as possible, even by engaging a team of government officials convinced that a Problem Driven Iterative Approach was the way to go. I also engaged senior authorizing officials who are focused on solving real problems. Now we have embarked on our learning process to discover how Panama can continue its growth trend and my team has more clarity about what is the role the Embassy can play in achieving this objective.
I also came to some insights that reshaped the way I engage with my team and with other government agencies. Among those are:
First, understand the problem
There are differences in the management of complex and complicated problems. If one clearly defines the nature of the problem faced, it is easier to select a sound management approach. Furthermore, by establishing a clear vision of the problem solved, it is easier to align efforts and accumulate learning to advance towards the desired destination.
It is OK not to know the path
Complex challenges are so because they do not have clear solutions. No one knows how to get to the destination. In that case, accepting that we do not know is the healthiest realization early in the process. The step enables the team to be honest and engage in a way that allows everyone to discover the best path forward together.
Please do not wait for the path to reveal itself
Although it is crucial to think, it is also vital to act. However, not all actions are created equal. In this case, small steps that generate learning are better than significant actions that paralyze the organization. By focusing early on action learning, one can build momentum, expand legitimacy and provide more opportunities for “serendipitous success.”
Many things need attention, and not all things need the same attention
Governments stretch between many demands. By understanding and analyzing what the real binding constraints to growth are, leaders could focus their resources and political capital on those things that improve the livelihoods of citizens in the short term. These actions, in turn, help them build the legitimacy and support they need to tackle other essential and long-term challenges.
Others must care
Solving an economic challenge is not only about identifying what is wrong and fixing it. It is also about connecting to society’s needs and aspirations, understanding the pillars upon which our identity rests, and in what way we can inspire others to contribute to a common goal. The task is not for a single expert to solve it. It must be a team effort, a societal effort. Without clear communication, empathy and humility, we can’t lead economic growth. We are just one, and we need other’s knowledge, insights, and contribution to succeed.