nation-owned enterprises

Cecil F. Antone: Nation-Owned Businesses: Gila River Telecommunications, Inc.

Producer
Native Nations Institute
Year

Former Gila River Indian Community Lieutenant Governor Cecil F. Antone provides an brief overview of the evolution and growth of Gila River Telecommunications, Inc. (GRTI), an enterprise of the Gila River Indian Community.

Resource Type
Citation

Antone, Cecil F. "Nation-Owned Businesses: Gila River Indian Community, Inc." Building and Sustaining Tribal Enterprises seminar. Native Nations Institute for Leadership, Management, and Policy, Udall Center for Studies in Public Policy, University of Arizona. Tucson, Arizona. March 29, 2007. Presentation.

"I'm going to try to give a little bit more perspective of what we've done at Gila River, and not so much on the technical stuff that's been provided to you with the slides and so forth, because I think that's what you really need to know is the relationship we have with our council and our administration.

As it was mentioned, GRTI (Gila River Telecommunications Inc.), we call it GRTI, it was established in 1988 as a tribally owned telephone company. And how we got into it is, simply the fact that at the time US West©, as some of you recall US West© was the big phone company in the west and still is today with Qwest©, their new title. But what happened, what was going on in our communities, even though we're located right next to Phoenix, which is probably the sixth- or fifth-largest city in the country now, we couldn't get adequate phone service simply because of the fact it was cost prohibitive. At that time, our Governor Tom White, he tried to ask for service to his residents and he only lived, the closest line was like maybe less than a quarter of a mile and they were going to charge him like $20,000 just to hook in. So as in any community or urban area, you know who gets the most attention is the cities. But in our case, since we're close to the City of Phoenix, it was just, and the other suburbs, it was a little bit difficult for us. So what we did was partner with a group out of Oklahoma, a company, and we initially set up as a 5149 corporation under the laws of the Gila River Indian Community.

I was on the first, I was chairman of the, as was mentioned, the chairman of the board for the first five years. And it was a very difficult time for us because at the time maybe, I can't remember exactly the percentage of members that had phones, but it was like in the very populated area like Sacaton and the west end of the community. What happened was that the membership or the people that had phones were kind of against us getting the phone business because we didn't know if we were going to succeed or fail. So we went through that process, got established by the council and it took a while. In fact, we had two recalls on some of our council members simply because they supported the effort of getting the telephone business. Of course they got back on again, but it was a struggle and there were times that I thought to myself or other board members, was it worth it? But we stuck together and today it's doing very well.

We've done quite a bit of improvements since... you've seen the overview of our company. The other thing that happened at the same time, which is quite interesting and it's really helping us out right now is that in 1988 and '89 if you recall, the FCC were issuing our licenses for cellular, when cellular was becoming a very important part of our life. I guess today even more than ever, everyone's got a cell phone. Anyway, at the time we only had two members. As I mentioned, when we were starting our phone company and two members that could always speak to each other, they were neighbors across. And part of the requirements in order to apply for the lottery, in this case, you had to at least have a phone company per se, but because of these two families that live across from each other we qualify as this phone company. And so we applied for the lottery. Of course the other, US West© and the other telephone companies in the areas, already had an agreement in place. So whoever won the lottery, they would all share the responsibility in developing the cellular area. Guess who won the lottery? We did. We tried to ask to be a part of that group and they said no, so we did it on our own and we won the lottery. And it was a long battle, but in the end we did own, we gave up a little bit of it. And today we own 25 percent of the ownership of that market between Tucson and Phoenix. And it's been very lucrative for us because at the time it was $100 investment to put in the paperwork. Every quarter we get a dividend from Verizon anywhere from $1.5 to $2 million every quarter and that's free money that we utilize to enhance our phone company. Fortunately, the time was right for us to do that. So it was an effort that the council supports us now.

Next year is going to be our 20th anniversary that we've been a phone company. And we provide a lot of opportunities for our membership; we do a lot of training for our members that want to go in the telephone business. We are expanding. We're going to different types of services. As you look in your little information that's been provided to you, we are going into other types of business. One of them is the Native Technology Solutions and there are brochures on the table, I brought some this morning. Basically we're expanding to provide other services throughout the community. Currently we are, our company is doing some work right now in Salt River for the schools -- the high school and day school, I can't remember which -- but we're planning to go out to the other areas from the local area to help other communities provide this service to them. One of the original things that, when we set the phone company up was to do video of our council meetings and because of circumstances that we couldn't control, the cost prohibitive at the time we were looking into it, that was the first thing we always heard when we'd go to council and give our report is, "˜When are you going to put us on TV, one of the members?' And about a year ago -- I wasn't on the board -- but at the time we were directed to and then within three days they had the first council meeting but that was just one council meeting that they had it videoed and it was seen by the membership. But we are in the process of finalizing hopefully in the next month or so or two months we'll have, that'll be offered at every council meeting from here on. But I guess the council wants to see themselves on TV I guess.

One of the things I guess to add on what was discussed earlier was I guess when Mary and I were in office, one of the things that we felt very strong [about] was communication with our council and our members, as was mentioned already about the money. Because at the time me and Mary were in the office when gaming came into being at least we stepped forward and got our casinos in place and it was very important that the membership know exactly where the money's going to. It was some exciting times but we had to establish different programs, departments. So it was very important at least for me to establish a real good relationship with our council, because a lot of the projects that we built or started when Mary and I were in office are in place now, but it was very important to have the council understand the direction we were going because they would wonder when we go to Washington D.C. what would we actually do with Congress. Of course we had to go talk to them and ask them about certain programs that we're involved in, but we also would take them along with us. And they finally realized that it's a lot of work going back in both sides of the House and trying to establish your program and priorities to Congress. I think that was probably the most gratifying event for me during my tenure as lieutenant governor is that communication I had with our council because it's very important to keep them abreast of what you're doing and what the company is all about.

What we do every quarter is give a report to the council, both financial, the activities we're involved in, the other things that we're doing within Congress. I was just telling Ken Robinson about the farm bill that's coming up this year and a lot of the cooperative telephone companies that we deal with, that's very important because that's where you get our U.S. funding and that's how you establish your phone companies. As they mentioned earlier about either you're going to fail or not, at the time we were seeking federal funds, it was REA funds at the time. And we, as far as the telephone side of REA at the time, you could have a power side and then a telephone side, you can get funds through the federal government. They had never had a telephone company ever fail and fortunately we never failed. In the first five years, I think we were in the black. We started there. We have about 3,000 customers that we have in place. It's just a big opportunity for us now simply because our location. I guess one of the things I look at economic development is location, location, location. If you've got location to the sixth-largest city, it's an added incentive to your community because it creates jobs and then you diversify yourself. It was mentioned in my little brochure about the Wildhorse Pass Development Resort & Spa. That was one of the projects I worked on when I was in office and now it's there and starting to expand our whole area along that area because the more industry you bring in the more services they need, in this case our telephone services. It's been an exciting time for us at least in this endeavor, but the technology has changed since I left the board. I left the board in 19--, when I went into politics, lieutenant governor in 1994. And since then I'm just overwhelmed. Both Mary and I just got on the board a year ago come June and it's just amazing what has happened within the last 15 years, 10 years.

Anyway, that's all I wanted to present to you today. If you have any questions, I'll try to answer them. I'll leave you with one note is that and I said it already about communication. I think it's very important that you talk to your council and your membership. What Steve mentioned about rumors about money here and there. We used to put it in our newspaper too is the budget for the fiscal year and then we'd leave financial reports to the council of course. That's all I can say, I can't say enough for communicating with your membership and your council. Thank you."

Catalina Alvarez: What I Wish I Knew Before I Took Office

Producer
Native Nations Institute
Year

Vice Chairwoman of the Pascua Yaqui Tribe Catalina Alvarez shares what she wishes that she knew before she first took office, and focuses on the importance of elected leaders understanding -- and confining themselves to performing -- their appropriate roles and responsibilities.

Native Nations
Resource Type
Citation

Alvarez, Catalina. "What I Wish I Knew Before I Took Office." Emerging Leaders seminar. Native Nations Institute for Leadership, Management, and Policy, University of Arizona. Tucson, Arizona. October 10, 2012. Presentation.

Catalina Alvarez:

"Thank you again for inviting me to speak on ‘what I would have known.' I think a lot of us as tribal leaders, especially for myself, we don't get into politics unless we know that either we wanted to see change...or we wanted to get revenge on someone, the director, or we really wanted to just for the prestige of being on council. My reason at the time was probably all three. And as a past employee of the tribe I think that one of our health directors, our council at that time never visited Guadalupe -- I live in Tempe area -- and never visited the community, we never saw a councilman really. I didn't even know who was actually on council at that time, so our grant was going to come to an end so when I asked them, ‘Why aren't these services being provided off the reservation? Why aren't we getting the same benefits?' and one thing they had told me was, ‘Well, if you want to see change, well, get on council.' So I'm like, ‘Okay, so I'll go to get on council.' But if I would have known the responsibility it is and the time consuming...I think I would have thought differently.

But it has been...I think the most difficult thing as a council is the time away from home and your families, the time that you spend at work is just tremendous, because as you come in...the council that I came into, we were fortunate I guess and unfortunate at the same time that we had the council that actually were there trying, at the time that the incorporation started and were still working. And I say it's fortunate because at least we got their experience as the tribal leaders that actually got us incorporated as a tribe, but also their mindset sometimes is set in the old ways. And when you have new faces, new council, younger council, we want to do things differently, we see others like the government as well and they don't, we tend to, I think the old council has the old mind frame that things should be done differently or they should stay the same. And so that's why I say that it was a good and bad.

But I think the difficult part of it was also to be able to get the council to agree on a vision for the tribe because you had so many different personalities, many different reasons and why they were on council. And it was, like I said for myself, when you get into council you don't realize the work behind the scene. And just like I said, as a council member, you'll be blamed either way if you do things right or wrong because sometimes it's even difficult to understand for our constituents and our employees that things have to be kept confidential. And what should and not -- that's always a fine line like our community expects to know certain things and should you give that information up or not. So that was one of the aspects of that.

Also to me, what overwhelmed me was -- going back to the previous presentation -- is that as a council you are the one that actually makes the laws, the ordinances but also set the foundation for the future. And that's a big responsibility, especially if you don't know what laws already exist. So you spend a lot of time as a new council being overwhelmed and trying to catch up. And like this council, with the new council members, I know that there's 11 council members in the tribe. We really didn't wait for them, we just kept on going, which I think we realize now...because I remember Rosita [Alvarez] was asking me, ‘So what are we supposed to do with these packets?' I mean simple as a study session, the day-to-day things that go on in the tribe, the previous council that was re-elected, I think we just kept on going, we didn't even both asking them how to get you up to speed on what was going on. I think as you're getting up to speed also having them understand where we were left off on some of the ordinances, the laws and also the foundation that you not only do for the government but for your enterprises and what best fits for those enterprises. Currently our tribe is also responsible like, we had a gaming board a couple years ago but the council at that time dissolved the gaming board. So council is not only the government part of it but it's also over the enterprises, the Chevron, and the gaming.

So we still have that discussion, ‘What is more beneficial as a council person?' I mean, of course I think the big, the one thing that I think as a council person that you should have in the back of your mind is that to acknowledge at least that you need help in finding the best quality person that you can for those positions. And I think that's one of the most surprising thing to me was that we have...or at least I say it that...it made me more cynical on things I think being on council because you have people that come in and still think that the council is like a social service, social service workers, and you've got to kind of separate yourself from that aspect and also just be...I think we, as a council you are more cynical because you're on the other side now. And is it really a need when everything else is going on?

The other thing is also...I lost my train of thought. But just on those aspects and just knowing that as the directors that you have, I think the council that we sit on, it's all 11, we all are re-elected, we don't have staggered terms. So it's very difficult sometimes to get started again I think even if it's half of the council that comes in as new. A lot of times as council you tend to forget that, at least in, this is my third term in council, is knowing if your finance director or your gaming person, your directors are actually telling you the truth on the numbers and that has been the biggest challenge for me as on council because we have. Since the council is over the gaming, I think they're too comfortable with the council, our gaming executives. So I think that's very, that's one of the things that I think that should, if I would have came back and done things differently is I would have made myself more aware of all the laws and things that were going on with the tribal council and the government at that time, even on the enterprise part of it.

But I think as a tribal leader, you don't think about, I mean as a newly elected [leader] you don't think about those things, you just think about what you will want to do as a council member, how you will want to improve things and how things should be done. But a lot of times we don't even think that those things as a council, the way you're going to get things done is by doing ordinances and strengthening your policies and not necessarily going and micromanaging the departments, which is a fine line because it's very difficult, especially if you have a council that is working and is there every day. And so I think it warps kind of the...your responsibilities. Because we still, like I said, have council that have that mind frame that when something happens, the community will run to that council or if they expect you to be at all the events or for you to solve all their problems and it's not, that's not what as a legislator you're there for. And I think that's one of the key qualities is that you need to know how to [not] micromanage, you need to have good leadership and especially know how to delegate and also to be able to speak out as an individual because of your integrity. Like, how strong are you on your commitments? How strong are you willing to go against the whole council if you feel the decision is not right? The previous council that I was with, I was the only female at that time, so it was very difficult for me because they had this ‘good ‘ole boys' network going on for years. You have to be strong enough to be assertive, to be able to get your point across and to get the things that need to be done the way you feel like, the way you think that you would be...the way the community would think.

And I know that as...when I came into council, I said, ‘Well, I'm not a politician, I'm not a politician.' But you've got to act like a politician if you...you've got to start lobbying your council to be able to move things because otherwise you cannot move on anything as a solo person. So that's one of the...I think one of the key elements that I've learned throughout the years is that if you don't know how to lobby, if you don't know how to be assertive and actually not get involved with the community aspect like keeping your distance from being biased. Because of course in our tribe everybody seems to be related. No matter what decision you make, it'll impact the family that you...or the families or the community that you live in.

And having strength even though that your constituents are telling you to vote a way that they would want to see; I think the biggest challenge is...because they don't see, and as a council I think that you have to do your own research and get the most information you can to make the best decision for the tribe and not just for that one individual. And not to make laws or pass ordinance for just one individual and not...because we have a tendency to work as a tribe or as a council at one time just to put out fires; that's all we did. This situation comes up, we're all over there and we'll try to fix this and we don't see overall.

And I think as a council, as a newly elected [leader], not only do you have to deal with your own constituents but how you relate to the state and how you lobby the state on some of the monies that you receive and even the laws that are being proposed even in the federal government and knowing how to actually go and lobby and meet with your representatives. And I think that was the biggest awakening for myself because I didn't realize how much of a detail and how much of a responsibility it is as being a councilperson.

If I would have done things differently, I don't think I would have ran for council, at least not until I knew a little bit more on what the responsibilities are. I think everybody that runs for council eventually runs because they genuinely want to see the community change or want to better the future of the tribe. Thank you."

Stephen Cornell: Governance, Enterprises, and Rebuilding Native Economies

Producer
Native Nations Institute
Year

Harvard Project on American Indian Economic Development Co-Director Stephen Cornell discusses the two basic approaches Native nations typically take as they work to build and sustain nation-owned enterprises, and shares a number of examples from across Indian Country.

Resource Type
Citation

Cornell, Stephen. "Governance, Enterprises, and Rebuilding Native Economies." Building and Sustaining Tribal Enterprises seminar. Native Nations Institute for Leadership, Management, and Policy, Udall Center for Studies in Public Policy, University of Arizona. Tucson, Arizona. March 29, 2007. Presentation.

Stephen Cornell:

"Well, good morning and thanks to all of you for being here. We've been looking forward to this. This is an experiment on our part. It's the first of a series, we hope, of focused seminars like this. A lot of the work that we do in executive education is very comprehensive. We spend two days with the tribal council, with the senior leadership of a Nation going through nation building from sort of A to Z, talking about constitutional reform, talking about policy, talking about strategic planning as well as economic development. But as Joan [Timeche] said this morning, we thought we've had enough interest from people in spending some focused time on nation-owned enterprises and we decided maybe we should think about doing some more narrowly focused seminars. And this is actually our first shot at it -- so you're all guinea pigs in this experiment -- and if this works I think we'll be doing more of this kind of thing. We've got one coming up in May, May 14. We're going to be doing a seminar; it's not an open one. It's a little bit different, but the focus is on sovereign immunity issues that a lot of nations are wrestling with. And we want to do one -- we've been asked by the National Congress of American Indians to do one on per capita distributions. A lot of you have probably dealt with those kinds of issues. A lot of nations are trying to think about how to handle the revenues that they're beginning to generate from the sorts of enterprises we're talking about today. So there's a number of opportunities to try to provide hands-on experience, research results, information to people on some of these narrow topics, narrower topics.

So this is the first effort at that. And I'm the guy we have to get through before you get to the meat of this, because what we're really pleased to have this morning is the panel that comes next, because we were able to persuade -- as Vern [Bachiu] said, it was tough persuading those from Saskatchewan to come to Tucson in March -- but we were able to persuade four nations to come here today and talk simply about their experience. These are all nations, and we've got the Meadow Lake Tribal Council, the Gila River Indian Community, the Tulalip Tribes, the Osoyoos Indian Band -- all four of whom have done interesting things, encountered all the problems, come up in some cases with solutions, in some cases maybe are still wrestling about some of those problems, but we wanted to ask those four nations to come and say a little bit about, 'Here's what we tried to do: here's what's worked, here's where we are today and where we're going,' and kind of tap into their experience. So I'm looking forward to that part of this and also there's time in the agenda to have some dialogue about asking them, ‘Well, how did you handle this?' or ‘what happened? Did you encounter this problem that we're having? How did you deal with it?' That sort of thing. And then this afternoon we've got a second panel that looks thematically at some of the nuts and bolts of organizing nation-owned enterprises and it's kind of an information exchange. We expect to learn something out of this as much as anyone in the room.

The Native Nations Institute, we're a vacuum cleaner for information and we spend a lot of our time listening to what people are doing. We don't see ourselves as an organization with answers, we see ourselves as an organization that helps communicate what Indigenous nations are doing that works. That's where the answers are coming from. The answers are coming from nations out there encountering these issues, solving them. What we do is try to learn, ‘Oh, you did that? Great, we can tell other people how you solved that, maybe that'll help them.' So that's what this is really about. My job in the next 40 minutes or so is to try to give you a little context for how we think about this issue, for some of what we've learned and kind of set the stage. As we've...as Joan said, this work at the Native Nations Institute goes back now for more than 20 years, back to the founding of the Harvard Project on American Indian Economic Development. And over those years we've begun to learn a lot of stuff and I've tried to put some of it together this morning in this presentation.

One of the things of course that's apparent is that all across North America and elsewhere -- we've recently been doing some work in Australia and New Zealand. And that wasn't our idea to go do work there but Manley Begay and I -- Manley would be here and sends his apologies -- but Manley Begay and I got a request from some Aboriginal Indigenous peoples in Australia and New Zealand saying, ‘We hear so much about what's happening in North America -- what Indigenous nations are doing there -- we want to learn from what they're doing. We understand you gather some of those stories. Can you come tell those stories?' And what's been interesting to us is when we hear about the problems they're facing, they're similar to the problems Indigenous nations here are facing. The politics are different, the legal situations are different, but here are Indigenous peoples trying to reclaim their place at the table, trying to reclaim control over their lands, trying to figure out how to solve the tough problems that they face. One of the tough problems faced everywhere is the economic problem and we tend to think of it as a set of challenges that Indigenous nations are facing. How do we reduce -- we hear this a lot -- how do we reduce our dependence on outsiders, federal governments and others who are paying the bills, often? How do we reduce that? How do we get in a situation where we're in the driver's seat? We don't have to ask permission from somebody because it's our money, it's the product of our work, we're in control, we can shape our communities the way we want to. There's that challenge of how do you provide opportunities for your citizens to live productive, satisfying lives.

[I was] talking once with Chief Phillip Martin from Mississippi Choctaw. Many of you may be familiar with what's happened at the Mississippi Band of Choctaw Indians, but they've transformed their economy over the last 20 years. And when you ask Chief Martin ‘What's the benefit of it?' He says, ‘Well, in the 1970s everybody was leaving, now they're all coming home.' Because what they've done is create an opportunity for their own citizens to live productive, satisfying lives on Choctaw land and to him that was the goal in part, to be able to do that. And you're also trying to create the means of supporting your own governing processes. If Indigenous nations are serious about reclaiming control, then they've got to find ways to support Indigenous governance where it's not dependent on somebody else saying, ‘Well, we'll pay for this but we won't pay for that.' Well, who's in the driver's seat when that happens? [I was] talking with Brian Titus from Osoyoos Indian Band and Chief Clarence Louie up there, and one of the key goals in their whole development effort has been ‘how do we get to the point where we can do what we want to do, support our own government, support our own priorities?' So those challenges are out there and we think those challenges lie behind this effort by Indigenous nations to create enterprises that are under their control and use those enterprises to produce new sources of revenue. Well, we've been looking at this for a while and I thought we'd begin with two real quick stories about some enterprises from our research files because they show, we think, some of the differences in approaches that we've seen over the last 20 years. And I think the last 20-30 years have been years of learning for Indigenous nations. But here are some of the ways that things get done.

I won't tell you what enterprise or nation this is but here's a quick capsule. This is Enterprise A -- and we came across this sometime in the early 1990s -- it's a tribally owned business. This tribe has a large forest on its lands. This enterprise cuts trees on the nation's forest and turns them into fence posts, sells them to a national broker who markets them across the United States. I say it does this, it doesn't actually exist anymore -- the enterprise -- but it was doing this. The manager is hired by and reports to the tribal council. Councilors repeatedly interfere in hiring and firing decisions by, for example, calling up the manager and saying, ‘You need to hire more people from our district.' When we were up there doing research and talked to this manager, he said, 'oh,' he said, ‘We've got a...,' I don't know, can't remember. I think it was a seven-member tribal council. He said, ‘I've got seven bosses. There's not a week that goes by that someone doesn't call me up and say, ‘I've got a personnel issue we need to talk about or my cousin's moving back here after ten years, moving back to the rez, needs a job, I want you to hire him.'' The manager says, ‘I'm running an employment service; my labor costs keep rising. Soon I'll have the most expensive fence posts in the country.' And that was exactly what he ended up with. And the result was he couldn't compete in the tough market because of the rising labor costs. Eventually the enterprise, which was being subsidized by the nation, eventually folded, end of all the job opportunities, etcetera. So that's Enterprise A, and that's a story which I think...you all have worked in this business longer than I have, or a lot of you have, it's not an unfamiliar story of how some things happen.

Enterprise B: this is an Indian nation, which in the early 90s was one of the early casino builders, became dependent largely on its own casino revenues. As one councilman said, ‘We've gone from dependent on the feds to being dependent on the casino.' But it has...then it started to face competition because the state it was in liberalized gaming law and pretty soon a couple of new casinos were opening up -- non-Native casinos -- located right between this tribe and its primary market. So its revenues looked like they were going to fall as these casinos came online. They were going to start losing jobs and losing resources so the nation established a tribally owned corporation, wholly tribally owned corporation, and directed it to diversify the nation's economy. That's its goal and they said, ‘We want you to make profits that we can use, you can use to get us into, get us out of our dependence on gaming. We don't want to leave gaming -- that's a core activity -- we want to be doing other things,' and insulated this new corporation from tribal politics and hired top quality managers. The chairman of the tribe said, ‘One thing we've learned in our experience is that politics and business decision-making are a bad mix. So we're going to set this thing up in a way that insulates, tries to manage that,' tough challenge in small nations. But in five years, the corporation is generating substantial profits and jobs from multiple businesses. They succeeded in diversifying the economy dramatically and today they're, in a sense, much more dependent on the multiple businesses that that corporation is running than they are on their original casino operation. And in fact, the casino revenues have fallen because these other casinos have been successful.

Now, one way that we look at these two enterprises is we look at very different ways to organize things. Enterprise A fits in our book under what we sometimes call the council-run model of a nation-owned enterprise and you can see it diagrammed up there. You've got the council, the CEO reports to the council, employees supposedly report to the CEO, there may be a board of directors but it's actually an advisory board. That may not be the original idea, but in fact the council is running things. And elected leaders are basically making the business decisions, political considerations loom large, employees have figured out where the power lies and realize, well, the way to get a complaint dealt with is you go around the CEO. Why talk to the board, they don't have any power; you just go straight to the council. So the council's become the personnel grievance process, the complaint department and everything else in that situation. Enterprise B -- the one I talked about responding to the casino challenge -- they've got a very different structure. They've got a council, they've got a board that reports to the council, the CEO reports to the board and employees can't go around. They've got a personnel grievance system that is built into their corporate structure. So if you have a complaint, there's a way to deal with it within the business structure. The council's job is to think about where are we going? What's the strategy here? Do we want to be in this kind of business? How should we use this chunk of land? What should we do with this windfall land selling? The big issues the council is dealing with, but then the council has appointed a board of talented, skilled people with integrity and said, ‘Here's our strategy, you guys execute it. If you depart from the strategy, we'll pull you in but you do the day-to-day execution of it.' Now this isn't the whole story of those two enterprises. As anybody in this room knows, there's a lot more going on than this, but to us this illustrates the point -- which came out very clearly in our research -- which is that how you organize the business and how you organize the business development process is at least important as what business you're in. The guys in Nation B, when they faced this casino challenge and they created that corporation and said, ‘Go make money, diversify our economy,' we talked with the people who were involved in those council meetings and one of them said to us, ‘You know, we never talked about what business to get into.' He said, ‘We didn't spend those meetings saying, ‘I think we ought to do something in transportation. I think we ought to get into retail. I've got a great idea, I know a guy who could get us into X.'' He said, ‘The discussion was all about how do we organize a structure that's capable of supporting and sustaining business, whatever the business is? We didn't really talk about what business to be in, that was the corporation's job: where are the golden opportunities?'

So I thought I'd just look for a moment at what the old days, the approach to business development. And this is a bit of a caricature of it, but this is kind of the way for a long time I think a lot of nations approached business development. It's being left in the dust by what many of you in this room are doing today, which is a very different approach, but this is what it used to look like I think. Whose job was development? It was the planner. You hired a planner, you told them economic development, ‘We need economic development here, go find something we should do.' It was the planner's job. I remember in the late '80s arriving at one reservation saying we wanted to talk to someone about their economic development strategy: ‘This is Joe Kalt.' And he said, ‘Oh, economic development? Down the hall, third office on the right.' You know, this was a councilor. It was if, ‘Oh, that's their job. We hired a guy. He's supposed to do economic development. We've got other things.' It's the planner's job. What's the strategy? Pick a winner, the home-run syndrome. This young lady is from, came from Pine Ridge, right? From Albuquerque. Somebody here though...well, there was a fellow up there when we were up there about three years ago and he said, ‘One of our problems is we've got the Messiah complex.' I said, ‘What's the Messiah complex?' He said, ‘it's the belief that someday the Ford Motor Company's going to roll in here with 500 jobs and save us all.' And he said, ‘We finally realized, no one's going to save us. We've got to do it ourselves.' Picking the winner, finding that home-run project that's going to solve all the problems is not what economic development is about, but it's often the way it used to be done. Pick a winner, get a grant, or -- the more sophisticated approach -- do an asset analysis, then pick a winner and get a grant. Either way the strategy focuses on what we can persuade funders to fund.

How is the effort organized, sort of as a branch of tribal administration? Businesses are often run like tribal departments or social programs, the relationship of business to tribal government, the council controls the business, makes the decisions on hiring and firing, decides how the revenues are going to be spent, etc., essentially they're the business operator. What role does political and legal infrastructure play? Not much. Nobody pays a whole lot of attention to it. The authority rests with the council and maybe with the funders who told you, ‘Here's how you have to use the money we just gave you.' There are few consistent rules about how you do things, there's little effort to keep politics out of business decisions. What role does financial management capacity play? Pretty modest. Businesses are dependent on grants, they're run like programs, you fill out the grant application, show where the money goes and you're pretty much done. Not a lot of investment in building financial management capacity on the ground. Key tasks: hire a planner, get a grant, start a business and employ as many people as possible -- the old approach. What does the process look like? This comes out of talking with a number of tribes about how these things happen. There's a tribal election, new leadership comes in, they look around and say, ‘We need to get something going around here. Anybody got any ideas? We better hire a planner; you hire a planner. Okay, let's get a grant; you get a grant. Start a business, any business, whatever you get a grant for, that's fine. Hand out the jobs to your relatives and supporters.' So the business gets going, not much money comes in, but as long as the grant holds out, the jobs hold out. Then there's another election, a new group of leaders comes in, they look around at the business and they say, ‘Whoa, those jobs ought to be ours. Let's fire everybody and put our people in there.' Six months later, ‘We're short of cash. We need some money. That business is bringing in money, let's take the money from that and solve our problem.' Three more months the business is in trouble. ‘Quick, get another grant. Get another grant.' Six months more it's going down, ‘Run for cover.' Everybody splits. ‘Fire the planner. What happened to the jobs? Aren't there anymore grants? The chief's an idiot. Vote him out. Elect me,' etc. So the business dies, next election, another elected set of leaders comes in promising to build a sound economy. Look around, ‘Boy,' they say, ‘those guys sure made a mess of things. Good thing we got elected. Now let's get something going,' and here we go again. ‘Anybody got any ideas, etc.?' And the outcomes of this approach tended to be failed enterprises, few profits, few jobs, a discouraged community that wonders, man, when is something going to really stick.

Well, the alternative, and we think some of you in this room have been inventing this. We'll hear about some of them this morning and some of you have been doing it that we don't even know about. It's a very different approach to business development. We call it the nation-building approach, but that's just a name for it, but it looks very different. It doesn't go after the home run or look for the quick fix. It basically says, 'We've got to put in place a governance environment that can support and sustain development and we've got to determine our strategic priorities.' What is it we're trying to create here -- that Joan [Timeche] talked about this morning? What kind of community do we hope will be here on this land 50 years from now and what does that mean for the business decisions we make today? Joan and I actually had dinner last night with four representatives of a tribe in the Southwest who are wrestling...and they've been extremely successful, have done a brilliant job of business. And one of them said, ‘We're realizing that while we've become really good at some of these business techniques, we're beginning to lose touch with some of the Indigenous knowledge that we're trying to preserve. So we're at that point of trying to say to ourselves, okay, we've solved this piece of our strategic objective, we're making the money we need to free ourselves, but we haven't yet solved this part of our strategic objective. How do we do both at once and what does that mean for the businesses that we're in?' They're thinking about, 'Hey, have we got the right strategy here?'

Features of the nation-building approach? And some of you who are familiar with our work will be familiar with a lot of this, but it emphasizes who's in the driver's seat, self-rule, Indigenous nations making the decisions, exercising control over their own affairs; backing up that authority with sound governing institutions; matching those institutions to their own Indigenous values, culture, the things that are most important to them; thinking strategically about where they're going, turning tribal government not into this boxing ring where families or factions fight to control the resources but into the engine that carries the nation forward. That's sort of the nation-building approach. But it approaches business development a little differently. Whose job is development? It's too important to be left to the planner. It can't be in the office three doors down. It's what the nation's about. How are we going to free ourselves from that dependence? How are we going to provide our citizens with opportunities? How are we going to support a government? Those are huge challenges. What's the strategy? It thinks about these issues. What kind of community are we trying to build? What do we hope to change? What do we hope to protect and not change, preserve? And given our priorities, our assets, the opportunities in front of us, what should we do? The relationship of business to tribal government, strategic direction is in the hands of the council or other leadership, the day-to-day management is insulated from politics, and there are multiple ways of doing that. We're going to hear about some of them today. Some people do it with independent boards, separate charters, established rules that govern how people deal with their own businesses. But that is a major piece of the task of running successful nation-owned enterprises.

We've looked at this council-run versus separated model, those two diagrams I showed you. We did a running study of 121 tribally owned and operated enterprises on about 30 reservations and we asked people, senior leaders from these nations, which of these models do you fit into? Does the council control everything, hiring, firing, day-to-day business management? Is that essentially council business or is it separated somehow? You have specialists, those who know that side of how to run the enterprise who are doing that. And then we asked them, are you profitable or not? And the interesting thing was 63 of them under the council-run model, percent that are profitable: 49 percent. Odds of profitability: less than even. Under the separated model, 58 of those, 83 percent of them profitable, odds of profitability almost five to one. And this is one of the things that taught us that this issue of how you manage that place where politics and business come together turns out to be a critical piece of whether or not the business succeeds in meeting the objectives of the nation. And we think actually on the left that the situation would be, that that actually overstates the successes, because of course what it doesn't capture is all the businesses that folded because of interference like that timber operation that I started with, which didn't last because it had been turned into an employment service for council."

Audience member:

"Would the 31 also include casinos?"

Stephen Cornell:

"At the time we did this, I would say there are casinos in this list, but I couldn't tell you how many. Some of this was in '91 and '92 and I think in those two groups, those two rounds of this, there were very few casinos but probably there are some in here. A lot of this is non-casino. And actually someone said to us last night, the nation that Joan and I were talking with last night has a very successful casino among other businesses. And this one gentleman said to us, ‘Well, the problem with a casino is if you're making a lot of money, it can cover over a lot of problems.' And he said, ‘What we've discovered is when we get into businesses other than a casino,' at least if you're in a place where casinos are making a lot of money, that is if you're close to a big market, he said, ‘When we get into businesses other than casinos, we find we have to ramp up our management game. It's a whole lot tougher.' He said, ‘We've had to find much better management skills outside the casino business. Running casino you've got to know how to run a casino but,' he said, ‘as a general set of management challenges, if the money flows in, boy, you can cut a lot of corners and still show a healthy profit. In our other businesses, the tolerances are a lot less. We haven't been able to tolerate the mistakes that we often made in our casino biz. We've had to be much more skilled.' So that's an interesting question.

What role does the political and legal infrastructure play? Treat it as a key piece of the puzzle. This is what we've got to solve. It's that nation with the casino challenges, Nation B that I talked about, not talking about what business to be in, but talking about, 'What's the political and legal infrastructure we're going to put in place that can support any business we want to get into?' Without a political and legal infrastructure, laws, codes, separations of powers, roles, etc., that can support development, changes of success are slim. What role does financial management capacity play? Another key piece, putting in place reliable financial systems that are effective, they're enforced, they're transparent, so people trust them. It's not only essential to business success, but this is one of the ways you reassure citizens, partners, funders. There's a fellow named Jason Goodstriker with the Blood Tribe in Alberta. He's a council member there and he said, ‘We used to have all these rumors about what's really happening to the money.' He said, ‘Nobody...we all knew what was happening to the money cause the council got all these reports, but out in the community, ‘Oh, I know what they're really doing with that money, you know where that money came from, I know what's behind that whole thing,' and it seemed like a big rumor mill. We kept talking about how do we control this? And finally someone said, ‘Tell everybody what's happening to the money.' So we simply started publishing the tribal budget in the newspaper every quarter, everything. ‘Here's where it's coming from guys, here's where it's going and we put it in there.'' And he said, ‘Anybody with the patience and the mind for that mind-numbing task of just looking at numbers, could figure out...we made it as clear, as simple as we could.' And he said, ‘Overnight the rumor mill wound down.' It was the lack of knowledge that had made a lot of our own citizens say, ‘I don't know about this, it looks fishy. We made it transparent and the trust level rose.'

What are the key tasks? In this approach, determine strategic priorities. What are we trying to create here, where are we trying to go? Create a governance environment that can sustain the development effort and business success. Invest in financial management capacity. Find talented people and support them. And when we look at the business development process, it's the same four points and probably others that we can talk about. It's very different from that, anybody got any ideas, let's get a grant, let's start whatever we can persuade someone to fund; very different approach.

What are the likely outcomes? Well, our research at least says increase profits, reduce dependency, jobs that last, they don't get tied to political cycles, things like that and resources the nation can use to support its priorities. That's a real quick sort of overview of some of what we think we've seen on this question of nation-owned enterprises, how they work, some different approaches to thinking about them.

Any questions or anything you'd like to raise from all of that?"

Michael Taylor:

"What did you advise the tribal leaders who you had dinner with last night about this issue of maintaining the tribal-ness of these kinds of enterprises? What did you tell them?"

Stephen Cornell:

"Well, this is going to sound like a real slippery answer, but they didn't actually ask us for advice, which I was relieved about. I think Joan and I were sitting there thinking, ‘Boy, this is...' I'll tell you, there were two issues they raised and both of them -- as Joan and I talked about this afterwards -- both of us thought, these are issues we're beginning to hear more and more about and they both were really interesting issues. That was the first one was the question of, 'We're getting really good at this side of this kind of cultural divide, are we losing too much on this side?' And I think if they'd asked for an answer, one of the answers I would have given them from other peers too to talk a little bit about what other tribes are doing. Mississippi Choctaw, they pour profits from their enterprises into things like language retention, into running their own schools. One thing we did ask them was who controls the schools on your rez, are all your kids going off to public schools where you don't have any influence over the curriculum, or have you actually got some influence and they sound like from what they said, one of those nations in the fortunate position of actually exercising control from nursery school to middle school, they run their own school. That's an opportunity to create a curriculum that does at least part of what they're concerned about. At Mississippi Choctaw they put a lot of revenues into language and that sort of thing. The Cherokee Nation in Oklahoma has launched in the last couple of years a major language revitalization initiative. They did a survey and they discovered that there were no fluent Cherokee speakers on the rez, on their lands, under the age of about 45. And the Chief said, Chad Smith, 'We've got a national emergency here. This is the future of the nation at stake and what we've got to do is make some tough decisions about how we spend our revenues.' They don't have a lot of revenues. They don't have a large casino generating a great deal of money."

Audience member:

"They do."

Stephen Cornell:

"They have some large casinos, but they aren't in the situation of some of these tribes which have a great deal of discretionary income coming in that they can just put into a new program. And what the chief said was, ‘We had to approach some of our programs and say if we're going to invest in language revitalization, we're going to have to take money from some programs that are already established because these are expensive.' They went and found out how do you do language revitalization and the research says you start with the littlest children. You don't do high-school language classes; you go to three- to five-year-olds. And the Native Hawaiians and the Maoris in New Zealand were doing these immersion classrooms for three- to five-year-olds where not a word of English is spoken. So the Cherokees started one of these classrooms. But the director of education said, 'It costs me $90,000 a year to run one of those and I need to run four or five of them. So I've got to find money from other pieces of the tribe to do that.' And the response of the other pieces of the tribe was, 'Of course.' So they're saying, 'Okay, this piece is critical and we've got to make some tough decisions and put some revenue into that.' The second issue they came up with was they said, 'Our economic development arm is very successful and it's drawing talent away from our tribal government piece. Our successful enterprises are soaking up a lot of our talented people and tribal government is having trouble recruiting our own citizens who are talented because the enterprises are doing it. So we're facing sort of a human capital challenge on the governance side.' And that's another issue, which they saw coming out of this type of success."

Michael Taylor:

"Let me give you a couple of ideas that have worked at Colville. I had the opportunity to have a hand in developing one of the early recipients of the Honoring Nations award, which was Colville Tribal Enterprise Corporation and they did...my recollection is they did receive it. It's been a long time. When we drafted the charter of the corporation, it had a provision in it, which required the corporate board to expend time and resources assisting tribal members in developing their own businesses. And that -- after the outside board came in -- the board didn't like that. They tried to get the tribal council to remove that obligation from it. So there was one of those internal political wars over a provision in the corporate charter requiring the corporation to make substantial efforts and show that they were assisting tribal members in developing their own businesses. But the tribal council refused to do that and so still today there's a provision in their charter and a requirement that they, as business managers and as a corporate board, they feel like they suffer under this requirement. But I would argue that the reason Colville Tribal Enterprise Corporation is still in existence today after 23 years is that provision, because they're obligated to go into the community, find people who have ideas, and help them develop those ideas. Another aspect of what we did in developing that corporation was we obligated the corporation to...we subjected the corporation to the TERO requirements of the tribes and that also was a bone of contention with the board of directors. Most tribes have hiring preferences, but when you get into the business the corporate managers always want to hire the most experienced, most productive people. And often, as in the case of Colville, that wasn't the tribal workforce. That may be changing today, but I don't think so. And so subjecting the corporation to the jurisdiction of the tribe's TERO organization also I think is a reason why Colville Tribal Enterprise Corporation is still going strong."

Stephen Cornell:

"Those are interesting. Anybody else have a..."

Alex Yazza:

"Stephen, Alex Yazza with the Gila River Indian Community. Just a question with regards to the tribal communities that you've worked with: have you seen the experiences of maybe a number of those tribes that have made significant changes to possibly their governance structure in building not only their administrative capacity but their financial management capacity in order to become more successful? Was that any part of their strategic outlook and doing so, i.e. government reform, or even reformation of their constitution bylaws? Have you seen that in Indian Country?"

Stephen Cornell:

"Yeah, and I don't want to steal Brian Titus's thunder but -- who'll be on the panel next -- but the Osoyoos Indian Band in British Columbia, when they decided they were going to vigorously pursue economic development. We recently did a case study of what they've done and they actually spent a considerable period of time focused just on what do our financial management procedures look like? Do we have the capacity to account for every dollar, to make intelligent investment decisions? And have we built that? And let's do that first. And actually there's a period of time in the history of their development over the last 15 years where you look and you say, ‘Boy, what's really going on here is building financial management capacity. That's what they're about.' And once they got to that point it began to really show up in what was happening with their businesses. The Grand Traverse Band of Ottawa and Chippewa Indians in Michigan, they went through a period of having some enterprises that certainly had potential but weren't delivering and they read some of the research that we, and others, have done looking at this business-politics mix. And as a result of that they reorganized their...they basically separated their development corporation from their council and it had been one in the same and they pulled those two apart and rethought some of the constitutional issues there. George Bennett and John Petoskey and others up there see that as the point where they really began to see different results. They were at the same time trying to diversify their economy away from gaming so those two kind of went together. But yeah, I think we have seen tribes that have looked at constitutional issues as a critical piece of making economic development work. Rocky Barrett from the Citizen Potawatomi Nation in Oklahoma, Rocky -- I heard him give a speech at the University of Oklahoma -- and he said, ‘If you're not thinking about constitutional reform, you're not in the economic development ballgame.' That's a line that stuck with me. It was the first time I heard a tribal chairman put constitutions and economic development in the same sentence. And he was reflecting their experience. His feeling was, until we dealt with the constitutional issues, we weren't able to make it happen."

Audience member:

"I have two questions and one is related actually to Rocky Barrett, because there are a number of tribes in Oklahoma where there's a three-party government and the executive branch manages the businesses. Rocky's a good example of that, and it's a little bit different from separated model. I was wondering if you've done any research into that. And the second question is among your separated-model businesses have you looked at the distinction between those that are successful and those that aren't and what are the characteristics of the businesses that are separated but not successful? Because it would be good to know where the pitfalls are if you go that route."

Stephen Cornell:

"Let me mention the second one of those first. The business/politics mix is just one piece of the development puzzle as all of you know. It's not as if solving that suddenly everything takes off. And yeah, we've seen plenty of places where they've succeeded in dealing with that, but it comes back to things like the financial management capacity issues. They may not have got their financial management house in order or they may be in a position where they're very reluctant. I remember up at Yakama, this wasn't so much business, it was the management of wildlife up there, but they had a very strong Yakama preference policy and the wildlife biology guy had said to us, ‘Well, we had to break that policy. We had to go to the council because there wasn't anybody here who knew anything about wildlife biology. And if you're going to manage a mule deer population and do it right, you better know what you're doing.' But he said what they did was when they hired me -- this guy who was the manager, he's a white guy -- he said in your job description is a five-year directive that within five years you will have trained a Yakama to replace you. He said, 'I'll only be successful here if I work myself out of a job.' So those kinds of issues come up as well and the separated model is no panacea, no guarantee. You still have to make intelligent business decisions and as all of you know, that's tough to do even when you're set up perfectly, the number of businesses that fail because of mistakes. So I don't think the separated model, we wouldn't hold it up as a panacea, but we would say that when you don't find a way to effectively manage that mix, you're inviting a lot of difficulties that even if you do the financial management right, even if you do a lot of the other stuff right, you're going to run into problems. On this question of this sort of these different structures, we've not systematically looked at that. What we're I think increasingly aware of is that there are a number of ways to skin this cat, and even within what I call the council-controlled model there are ways to manage politics within that model. You can do it by having very clear roles and rules about what council may and may not do. It's a model that's more susceptible or more dependent on electing the right councilors, because it opens some doors to people who may eventually get elected who don't have the best interest of the nation at heart. But I think what we're becoming aware of is that there are a number of different ways of addressing this political challenge. We've not done systematic research on this sort of executive as the managers separate from the legislative branch but still under tribal government and that's actually a good suggestion. We ought to look systemically at places like Potawatomi that does that."

Mary Thomas:

"Less than 15 years ago we were a very, very poor tribe. We had just a handful of businesses that were struggling. So when we got into the enterprises of entertainment, mainly gaming, that proved to be such a huge success that it was a benchmark and other businesses that followed almost had to strive to be try to reach that same benchmark and that was a hindrance I think. But keeping that up and trying to get as profitable as possible in a quick turnaround time, it has helped. And that's the main thing that I wanted to share with you is that you set a benchmark and then you try to achieve it and that's part of our success. But investing in people at the top when you're successful also helps, because now they're coming back and they're taking over and I just see the brightest future ever with all these bright minds coming in."

Stephen Cornell:

"Thanks. And we're going to hear more from Gila River during the next panel about some of what they've done. Other comments or questions? Yes, Roger."

Roger Willie:

"My question kind of goes back to this cultural aspect. You mentioned that certain tribes are starting with the youth. What about in terms of financial education, starting with the youth, what are tribes doing all the way down to like pre-K, elementary years, and so forth?"

Stephen Cornell:

"Well, I don't know if I've got an answer for you other than I think as many of you know, this issue of financial literacy is a very big issue right now in Indian Country, and there are several major initiatives underway, some by the Oweesta Corporation and First Nations Development Institute. Some of you know Joanna Donovo who is very involved in some of this. The Federal Reserve has been very interested in some of these financial literacy issues. And I think a number of them are focusing on not quite as young as you're talking about Roger, but certainly high school level and how...we hear from a lot of tribal leadership who are working on, thinking about education issues. We hear them saying to each other, ‘Have we thought through what it is we want our kids to learn on both sides of this cultural gap?' And I think some of them are thinking about the sorts of issues you're raising, financial literacy. We had a tribal chairman a couple of years ago who said to us -- no, he wasn't a chairman, he was a councilor -- and he said, ‘You know, my kids know all the latest stuff in popular culture but they don't know what I do. They don't know what it means to be a councilor. They don't know what tribal government is about.' And he said, ‘That's my worry. Thirty years from now who's going to run this place if my own kids...we're not somehow in our high school capturing their imagination with the challenge of nation building and of development and of what we could be doing on this land?' So I think there's a lot of talk about this, but I don't know examples of exactly what you're talking about."

Martin Harvier: Building Sustainable Economies: The Salt River Pima-Maricopa Indian Community Story

Producer
Native Nations Institute
Year

Salt River Pima-Maricopa Indian Community Vice President Martin Harvier offers a brief history of the Salt River Pima-Maricopa's efforts to cultivate citizen-owned businesses and then do business with those companies.

Resource Type
Citation

Harvier, Martin. "Building Sustainable Economies: The Salt River Pima-Maricopa Indian Community Story." Emerging Leaders seminar. Native Nations Institute for Leadership, Management, and Policy, University of Arizona. Tucson, Arizona. March 25, 2010. Presentation.

"I'd like to welcome you all here this morning. I'm grateful for this opportunity I have to speak. Again, my name is Martin Harvier. I know this conference is for newly elected officials so how many of you are actually newly elected officials? Do you know what you're getting yourself into? Actually I'm in the last year of my four-year term. This year my term expires, and I've already decided to throw my hat back in the ring and see what happens. But it's been an experience. To be honest with you, the position that I'm in I didn't expect to be here. I went the night they had nominations for the positions that were being offered that night -- the president, vice president and council members -- and an individual got up the night of the nominations and pronounced my name as a vice president nominee and I was kind of surprised and taken back. And I just thought about my life opportunities that I had that I didn't take and I thought, 'You know what, I'm going to go forward with this.' I felt very humbled that I was picked.

I was actually born in Parker, Arizona. I'm not sure if you know the state of Arizona and where Parker's located. It's actually on the western boundary. It's the boundary of California and Arizona. The tribes that are there -- the Chemehuevis, the Mojaves, the Navajo and the Hopi tribes -- are located in La Paz County in Parker. My dad was a full Native American. He was Tohono O'odham and he was Pima, half and half. And my mom, she was actually born in Fort Worth, Texas. She's Anglo. She said she's Cherokee, but they all say that. I'm a quarter Pima and a quarter Tohono O'odham. I was actually enrolled in the Gila River Indian Community, which is actually west of here also. The tribes that are represented in Gila River are represented in Salt River where I reside. In 1996, I relinquished my membership from Gila River and I was adopted into the tribe of the Salt River in 1996. I'm not sure how many of you know one of our former presidents Ivan Makil. He was the president at that time and I call him daddy because he was the president and he accepted my enrollment. So I call Ivan my father since he adopted me into the tribe in 1996. But I've been a member of that tribe ever since then and like I said, I feel very humble to serve in this position, being an adoptee into the tribe, and it's been I think a learning experience for me. And I'm sure all of you will have a good experience and there'll be some bad experiences, but I really enjoy it.

I'd like to go ahead and get started. Just a little bit about our community. Again, there's two tribes, the Akimel O'odham, which are the Pima tribe, and the Xalychidom Piipaash, which are the Maricopas. The Maricopa tribe actually resided in the Yuma area again, which is along the Colorado, which is the western boundary of Arizona. And the history says in the early 1800s there was an uprising in that area and that the tribes that were located there were chasing the Maricopa people wanting to kill them, to destroy them and when they chased them as far as into the Pima territory, which is now Sacaton, they said that the Pimas made an arrangement with them that if they would help, if the Pimas would help them, that they would help the Pimas fight their enemies, which at the time were the Apache tribe. So what happened, the Pimas and the Maricopas banded together and they killed all, the history said they killed all of them except one, and they sent him back to the Yuma territory and told him not to come back here because the Maricopa and the Pima were now one tribe. So that's how the history tells us that the Pimas and the Maricopas came together. And they resided in the Gila River Reservation, which is Sacaton and the reservation is pretty large. The Pimas and the Maricopas are known as farmers and they farmed that area. And the settlers, when they came in they were really impressed with the produce that was produced by the Natives there, the irrigation systems. And so that's what they did until the settlers came in up east and they started damming up the river and so the water stopped flowing. And when the water stopped flowing a group of the Pimas and the Maricopas headed north up to what now is the Salt River Reservation.

Right now we have, as of December 31st, 2009, our enrollment stood at 9,110 members. And I'll just kind of give you a view of our community. I want you to kind of look at this outline right here, this red area. I do that because in our community, in January 10th of 1879, [President] Rutherford B. Hayes by executive order gave this land to the Salt River Pima-Maricopa Indian Community and at the time it was 680,000 acres of land, which encompasses Phoenix, Tolleson -- if you know that area -- all the way down to Chandler. And actually boundaries of the Gila River Reservation, it comes up and it follows the canyon, the Salt River all the way up into the Salt River Canyon. Again, it was 680,000 acres and approximately six months later, because of pressure from the settlers that were in that area, it was changed to this, which we now have our land and again that piece was established June 14th 1879. Again, six months later it was changed to what we have now, which is 52,600 acres. So in the span of six months we lost approximately 630,000 acres. I wanted to show this picture to you also and just keep in your mind this area right here, the western boundary. Again this is Scottsdale area. As far as location to our community this is Scottsdale, you've got Tempe boundaries here, Mesa, Fountain Hills, and so we're surrounded by these surrounding cities here. So that's our community and again I want you to think about this part when we go into our discussion.

As far as our enrollment, the 9,000 members, half of that, 50 percent of that we are told is under 18 years of age. So our population, a lot of it again is under 18. As far as our land base, again there's 52,600 acres, 19,000 of that is held in natural preserve and that encompasses our sacred mountain, which we call the Red Mountain. If you go into that area, you'll see the Red Mountain, it's very beautiful. And behind the mountain we have only a portion of the river now that flows. Right now the river is actually flowing pretty good because of the rainfall and the snow that we have. They're releasing water through the river. So the river through Phoenix is actually running right now, which is really nice. And right now we have about 12,000 acres that's under agriculture. And just to let you know, right now we do not have any community members -- like I said the Pimas and Maricopas were known as farmers -- we do not have any community members that farm. The land that's being farmed is from outside and they're leasing the land from the community members.

Just wanted to go back here now and talk about our for-profit enterprises. We do have a casino. We actually have two casinos. It's called Casino Arizona. We're actually right now in construction. We have a soft opening, which we'll be opening April the 15th. That's tax day, so if you guys want to spend your tax money or you need tax money to pay I encourage you to come to our new casino that will be opening. It's actually a 15-story resort with 498 rooms, with restaurants, everything you can think of that's there. That's the two casinos that we have. And we also have Saddleback Communications that provides communication to our community members and all the businesses that is encompassed in our community. We have the Salt River Materials Group, which is a sand and rock operation and also with that we have a cement plant, which isn't located in our community. It's approximately 120 miles north in the Prescott, the Cottonwood area, but our community does own the cement plant. We have DevCo, which is a real estate management and development [company]. It goes out and finds those that are interested in developing in our community and they work with them. We have the Talking Stick Golf Course, which is two 18-hole golf courses that's located right next to the new resort that's coming up; it's operated by Troon Golf. And the spring training facility that's under development, I don't want to say this too loud because the two teams that will be housed in our facility is the Colorado Rockies and the Arizona Diamondbacks who are in their last year of being here in Tucson. And I know Tucson got kind of upset when they found out that they were leaving. Next year they will be down in our area and that's the first time that any spring training facility has ever been built in Indian Country so we're pretty happy about them making the agreement to build in our community. And then we have a Salt River Landfill, which has been in our community for quite a few years and for the longest time that was the moneymaker for the tribe until the casino came along. We do have non-profit enterprises. Our Salt River Financial Services Institution, we'll get into that a little bit more. Our Salt River Community Housing Division, our Salt River Education Department and the Salt River Community Children's Foundation. The Children's Foundation organization has been put together, employees are able to, if they wish to donate through their payroll and it goes to a foundation that helps the youth in our community and things that the children need. And then the other governmental services that the government provides for as far as public works, just the regular government services and programs that we have. Again, that's the map.

Today we're going to be talking about, as far creating an environment for a community member-owned business, the opportunities, access to contracting, technical assistance, coaching and education, financing, access to capital and the policy making, the procurement and vendor relations. Since the 1990s in our procurement policy for the tribe, community member preference was included as far as language in the procurement policy but there was never another step, it was just there. So nobody really knew what to do for the community members that wanted to start a business. They didn't know what to do; they didn't know the process. But even though there was no process we just wanted to point out that even though that wasn't working we have two community members that have nationally recognized companies. One of them is Pima Awards and the other is O'odham Ki and they're a construction company and the other one is awards. I think anything that we get in our community as far as when people come and they give them gifts, little trinkets and whatever, our Pima Awards, which is our community-owned business, provides those, tournaments that they have, T-shirts they give out. We got to Pima Awards, which is a community member-owned business. The O'odham Ki Construction, they've built a lot of buildings in our community. Not only in our community, but they've done a lot of business off the community and they got their business started off the community. They got started off the community and then they're coming back on to the community. Requests were made to support building community-owned businesses and that request came primarily from these two individuals that started. And they knew how hard it was to get started and how hard it was to work through the government to get things going. So they came back and they requested to the community that we need to start supporting the community-owned businesses. And then the council created a technical assistance and lending entity to support the development of the community-owned business system. We'll get into that as far as the technical assistance.

From 2000 to 2006, the Community engaged in the planning and development of the Community Development Financial Institution. The CDFI, the Community Development Financial Institution, is part of the U.S. Treasury and its funding is given, but there has to be a certification that has to be done by the tribe to receive that type of funding. So the community went through the process and they were given some funding underneath that program of the Treasury. The goals of the CDFI included development of full-service financial education programs for all community members. And I can tell you that through that program there have been numerous individuals, community members that have received education on financial education on how it works as far as trying to get a business started. And they also provide the loans, home loans for the community members. A lot of these things weren't available until this institution came about. Then the council created a non-profit CDFI on April 5th, 2006, called the Salt River Financial Services Institution and that's put in place again to help community members understand what they're getting into. A lot of times, community members know what they want to do they just don't know how to get started so that was put in place for the community members to go to get information on what they need to do. And a full-service individual and group technical support financial education and entrepreneurship classes were also offered. Next was the financing. The community member-owned businesses and people wishing to be entrepreneurs were missing access to capital. A lot of time our community members had no relationship with banks. They didn't know how it worked. When they tried to go get money, if you do not have credit history, we all know that they are not going to give you a loan to start anything up, so a lot of them fit into that category. They didn't have any banking history. That's what the next bullet point is, they were un-banked. That's what that means. They didn't have any type of credit history. The technical assistance allowed the creation of a lending program.

The technical assistance -- here we're talking about again is the Salt River Financial Institute. It was created to provide micro-loans to launch new entrepreneurs from ideas to action. And these micro-loans were loans that were for $50,000 or less, and sometimes that's not enough to get a business going, but at least it's there to help them to get started. Again, a lot of them had ideas, but they didn't have the finances to do it so it helped them act on the action that they had. The next one is the community and the policy making to support the entrepreneurship. The community is home to an active association of business owners. Again, the two individuals that I had talked about, they started the Salt River Business Association. We used to call it the Small Business Association. They got onto us. They said we're not the Small Business Association; we're the Salt River Business Owners Association. They made that clear. And so in 2005, the organization continued to work with the Salt River government to find avenues to create policies that community member business owners are friendly and by that meaning preference. They're given preference. One of the things that's kind of hard is that a lot of times the businesses that are coming in that are trying to get work didn't have the experience and a lot of times as an example of building a building and you want the best. You want to make sure they have the experience and know what they're doing. So a lot of them didn't have that experience and it was kind of hard for them to get started, the opportunities were hard to come by and so the community staff worked with the Salt River Business Association. In 2006, again the financial association was created to lend us support and right now the institution, the Salt River Financial [Services] Institution has a staff of about eight people and again people go in, if they have questions, they're there to help them. The Salt River government purchasing policies, again when opportunities are there, they go through the list, they see the community-owned businesses and they're given preference to have opportunities to do business with the community and again I kind of made example of the Pima Awards. When something comes up, they're given preference because they're a community-owned business.

The community office staff also developed a procurement preference language in the master commercial lease language of the Pima Corridor. When we started -- and I showed you the map of the community -- I made reference to the western boundary. The western boundary of our community, there's the 101 Freeway goes through there and when that was put in, that was strategically put in to create an economic development corridor through there. It's about a quarter of a mile in some areas, it's a nine-mile stretch and it goes from the southern boundary up to the northern boundary. In some areas it's wider than a quarter of a mile, but that area has been set up for economic development. We really feel it's important that since the community developed this corridor that we educate our community members on the potential opportunities that they're going to have in that area to have a business or to provide service for people that have businesses there. So that was some of the things that the staff has worked with as far as the business association.

The community and the policy making to support entrepreneurship, the procurement policy was written to be specific about what preference means and how it is implemented. Preference is given in succession. First, community-owned businesses. And in talking with staff...okay, well, second, the community member-owned businesses and third, other Native American-owned businesses. The community-owned businesses like we pointed out the enterprises that we own like the Salt River Materials Group. If there's anything that goes on construction wise, the community-owned businesses have preference. If there's other things that come in that we do not supply, just say like paper, if we need paper. If there's a community-owned, member-owned business that supplies paper, they get preference and that's the way it's been set up. And if we don't, if there's another Native American company out there that has it, it goes through the succession and then it just goes down the line, then we go to another Native American, if it's not out there, then we just go out and get what we need. The certification process was created. The intent of the certification process was to insure that organizations are not fronts.

My previous job before I came to work for the tribe, I worked for an asphalt company. And when an individual found out, that worked for the asphalt company, found out I was working for the tribe, he approached me and he asked me if I wanted to go into business with him as far as doing roads, laying down asphalt. It sounded really good. He said that I would be 49-percent owner of the company and that way -- actually 50 percent -- and that way we could go in front of council when job opportunities came. And because preference was given to community members we would get those jobs. And this was put into place to insure that those things wouldn't happen and I think it's important when you see things like this. I didn't think about it, I really thought it was a good idea. I was thinking, "˜Wow, we could make some money here.' But somebody informed me that when you use a front, and say I'd went with this individual and we did a road, after the road's completed, my partner leaves. Say six months down the road, and it's a one-year guarantee on that road, something happens to that road. Well, they're going to come after me; they're not going to go after the other guy. So I'm going to be responsible. And I think that's important and I think that's why a lot of Natives were taken by this, is that they need to know that they're responsible for anything that they do in Indian Country. After it's put down that they're going to be responsible, not the individual that used them as a front to get that project. So that was put in to make sure that there wasn't any fronts.

Certification of community member-owned businesses is based upon the community member owned no less than 51 percent of the business, community members perform active day-to-day, hands-on role in the management and operation of the business and the community member is entitled to no less than 51 percent of the profits of the business. Part of the policy, the procedures that go through of certifying community-owned businesses is that they are asked to show their taxes from the year before. If they say that they're a business, they need to show their taxes to prove that they are the owner of that business. And we've had community members that get upset and they say, "˜We're not going to do it,' but the community has held fast to say, "˜No, you will show us just because of the fact that we do not want fronts coming in and doing business like this.' So that was put in to help make sure that there wasn't fronts.

Right now in our community there are currently 27 preferred vendors on our list. We have six community-owned businesses, enterprises, twelve community member-owned businesses, and nine Native American-owned businesses. And today, total value of the community member-owned business contracts since October 1, 2008, is $10,747,540.30, which is quite a bit of money. I think it just shows the success of our community members. And what's next for the community in this arena? Youth entrepreneur camp; again our financial institute puts on a camp at Arizona State University to help with our youth. We really feel that's important. Our tribe does pay per capita out to its members. We have a lot of youth that have trust money and by the time they turn 18 they have quite a bit of money. And it's very important we feel as leaders that they know what they need to do when they get that money. A lot of them get it and they'll just throw it away and it's gone. This is an opportunity for them to learn. If they wanted to get into business, they can learn these at an early age. Again, the financial institute, the researching, the development of the Future Business Leaders of America chapter, to continue financial education and lending opportunities and refining policies to support and manage the creation of new opportunities for the community-owned businesses. So these are some of the things that we are doing as leadership in our community. We know how important it is of our members that want to be successful and we know there's a lot of them that have ideas and they have goals but they don't know what to do and the process. So we've been trying to set up ways that will help them and we think that's very important and our council supports these departments in doing that. So with that, thank you."

From the Rebuilding Native Nations Course Series: "The Politics-Enterprise Balance"

Producer
Native Nations Institute
Year

Native leaders and scholars share their thoughts about how Native nations can effectively manage the relationship between their governments and the businesses they own and operate. 

Native Nations
Citation

Grant, Kenneth. "Building and Sustaining Tribal Enterprises" (Episode 4). Native Nation Building television/radio series. Native Nations Institute for Leadership, Management, and Policy and the UA Channel, The University of Arizona. Tucson, Arizona. 2006. Television program.

Jorgensen, Miriam. Native Nations Institute for Leadership, Management, and Policy, University of Arizona. Spearfish, South Dakota. April 19, 2011. Interview.

Morgan, Lance. Native Nations Institute for Leadership, Management, and Policy, University of Arizona. Tucson, Arizona. January 14, 2008. Interview.

Pico, Anthony. Honoring Nations symposium. Harvard Project for American Indian Economic Development, Harvard University. Cambridge, Massachusetts. September 2004. Presentation.

Record, Ian. Native Nations Institute for Leadership, Management, and Policy, University of Arizona. Spearfish, South Dakota. April 19, 2011. Interview.

Smith, Jerry. "Building and Sustaining Nation-Owned Enterprises." Emerging Leaders seminar. Native Nations Institute for Leadership, Management, and Policy, University of Arizona. Tucson, Arizona. March 26, 2009. Presentation.

Taylor, Michael. Building and Sustaining Tribal Enterprises seminar. Native Nations Institute for Leadership, Management, and Policy, The University of Arizona. Tucson, Arizona. 29 March 2007. Presentation.

Ian Record:

"Separated model, in many cases, it's a loaded term. It's saying, 'We're going to separate this stuff.' And it's really, 'How do you manage that relationship? How do you strike that balance to where, you know, the nation is ensuring that the business entity has the best chance of success and then the business entity in turn is ensuring that it's advancing the vision of the people and its priorities for the future?"

Anthony Pico:

"We have learned experience brings wisdom. The first rule is that businesses cannot compete successfully when the decisions are made according to tribal politics instead of business criteria. This doesn't mean that the tribe must abandon control, it means that the tribe must develop strategies and policies and execute oversight that guide the actions and decisions. The strategic question the Viejas council engages should not be, 'Who runs the mailroom?' but 'What kind of society are we trying to build?'"

Kenneth Grant:

"There's a real difficulty in separating the roles with government-owned or tribally owned enterprises, people wearing multiple hats at the same time. And so you're a citizen of the tribe and yet you're also a part owner of the enterprise. A council member is a, has governing responsibilities, is also an owner, is also a citizen. That collapsing of the distance between government and business often creates a lot of role confusion for tribes that is difficult to overcome."

Michael Taylor:

"Dividing the business operations from the politics of the tribal council is perhaps not a panacea, but it's necessary if the tribes are going to succeed with their development. And all the years that I've worked on reservations and I've worked in the tribal facility always, I've always worked directly for the tribe, the struggle has been how to figure out ways to deal with this problem. We need to develop our resources, we need to pay attention to taking those resources that we have and maximizing [them] for the benefit of our people and creating institutions that last, both governmental and business."

Miriam Jorgensen:

"You know, the challenge I think about the most, because I think it's the place that has the greatest fears raised for tribal council folks, for, you know, the political leadership, is the fear of just not knowing what's going on at that corporation. And that just means that there have to be mechanisms in that separated model for information flow, and a lot of times, initial documents that create corporations specify some of this information. It may say, you know, you have to have an annual report to us, and that annual report, you know, has to happen on such-and-such day, or the third council meeting of the year or whatever, but I think the most contemporary learning on this suggests that that's not really enough. What tribal councils need is some assurance that they're going to get information more frequently and probably a little bit more intimately. That doesn't mean that they've got the right to go in and ask the CEO of the corporation or the board of the corporation lots of questions every day all the time, but rather that the corporation has to have mechanisms that are both formal and informal for communicating adequately with tribal council to sort of say, 'Here's the stuff you need to know, and we'll give you more detailed information at our annual report time' or whatever. Different nations have handled this in different ways. I know that you've spoken with Lance Morgan, who is the one who told us what I think of as one of the best examples of this, is just offering the tribal council training for new councilors. Anytime somebody is newly elected that they get to learn about HoChunk, Inc. through a tour and an orientation. There are also tribes that require say quarterly reports that might be much shorter than say the annual reporting-in, but just to sort of update on here's where things are at. So whatever's going to work for that tribe that's not micromanagement and too much oversight, but actual good communication back that maintains the balance."

Lance Morgan:

"Well, managing a relationship between the business side and the political side is a very big deal. We've been doing it now for, I guess, almost 12-13 years. And when we started off, we had a formal set of rules. This is basically, the tribe would do this and the board would do this. And what's happened is that, as issues emerge, as we evolve as an entity, we continue to give more information. I mean everything's kind of slanted towards more sharing and more information rather than less. We still have to maintain certain differences, certain walls, you know. Things like keeping the tribe out of personnel issues and things like that -- just base, functional things that we have to do as a corporation. But in terms of the relationship, everything that we have done has gone towards more sharing and more information. And I think that as you do that, that's very helpful as long as you maintain the core differences, the core separations that allow you to continue to function independently."

Jerry Smith:

"The first lesson I learned is that maintenance of the separation of tribal governments and businesses is a very delicate balance. For example, tribal membership's demand for per capita could definitely affect you as a business. And, given the hands of people in a tribal governance role, they may have an agenda to get more money out of you. And from a business standpoint, we can only give what we can afford to give to the tribe. And so, political factors can come in and wipe you out. We don't go promote ourselves and sell ourselves as a service to anybody because, in my opinion, we're still learning how to do this, and if anybody tells you they're an expert at it, I'd like to meet them. I really would like to meet them. But what we continue to try to do is help when we're asked to help. And we've had tribes come to us and ask for help to do this, and the biggest challenge that I've run into in trying to help those tribes is the issue of control, and government does not want to give up that control, especially in tribes that already have ongoing gaming operations. And so, they'll commit to the idea of doing it, but once they understand that they can't go in and fire the manager tomorrow or go in there and do the things they're used to doing, they don't like it. So, you have to manage that every day. I mean, it's something that I have to manage every day. The governor doesn't have an authority to come in and take any actions within the operations on a day-to-day basis, but everybody knows that when the governor shows up on any one of our properties, I need to know immediately and we have somebody there to make sure that he's seen, he's getting what he needs. So you've got to manage that. You have to recognize who the owner is. And so, again, that's a delicate balance." 

From the Rebuilding Native Nations Course Series: "Rules are More Important than Resources to Enterprise Success"

Producer
Native Nations Institute
Year

Professor Joseph Kalt discusses the importance of sound laws, codes, policies and other rules to the building of diversified, sustainable economies in Indian Country and everywhere else around the world.

Native Nations
Citation

Kalt, Joseph P. "Nation-Owned Enterprises: Building and Sustaining Success." Native Nations Institute for Leadership, Management, and Policy, University of Arizona. Tucson, Arizona. 2011. Lecture.

"When we work with tribes, we get in these conversations all the time with tribal councils [who ask,] 'What are the ingredients? What are the building blocks that we need to get one of those productive economies going?' In some ways, of course, it's a very complicated process -- you need everything. You need money, you need a skilled workforce, you might still try to get some federal grants, you'd like to have some natural resources. It's a whole panoply of things that you need, if you will, to really get successful tribal enterprises going. But when we look across Indian Country, among the building blocks -- capital, education, access to markets -- what we find is, at a foundational level, we've not success in the building of tribal economies, productive economies, without a set of, essentially, good rules of operation in place. The tribes that are succeeding in building these productive economies, start by building the kind of legal and organizational infrastructure upon which any business -- whether it is a citizen-owned small business or a large tribal enterprise. The kinds of rules of the game or procedures, everything from personnel policies to corporate governance [are important]. What we're seeing is that the tribes that are succeeding in building productive economies are putting in place this kind of legal and organizational infrastructure.

That's actually not very surprising. We know all around the world, we have examples now of places that build strong productive economies, where just a couple decades ago, or two decades ago, you wouldn't think it could happen. One of my favorites is Taiwan -- off the coast of China, out in the middle of the Pacific Ocean. Right after World War II, Taiwan was basically an almost empty rock in the middle of the Pacific Ocean in the poorest part of the world -- not close to any markets, no natural resources to speak of, a population that was very, very poor with almost no formal education. And today, some people talk about Taiwan as one of the 'Asian Tigers.'

And the reason for that is, it turns out every human society has at least one productive resource –- it's a society, it's got human beings. And we human beings are amazingly productive when you give us a system in which we channel our energies into productive activities. And there's a lot of focus on the ground -- in federal policy, sometimes in the tribal councils -- 'the way to get a business going is to get to the next grant, or to hire a good manager.' All of that is sort of true, but you can't hold on to the good manager unless there's a system that allows for people to be productive and be, essentially, productive in these economic activities."

Jerry Smith: Building and Sustaining Nation-Owned Enterprises (2009)

Producer
Native Nations Institute
Year

Laguna Development Corporation President and CEO Jerry Smith shares the lessons he has learned about building and sustaining Native nation-owned enterprises, in particular the critical step of creating a formal separation between tribal politics and the day-to-day management of those enterprises.

People
Native Nations
Resource Type
Citation

Smith, Jerry. "Building and Sustaining Nation-Owned Enterprises." Emerging Leaders Seminar. Native Nations Institute for Leadership, Management, and Policy, University of Arizona. Tucson, Arizona. March 25-26, 2009. Presentation.

"Good afternoon everyone. Again, thank you for the introduction. Again, I appreciate with all humbleness the introduction, because I definitely have had a lot of good and bad experiences in the arena that I've been in. But I want to say for the nation-building program -- and I'm asked to participate in a lot of activities and I've had to be selective in some of those that I do involve myself in, because there's a lot going on in terms of what's happening out there -- but I choose nation building because I believe in what they're doing. And they're doing, and it's about capacity building. It's about trying to communicate best practices, so that you don't have to go do the things and make the same mistakes I made. And I definitely made a lot of mistakes in my career as it begins to evolve. I wish that I was in a position that you're in to have an institution to go to, to talk about it. Because in the early 80s, when I started doing this, I didn't have any place to go; I had to do a lot of figuring out by myself. And some of you who work in tribal offices know that's a lonely feeling in there sometimes, sitting there and just trying to figure out what the heck are you going to do. I call myself a rez boy. I'm a rez boy raised on the rez, spent a little time away from the rez going to college but, and then came back to the rez. So definitely I'm home grown and I've tried to understand and tried to do what's best for our community.

I want to start off by a couple of sayings just to give you some idea of how we need to think about this or how I'd like to frame my presentation. One saying is, ‘Success is the point that preparation and opportunity meet.' That's been a very important thing for me in my career, because you don't have success without preparation. And whether you're an individual or whether you're in a tribal environment, you have to continue to prepare yourself to be in a position so that when opportunity presents itself you can grab that opportunity. So if you get an opportunity today to do a partnership in a big business deal, if you're not prepared for that, that thing's going to go by you because as we all know, setting up businesses isn't an overnight thing. It takes a lot of evolution. So if you're not in the process of preparing yourself for that opportunity...I've missed many opportunities in my lifetime because I just wasn't ready for them. And some of these opportunities have never presented themselves again. And so we miss a lot of opportunity. The stimulus package coming down -- how many of us are prepared to take advantage of that opportunity? I think we're all trying to figure it out, right? But the reality of it is that those that are prepared are going to benefit from it.

The other saying I like to say -- and this is something that [is] mainly for youth -- that we need to keep in perspective is that, ‘If you're chasing money, you are not necessarily chasing success.' Give yourself success and money will shadow you, wealth will shadow you. So as we try to achieve...and you would think that this came from a Donald Trump or this came from one of the big Wall Street guys. And they're in trouble now, right? But this really came from a basketball coach, Rick Pitino. And I've enjoyed reading about his story and how he's prepared his career, because there's a lot of things that we do in athletics as teams that are very applicable in business. So I recommend his book. His book is called Rebound and it's a story of leadership.

The other book I recommend is a book that was written by a guy by the name of Marshall and I just finished his book and the book is entitled The Power of Four: Leadership Lessons of Crazy Horse -- the great Lakota Sioux warrior -- and is written by Joseph M. Marshall III. And he talks about a lot of the things that are very applicable in tribal cultures that are very important in insuring that you maintain a good business structure.

So in that regard, I just want to share those with you. I have a limited time so I'm going to go through my presentation here. Again, my name is Jerry Smith and I'm president and CEO of Laguna Development Corporation. Laguna Development Corporation has to be...we have to start with the Laguna economic story. In the 1950s, we were an agriculture-based economy. And then we evolved into in the '50s to the 1980s we were very fortunate, it was very fortunate that a resource was found on our reservation called uranium. In its peak production, the Jackpile Mine was the world's largest open-pit uranium mine, and the Pueblo of Laguna benefited significantly in terms of royalty income from that mine. And I was fortunate to have my education paid for as a result of that resource. But one of the things that has been interesting in that evolution is it brought wealth to the Pueblo Laguna and I'll tell you why that's important.

In the early 1980s, late 1970s, the mine shut down and we went into a very serious period of having to refigure our economy. Unemployment rate went up to about 86 percent and the worst thing or the best thing that happened to me is I got hired as the tribal administrator in the early 1980s, just out of business school. [I] walked into my tribal council -- I was working at construction at the time, I was working with James Hamilton Construction out of Silver City -- and I was called home and asked to show up Monday morning at tribal council meeting. I said, ‘Okay, I'll be there.' I walked in with my cleanest pair of blue jeans and a borrowed shirt from my dad, polo shirt. And I didn't realize that I was there as an interview in front of the tribal council for the position of tribal administrator. And so I walked in to the interview and everybody was in suits, everybody was in ties, everybody looked very pretty and I was in my cleanest pair of blue jeans. And I went through the process of the interview and was asked, ‘What are you going to do to get me a job?' by 90 percent of the tribal council members who were unemployed. And I looked at them and said, ‘Well, all I can do is the best I can and I'll figure it out.' I went home and my mom -- who was then, knew what was going on -- asked me, ‘Well, how did it go?' She was all excited about it. I said, ‘I blew it. I didn't have any answers.' I couldn't commit to them. I couldn't lie to them to tell them I had the solution. So I'm headed back to Silver City, start packing my stuff. Twenty minutes later, I get a call from the personnel officer of the Pueblo telling me I was hired. So you talk about someone learning from the grassroots, from ground zero.

So what we began to do -- because of that impact -- we began to take a look at how to develop the economy, how to reinvent the economy of the Pueblo of Laguna. Again, wealth was not the issue. We had wealth as a result of the uranium mine. We had to develop an economy of employment and continued development of wealth. So we began to develop -- and a lot of the theme of this session that you heard is the need to develop businesses to give its best opportunity for success -- so what we did and what we decided to do -- and again this is a young rookie out of business school. I had to go into my tribal council and get them to understand that you're dealing with two different environments.

When you're talking about governance on one side and you're talking about business on the other side of the table, and there's that line -- that's kind of like this black line on this floor -- there's a line between the two. And it's about -- as I tell people -- it's about learning how to play Monopoly© by Monopoly© rules, and then over here learning how to play Chess by Chess rules. You can't play both sides of the thing by the same set of rules. And there's a whole history and sophistication on how business works compared to how governments work. And so each has to have their ability to operate effectively within those two environments. So I went in and said, ‘You're going to have to give me the authority to separate business from government. You're going to have to give me the authority to allow our development, our business, the environment that it needs to give it the best opportunity to succeed.' And it was great because if I was to go into my tribal council today, I don't know if I could get that decision because of the wealth. As a result of what we're doing now, one of the things that always, is the issue of control and tribal government wants to control. What we're trying to do now with our tribal leadership is try to show them how to control without micromanaging. And the techniques that as owners of a business is different than a governance of a community and a people. So we're having to go through processes of educating them. We've used nation building and our tribal council has been through nation-building sessions. The nation-building folks have been out to our tribal community, have taken our tribal council through facilitation sessions on developing that capacity and competency, so that we can from the business side -- when we walk into a tribal council meeting to report as a business entity -- they deal with us as owners of a business should deal with management and the corporate boards.

So what we did is we created three corporations since then. We created Laguna Industries, which is a manufacturing corporation. We developed Laguna Construction Company, who presently is in Baghdad doing a lot of the reclamation [and] revitalization of Baghdad right now. And then the company I manage called Laguna Development Corporation. We do have somewhat of a non-profit corporation called Laguna Rainbow Corporation and that corporation provides elderly service to community members.

The Laguna entity business structure or model, it's the separation: it's the government model versus the business model. Government and its role and its model provides governance for tribal membership. It's not profit motivated. It's the fiduciary custodian of tribal wealth. The business model is a model where we have to work within the governance of the tribe, which means that if you run a private business in the State of New Mexico you can't divorce yourself from government. Government has a role to play in everything you do. But they provide you regulatory oversight, not day-to-day oversight of your business. So the tribe has to get involved in developing all the infrastructure it needs to be able to provide that oversight. We're profit motive and we're a huge investment of capital in risk-based ventures. We're also the revenue and tax base to the tribe. We're the economic engine that pays probably at this point probably 80 percent of tribal governmental operating needs. And in most tribes, especially with casinos, that number ranges from 80 to 95 percent of revenue that goes to the tribe normally comes out of those kind of activities.

We've explored a number of business structures in our evolution. We started out as a tribal enterprise and chartered under the constitution of the Pueblo Laguna. Then we evolved to a state-chartered corporation. That evolution really was the result of the challenges of the state of New Mexico to tax our income. There were legal opinions coming down that says if you're a tribal enterprise at that time that you would be taxable. So we went to a state-chartered corporation. And then later we got an IRS ruling saying that's not good enough. So then we went to a Section 17 corporation, which then we basically resolved that taxation issue. But as things have evolved, we have also been able to...those other areas have cleaned up in terms of taxation. So I believe today, now you can do any of the three and still be secured in your taxation on income.

But the other thing that, reason that we did that is that...from a tribal environment, not very many people out there -- especially if you're looking for business partners -- understand how you work as a government. And you have 500-some-odd Indian tribes across the country with all unique forms of government. How do you expect a Microsoft or how do you expect a financial institution and investors to try to understand how all 500 of us work? So what we have to do is create an intermediary corporation that they're used to dealing with -- they understand the nature of corporations, they understand the nature of how corporations work. So when we apply and we introduce ourselves to people, they don't need to go back and try to understand how our constitution works and all those things. They understand how corporations work and we can talk at the same level and in the same language. So that was one thing.

But from internally to the tribe, what was important to us was the insurance of protection of tribal wealth. Remember, Laguna had wealth. Laguna had wealth as a result of the uranium mine. And we had to go understand why Donald Trump declares bankruptcy probably every other year but he's still wealthy. And the way he does that, and business is as a foundation a risk-proposition environment. You have to take risk. But you don't want to risk the tribal wealth. In my operations, I could say within the five years of our new property, we've had probably about three people die on our property. And so what you have to be very careful about is the claims that can come at you from people who do things on your property and the liabilities you assume by allowing them to come onto your property. So you're at risk every day. You're at risk for a lot of different things but you don't want to put the tribal wealth at risk as result of that.

So what we were able to do was separate the two through the corporate veil and that's why people set up corporations is they protect their individual wealth from the business wealth and the business risk. So you have this corporate veil that prevents you from doing that, from putting tribal assets at risk. So that was another major reason is that we didn't want to put the tribal treasury at risk. And so if anybody sues Laguna Development Corporation, it's only within the limits of what the corporation owns. They cannot touch tribal assets.

The state of the industry: Las Vegas is down 8.7 percent; Nevada casinos are down 68 percent at the net-income level. Fitch -- who's a rating company that comes in and evaluates your capacity -- tells us that Native American operatives are feeling the same kind of pressures Nevada is feeling and those businesses that operate to a conservative operating file will survive this pressure. You've got numerous retail and F&B closures. Who would imagine that Mervyn's© was going to close? Who was going to imagine that Circuit City© was going to close? You've got a lot of businesses going out of business. And then in New Mexico, we've had a huge expansion in gaming properties with the Ysleta Pueblo property expanding, with Buffalo Thunder and then now the Navajo Nation has gotten into gaming. So there's expansion in the market when 2008 the economy is coming down. So what's ultimately result of that is only the fittest are going to survive. Because you can run an operation and some gaming operations at a 65 percent gross profit level. It's easy to run a business that way. But if things that are happening with your economy are attacking that and now you're having to operate at a 30 percent or a 40 percent gross profit level, it's a whole different ballgame, which means that you have to be a lot more efficient in the way you run your business.

Our success at Laguna Development Corporation -- in a period of time when Las Vegas is dropping 28 percent in '08, we grew our revenue by 15-16 percent. We improved our total company gross revenue. We just don't do casinos. More than 50 percent of our revenue comes from non-gaming activities -- we're in travel centers, we run restaurants, we run...name it, we run those kind of operations. 23.4 percent growth in our EBIDA [earnings before interest, depreciation, and amortization] in '08. We had 115 percent growth in our revenue in food and beverage. We had a 33 percent return on an equity. You ask any investor whether that's good or bad and they'll tell you. Our debt service coverage ratio, our leverage ratios are very good. We actually increased payments to the tribe by 47 percent during this period of time. And again, we're rated from Fitch standpoint as being a very stable company. So as you can see, structure and having your proper environment in place is very good.

I cannot recruit executives today. Let me say, it's very difficult to recruit executives today in our industry, especially in the Indian community. The people I want, the first question they ask me is, ‘Is there a separation between tribal government and the business.' And if you say no, they're not coming, because there's been too many experiences...the average tenure of somebody that sits in my position in New Mexico is one year. That's the turnover for someone that sits in my position in New Mexico -- one year. So there's a huge turnover and the number-one reason why that occurs in their opinion is because of tribal politics' intervention into the business and that they have to worry about, on a day-to-day basis, whether a tribal council family member is going to come up and shoot them. Where in our operation, we do have very much respect for our council and our government and our governor, who's the president or chairman of our tribe, but the governor has no authority to hire or fire anybody in the corporation. And so we have control over day-to-day operations through this model.

Keys to success -- tribal council understood the need to release day-to-day management over day-to-day control. We killed a lot of businesses before 1980 because of day-to-day intervention from political people into day-to-day operations. So the second thing we did is we formalized all our relationships between tribal government and the entity. For example, we have the charters, we have the bylaws, all reported transparency is there -- we provide financial statements monthly, quarterly, all those kind of things -- we also have a formula that basically defines how cash gets transferred. A lot of my counterparts in New Mexico at the end of the month, all excess cash gets transferred over to the tribal government. In our environment we go through a very diligent process of closing the year, closing the books, evaluating performance and we've negotiated a cashiering agreement with the tribal council whereby it's all formula-based. So no politics, nothing can enter into the picture and all the needs of the business are there in terms of supporting the business before any money goes over to the tribe. So from that standpoint, we can get the favorable ratings from the rating companies.

We also have had to help tribal government understand and set up their own infrastructure to handle these kind of entities. For example, we have to make sure that administratively they know how to read the reports -- they know what they're getting, they know how to read it, they know what it's telling them. We also have to make sure from a legal standpoint you have all the things like codes in place -- there's things like building codes, there's things like commercial codes. So if there's a dispute between me and one of my suppliers, they don't need to go run to tribal council. They go through the judicial process and they file as any other community, metropolitan does; they go through the court systems to get their problems resolved. So it keeps a lot of calls from going into the chairman's office from people who don't necessarily, when you find yourself in dispute with. And that happens every day folks and we all know that. We also have to look at capitalization needs and all the way down to things like tribal preference. So we've taken the time to insure that we formalized and put everything in rules so that it's not discretionary or arbitrarily determined based on who knows who and who knows what, that it's consistent. Because one of the things that we have to develop is consistency in applications so we get trust.

The last thing is definitely is adherence to the rules through visions and missions and core values of the corporation. Now as a corporation...I listened to the session before lunch and they were talking about, how do you operate in the business world? Like I can put on a suit and do I have to give up my tribal heritage and my tribal ways for that? I can tell you that my father is one of the top religious leaders in my pueblo. And as one person, he was the one that encouraged me to go on to college. And after I came out of college, I tried to figure out why you sent me there. And then when I come home I get a lot of criticisms about losing my ways from community members. 'You're educated, you lost your ways, you joined the other guys' kind of thing. And one of the things that he helped me understand is that in order to survive, we have to understand and have the knowledge to survive. So we have to go out into this other world and do the things necessary to provide for our families and our community. But you should not have to give up your heart in the process and where your heart values are coming from are from your tribal core values. In our language, we have basically four core values that we're told every day from community leaders, religious leaders is -- and I'll use my language -- it's [Laguna Pueblo language]. And those four things are love one another, respect one another, understand what the way is, understand what the truth is, and live your life by them. And when you begin to run business, when you begin to take opportunities of kickbacks, they present themselves to you. I don't think anybody in this room that's run a business hasn't been given the opportunity to take a kickback. But your core values of right and wrong will tell you not to do those things. So it's very important for our young people to understand that they can be successful, they can be successful in athletics, they can be successful in their careers by using their core values that each tribe, everyone of us has as tribal communities, because you can connect the two. You don't have to give up your heart to survive.

So we run our business on those tribal core values. In fact, the core values of our corporation are tribal core values. And everybody who has gone through a strategic planning session know you have vision, mission and then you set core values. So we didn't see the need to create new core values because we've had core values that our ancestors have given us through time. Why do we need anymore and how can I be more creative than those people? They've given us the menu to success if we just follow it in whatever we experience.

Keys to success from a business responsibility standpoint: you have to hire the most competent executive team you can find. These people have to have the knowledge, they have to have the experience and most importantly they have to have the character. And you have to make sure you insist on knowing the character of a person. So what do I do when I hire executives? I just don't take their resume and a one-hour interview. Not only do I use my gaming commission's authority to go check their background, their criminal, their financial, I want to know everything, as much as I can about the person. So I use those mechanisms to find out as much as I can about the person. I've got my internal networks where I do evaluations on every one of these individuals.

Anybody heard about DISC? It's a tool that you can use to determine whether or not you have an individual that's a driver, somebody that's task oriented; or an I, which is somebody that's an intelligent thinker; or an S, who's a supporter; or a C, who's a communicator. So I want to know 'cause I have to have everyone of those characteristics on my leadership team and I use that tool to tell me what kind of people I have. When I first used the tool, I found out that 90 percent of my managers, my executive team, were Ds. They were all direct, they were kind of like me, go get it, get it done. And so, and it's the nature that you kind of lean towards hiring people like you, but it's not always the best thing to do. What I found out was a lot of people didn't understand what we were doing even though we were doing great things [because] we weren't great communicators. We weren't able to go out and tell people what we were doing [because] that wasn't our nature. So now I make sure I have Cs on my leadership team.

So there's tools that you can use to help you understand who these people are and what you're hiring and what you need in your leadership team. The second thing I do is I send all my people up to a place called Professional Decision-Making, Inc. in Denver, PDI, and they do a complete assessment of that individual to tell you whether or not that person is really an executive quality person. Because for many years we as tribal people have been sucked into thinking that because I can put on a suit and tie that's an executive. You've got to know more about that person because you're entrusting that person with a tremendous amount of resources and decision-making. So you've got to know as much as you can about that person and make sure that person fits your organization. My leadership team I've had with me for about seven to eight years now, and there are not very many people that leave me because of these principles. So it helps your retention, it helps you keep people because they definitely understand a lot of these principles in which you're operating by.

The other thing you have to do is make sure you have the business systems in place that operate in financial human resources systems. You have to make sure that you have transparent reporting not only to...I report to a five-member board that's appointed by the tribal council. So I make sure that the reports I give to them are very, can be verified and validated at any time. And the last thing is that we focus on developing and growing the business not on tribal politics. So many tribes and many of my colleagues at the end of the year that are in positions like me worry about who's running for the chairmanship position and what's going to happen to them. And a lot of them are sending out resumes in that process. In our situation we honor the change in administration, the change in leadership but we don't have to worry about our jobs the next day as a result of that.

Lessons learned -- the first lesson I learned is the maintenance of the separation of tribal governance and business is a very delicate balance. For example, tribal membership's demand for per capita could definitely effect you as a business. And given the hands of people in a tribal governance role, they may have an agenda to get more money out of you. And from a business standpoint, we can only give what we can afford to give to the tribe. And so political factors can come in and wipe you out. We don't go promote ourselves and sell ourselves as a service to anybody, because in my opinion we're still learning how to do this. And if anybody tells you they're expert at it, I'd like to meet them. I really would like to meet them.

But what we continue to try to do is help when we're asked to help, and we've had tribes come to us and ask for help to do this. And the biggest challenge that I've run into in trying to help those tribes is the issue of control, and government does not want to give up that control, especially in tribes that already have ongoing gaming operations. And so they'll commit to the idea of doing it, but once they understand that they can't go in and fire the manager tomorrow or go in there and do the things that they're used to doing, they don't like it. So you have to manage that every day. It's something that I have to manage every day. The governor doesn't have any authority to come in and take any actions within the operation on a day-to-day basis. But everybody knows that when the governor shows up on any one of our properties I need to know immediately and we have somebody there to make sure that he's seeing, he's getting what he needs. So you've got to manage that. You have to recognize who the owner is. And so again, that's a delicate balance.

Due diligence -- I went through this. You have to hire the best you can afford and sometimes you have to hire the person you can't afford. That's one of the 201 business lessons when I went to New Mexico State and went to my first business management class, that's the thing that I remember hearing out of that class is that you've got to...in order for you to be successful, you've got to hire successful people. You've got to surround yourself with successful people. And so it's been my agenda to always hire the best. And not only stop at hiring what I can afford, but I've actually had people that I couldn't afford but I made sure that within a year I could afford them because then they grew my revenue. They grew my EBIDA.

Setting up tribal government and business infrastructure is very critical. The government needs to understand how to interact with this new animal that you created. And that's kind of been one of the struggles of Section 17 and business entities is government not necessarily having the infrastructure to know how to deal with this new animal. One of the ones that kills you a lot is personnel issues. I am the final say. My board does not even have a say as to what the final conclusion of a personnel action internally within the corporation is. That's my decision as CEO of the corporation. If a tribal member does not agree with that, they take me to tribal court. And tribal court through a wrongful termination hearing then determines whether I did the right thing or the wrong thing. So that's an example of infrastructure. So that the council doesn't have to be tied up with that issue because tribal members are complaining about...

And it always happens that they only hear one side of the story. I have grandmothers calling me, I have mom and dad's calling me and these are for people that are probably 40-50 years old some of them. Grandma's still calling me and saying, ‘How come you fired or how come you took this action on my grandson,' or, ‘How come you took that action on my child?' And I will say, ‘I wish I could talk to you about it, but there's something called the Privacy Act. And you take this form; you take it home to your child or your grandchild and have them sign this document. Then I'll tell you what's really in your grandson and your son's file.' I have not gotten one of those back yet because only one side of the story is told and we love the opportunity to tell the other side of the story.

This is a weakness is that tribes normally set up these operations without adequate capital. Most of the business ventures, you're expected to put at least 30 percent equity into a business start-up and tribes notoriously don't want to do that. So that's always been a weakness in tribal economies. The diversification, the economic base, we learned that through the Jackpile Mine when you have all your eggs in one basket. And there's a risk in a lot of tribes [because] the only economic engine a lot of tribes have right now are your casinos. And you're seeing right now that these casinos are not recession proof. There was a fallacy out there that gaming casinos were recession proof. Just look at what's going on in Nevada with the big ones. And then the other thing is that we also have to make sure that we stay business vision and mission focused. It's important for us to maintain that vision focus because if we don't who else is going to do it?"

Native Nation Building TV: "Building and Sustaining Tribal Enterprises"

Producer
Native Nations Institute
Year

Guests Lance Morgan and Kenneth Grant explore corporate governance among Native nations, in particular the added challenge they face in turning a profit as well as governing effectively. It focuses on how tribes establish a regulatory and oversight environment that allows nation-owned enterprises to flourish, particularly the separation of day-to-day business operations from politics.

Citation

Native Nations Institute. "Building and Sustaining Tribal Enterprises" (Episode 4). Native Nation Building television/radio series. Native Nations Institute for Leadership, Management, and Policy and the UA Channel, The University of Arizona. Tucson, Arizona. 2006. Television program.

Mark St. Pierre: "Mark St. Pierre. Hello, friends. I'm your host, Mark St. Pierre and welcome to Native Nation Building. Contemporary Native Nations face many challenges including building effective governments, developing strong economies that fit their culture and circumstances, solving difficult social problems and balancing cultural integrity in change. Native Nation Building explores these often complex challenges in the ways Native Nations are working to overcome them as they seek to make community and economic development a reality. Don't miss Native Nation Building next."

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Mark St. Pierre: "Today's show looks at enterprises owned by Native nations, how those enterprises are run, why many such enterprises fail, and what Native nation governments and elected officials can do to help ensure their success. With me today to discuss why some Native nation enterprises succeed and others fail are Lance Morgan and Kenneth Grant. Lance Morgan, a citizen of the Winnebago Tribe of Nebraska, is the Chief Executive Officer of Ho-Chunk, Inc., the Winnebago Tribe's award-winning economic development corporation. Kenneth Grant is a research fellow with the Harvard Project on American Indian Economic Development and a senior policy scholar at the Udall Center for Studies in Public Policy at the University of Arizona. I'd like to thank both of you gentlemen for being with us today. Kenny, I'll start with you. Give us a definition of tribal enterprise."

Kenneth Grant: background:white"> "I think most people think of a tribal enterprise as a company that's owned by the government, and that's not quite correct. It's a company, a business unit, that's owned by every single tribal member by virtue of the fact that they're a citizen of the tribe, and these business units typically have as their objective to earn financial returns and other social objectives that accrue to the entire community, so that all the citizens are owners and share in the benefits. So that's what I think of when we talk about a tribal enterprise."

Mark St. Pierre: color:#222222;background:white"> "Lance, you've developed one of the best models for tribal enterprise. What are some of the toughest challenges that tribes have to overcome?"

Lance Morgan: background:white"> "Well, you have to think about it terms of the situation that we have to function in, and we have a political system we didn't design, we have a system that doesn't allow capital to flow to reservations very easily, you have a poor educational system that doesn't necessarily deal with business development, you don't have a history of entrepreneurial and business success. And all of these things combine to create probably the toughest business environment in the United States."

Mark St. Pierre: color:#222222;background:white"> "Is one of the problems that you encounter, and this is for either one of you, separating business from tribal politics?"

Kenneth Grant: background:white">"There's a real difficulty in separating the roles. With government-owned or tribally-owned enterprises, people are wearing multiple hats at the same time, and so you're a citizen of the tribe and yet you're also a part owner of the enterprise. A council member has governing responsibilities, is also an owner, is also a citizen. That collapsing of the distance between government and business often creates a lot of role confusion for tribes that is difficult to overcome."

Lance Morgan: background:white"> "I once went to a conference and gave a speech there, and before I spoke somebody said, 'There are 30 government entities to help you tribes get into business.' And it occurred to me that they're helping us set up these government-led economic models, kind of the communism or socialism things that we had spent billions of dollars or trillions of dollars probably in 30 years fighting it 'cause it's inherently evil. And that's the system they had in mind for us. And I'm not so sure, I'm not going to make a comment on...at the end of the speech I said, 'I think that...I can't believe Winnebago is Karl Marx's last hope.' But I think that you have to understand the situation we're in. If we need to develop businesses, the government is really the entity with the only access to capital to do that, and so you almost have to get into this, and if you don't then you have this kind of capital-starved entrepreneur sector you've got to hope for the best with. But if you don't have that tradition or those capabilities, the government really is the only answer, so if you're going to set it up, you have to figure out a way to set it up that takes away some of the negatives of having a political entity run the business and I think that's really the challenge. You really...the tribe doesn't have a choice."

Kenneth Grant: background:white"> "Right, exactly. And a lot of people say, 'Oh, it's separating politics from business and the fact is you can't separate the two. It's a question of how they meet and making that relationship as productive as possible."

Lance Morgan: background:white">"We're owned by government entities, so really politics plays into the decision-making to some extent. It always will. But you still have to figure out a way to balance those issues."

Mark St. Pierre: color:#222222;background:white"> "Those of us that have been around for awhile remember a lot of failed EDA [Economic Development Administration] attempts to create tribal enterprises. Is the climate different today than it was in the past?"

Kenneth Grant: background:white"> "I think that there's a lot more success out in Indian Country in running tribal enterprises. So you can look from the Citizen Potawatami Nation to Mississippi Choctaw -- who have a plethora of successful tribally-owned enterprises -- to individual instances, whether it's Yukaana Development [Corporation] up in Alaska. You can look across the tribes, north to south, east to west, and there are examples of success, and I think Lance can speak to this better than I can, but they are becoming much more sophisticated in understanding sort of what the dangers are and how to promote business and run these operations."

Lance Morgan: background:white"> "You referred to kind of the old grant-based economic development model, and I think that that's still an important part of it, but we need to...we've transitioned I think, or the challenge of transition is away, from the grant as our only development tool. What we did is we ran kicking and screaming from anything to do with the government for the first seven or eight years we were in business. And then it occurred to us when we wanted more capital that, hey, maybe we should go back and dust off the old grant model, and we've been able to raise grant money, but it's a supplement to what we're trying to do and it gives us some of the startup capital we need and we're not dependent upon it. And I think it's still a tool that you need to [use] but -- as you grow in sophistication -- that it really factors into your decision-making, it doesn't drive it."

Mark St. Pierre: color:#222222;background:white"> "Kenny, you've worked with a lot of tribes. Why do you think so many enterprises have failed?"

Kenneth Grant: background:white"> "I think part of it is there are issues that are particular to each tribe. Let me put it this way. I think the most insidious problem that I've seen -- working with tribes and trying to run tribal enterprises -- is when the tribe and the citizens think it's an operational problem, when really it's an institutional problem. So I'll give you a quick example of working with one tribe where they had a plethora, I mean just a whole bunch of human capital, great natural resources, access to financial capital. These were very, very well-educated people, and yet the tribal enterprises kept falling. If you talk to the tribal citizens they'd say, 'Well, we just haven't been as civil as we used to be, or people aren't following the procedures book -- and there's this big procedures book.' Or the opposition would say, 'If I were in power all of this problem would go away.' In fact, what you saw is that there were really big disputes that had never been resolved because they had no tribal court system and these disputes were creating distrust and they would just bring an operation to a standstill. A council meeting would just come to an end. And so it wasn't really about civility, it was really about the foundation and the institutions. And that's the toughest problem is when you think it's just our accounting isn't in order, when in fact it's really about how the institutions are operating."

Lance Morgan: background:white">"Yeah, I'd like to add to that a little bit. I think that people tend to simplify the problems, and they focus on whatever bad thing happened at that time and they try to allocate blame, and some people try to do that for their own political gain and all these kinds of things, so you have a tough kind of local political environment. But if the people would take the time to say, 'All right, if we're having this problem over and over again, there's probably some reason for it.' And I always recommend, when tribes come to visit us, that they look at their government structure, they look at their corporate structure, and they figure out in advance what their challenges are going to be and try to plan for them in advance. If they do that, then their chances of success in avoiding these kinds of constant cycles of problems are much higher."

Mark St. Pierre: color:#222222;background:white"> "To follow up, Lance, then what are some of the things that Native Nations need to look at to build success?"

Lance Morgan: background:white"> "Ho-Chunk, Inc. is really the second attempt. Winnebago Industries was our first attempt in the 1980s, and that pre-dated me a little bit, but when we got there and we decided that we wanted to set up a new corporation, we sat down and we said, 'What are all the reasons we failed before?' 'Cause we have a long history of failure in some of these businesses, and we listed them out and we tried to design a system that would allow us to actually deal with some of those things right up front, and I think that's probably a pretty important step."

Kenneth Grant: background:white"> "That statement reminded me of a speech that Chairman [John "Rocky"] Barrett gave at Native Nations Institute maybe four or five years ago now, and he was talking about his economic development plan. He's chair of the Citizen Potawatomi Nation and he said, 'My constitution is my economic development plan,' meaning, 'I wanted to get the institutions right, I wanted to sort of be able to lay the foundation. That was my goa. Then let the economic activity flourish.'

Lance Morgan: background:white"> 'It's not even a difficult thing to really figure out how to address [that], because you can almost go to any -- ask a tribal leader and economic development person, 'What are your problems?' And they can list them out in detail, and they're almost the same as everybody. But why not take a little bit extra time and put your institutions in place to deal with some of those problems right up front?"

Kenneth Grant: background:white"> "The one place I might have a little disagreement is the problems are often known, but when you're talking about changing systems, that can be a very difficult process, because people have gotten used to the system that they have, they know how it operates, and so trying to transform those institutions can be a real challenge."

Lance Morgan: background:white"> "Oh, it's actually...it can actually not just be a challenge, it can be dangerous because I think you can do things -- I've seen some tribes do some things that are actually counterproductive, and they do it in the name of maybe some kind of ode to a traditional practice in the past, but it really doesn't make sense in a modern contex. And I've seen some tribes do some things, set up governmental structures that really sounded good and sounded like a great idea but in practice have been a real impediment towards their growth and development."

Kenneth Grant: background:white"> "And I think it's interesting that the first part of this conversation has really focused more on foundational issues about institutions -- and we can get into the operational issues of the tribal enterprise -- but clearly you can see where Lance and I are going about getting the environment right in which the enterprise can then begin to perform."

Mark St. Pierre: color:#222222;background:white"> "Well, that kind of leads to a logical question, I think, and that is that Lance listed at the beginning some of the obstacles that are very real that every tribe face, especially the larger tribes, larger populations. What are some of the factors that tribes can control?"

Kenneth Grant: background:white"> "I sort of come at it from the economics and I look and I say, 'Okay, there's the market out there and there's much that the tribal enterprise can't control. They have to go out and compete against other companies that are providing the same services and then there's policy over here and tribal policy, maybe they've got some say in there but there's not too much control and then there's federal policy.' So I look at it from the economics and say, 'What they really can control is their operations. Are their operations running efficiently, the accounting and the reporting, the board structure?' That's really what they have within their own control."

Lance Morgan: background:white">"I think that's right, but I think what we've done is we've had a tendency to look for some advantage. I always joke that...all of a sudden we're all business experts because of gaming, but I think that it doesn't take a huge sophistication I think to make a lot of money in gaming if you're right next to a big city and you have a monopoly. But what we've had to do is find niches where we have not as huge an advantage as gaming but some advantage over our competition, and there's huge advantages being a tribe. You have your own governmental jurisdiction, you can make your own rules, you can get preferential treatment on some contracts, maybe you can get some start-up capital from various places. So we've tried to focus on areas where if we make a mistake learning, that it's not going to kill us, and that if we get our act together, we should be able to long term have a viable entity because we have some inherent niche or some inherent kind of advantage in that market."

Kenneth Grant: background:white"> "Mark, I'll just follow up. That's a great point and that's a lesson that's seen over and over and over again, is exploiting these small niches where there's a comparative advantage for the tribe and then growing that. You can see it in Yukaana Development Corporation, which is an environmental remediation group up in Galena, Alaska. Very focused on a few issues, they basically have their teams all over Alaska now. The Cherokee Tribal Sanitation Program run by the Eastern Band [of Cherokee], servicing first their own community, then got so good at it went out and signed contracts with neighboring jurisdictions so that they provide waste facilities, a transfer station for their neighboring communities, and they sort of grow off this seemingly little niche but they learn the game and then grow."

Lance Morgan: background:white"> "I don't think it's a coincidence that tribes everywhere are involved in gaming, are involved in gasoline- or tobacco-type issues. Those are kind of the stereotype economic development issues. And what those really are, if you think about them, they're not inherent Indian businesses. What they really are are businesses that you can get into and take advantage of having a jurisdiction or a different tax base or making a decision on gaming, for example, that another place doesn't. And so I think the challenge is -- or I recognize that these are jurisdictional advantages and we're going to develop our businesses. The challenge for us has been, all right, these businesses are controversial, they create clashes with the state, they create competitive threats that people don't like, and our challenge has been to figure out how we take the money we've made and move to the second stage. How do we take that money and get into home manufacturing, get into construction, get into government contracting, those kinds of things, things that take full advantage of being a tribe but aren't nearly as controversial and aren't a stereotyped business. I think then that's been the challenge for us."

Mark St. Pierre: color:#222222;background:white"> "This is for Lance, but Kenny if you want to jump in as well. A lot of folks, tribal people are very concerned about the job issues and the whole issue of jobs versus profits and the social impact of tribal enterprises and I'd like you to talk about that for a minute."

Lance Morgan: background:white"> "When we started our company, we created two missions. We have two primary goals, and one is to create economic self-sufficiency and the other one is to create job opportunities. I think that we've had a lot...before we started we had a long history of kind of having businesses there and we kept them open even if they weren't necessarily profitable because of the jobs issue, and I always kind of thought that was kind of a bit of a cop-out for poor management or poor decision-making or poor governmental structure. I think that if you don't have the profits, you're not really going to have the jobs for a long-term, sustainable period of time, and so I think you really need to focus on developing a successful business. If you do that, the jobs will follow. If we would have, for example, made the decision early on to keep a business that was failing open, that capital would have...we would have had to supplement that business over a period of years and it would have prevented us from making other decisions further on that would have been very helpful for us. And so by focusing on the real economic development issues, we now have more jobs than working-age people in our community. So I think if you focus on success everything else will follow."

Mark St. Pierre: color:#222222;background:white"> "Kenny, would you like to respond?"

Kenneth Grant: background:white"> "I agree. I think in some sense it's a false dichotomy, but I think Lance is absolutely right that you have to...if the goal is sustainable, ongoing economic activity, the tribal enterprise is going to be here for today, tomorrow, five years, then the focus has to be on profit and then the industry that you go into, the service you provide, or the product that you make will then dictate the number of jobs that are allowed, 'cause you can't force 20 jobs into a position where the market really only allows one job, but if you want that job to sustain itself, then it has to be the focus on profits."

Lance Morgan: background:white"> "I think the key decision upfront is does your tribe need the jobs? Some tribes necessarily don't. If you do need the jobs, then you have to go into businesses that are labor intensive and then try to be successful there. So the real decision is up front in what type of industries do you want to go after or try to develop."

Mark St. Pierre: color:#222222;background:white"> "I would think, too, that the grant mentality of the two- or three-year jobs based on a grant cycle versus long-term jobs created by real enterprise and real profits are kind of an adjustment that tribal citizens have to make, especially for those tribes that have been invested in that grant economy."

Kenneth Grant: background:white"> "I would agree. I think a lot of times what you're doing is trying to fit a square peg into a round hole. Those grants are coming from Washington. So you know the old EDA hotels. It just was the wrong enterprise, and that's not what should have been going, but the money was there, and so there's this sort of predilection to want to go get that money and do that enterprise even though the tribe may not have a regulatory advantage, it may not have a business or a competitive advantage, and they fail and that sort of begins a cycle of..."

Lance Morgan: background:white"> "I think if you don't have a clearly defined strategy, that you're likely to make some mistakes on the grant side of things. These grants are written to say do certain things, but we have found that if you come forward with a very well-conceived plan and they have trust that you're going to do it, that the government entities on the grant side are very flexible. If they believe in what you're trying to do, they will modify their system to help you accomplish your goal. So I think the real key is to figure out exactly what you want to do and make sure that that makes sense and get other people to buy into [it]. Then you can spin the system to help you."

Kenneth Grant: background:white"> "Right. But notice in that case whose leading. Here's the tribe saying this is...or the enterprise saying, 'This is where we want to go. This is our goal and are there grants out there that will fit into this process,' as opposed to, 'the grant is out there so we'll do whatever the grant says we're going to do.'"

Lance Morgan: background:white"> "Yeah, you've got to flip the equation so that you're in the power position."

Mark St. Pierre: color:#222222;background:white"> "Lance, kind of on that same plane though, there's one of the fears out there that as tribes thrive rather than survive that the culture is going to be eroded, that as tribes move into a more professional business model that somehow cultures or tribal cultures are going to die."

Lance Morgan: background:white"> "Yeah. That's really a major challenge that especially I think young Native American professionals are facing right now. I've always said that culture is really based on a lifestyle based on how you live, and that's based on economics and I think that tribes have a tendency to stereotype themselves based on a positive image that we had of ourselves 100 years ago. But those cultural things, some of those values carry forward, but some of the things that they did were based on a different economic reality, and so I think we need to figure out a way to do Native values like taking care of your family, sharing in your community, but figure out how to be successful in a modern context. I think too often somebody will stand up in a meeting, make a speech about culture and it'll kill a project, and I don't think that that's probably the...and I think then they pat themselves on the back for being pure and then nothing happens and people still aren't able to take care of their families. I also think it's used to make young Native professionals feel bad. You question yourself all the time: Am I doing the right thing? Who am I now? And I think we need to try to embrace success and really figure out what the context of what part of our culture do we want to take forward and reapply it in a modern context. And I think that's the core challenge we're facing."

Kenneth Grant: background:white"> "This came up once in a classroom with Chief Phillip Martin, Mississippi Choctaw, and I will never say it as eloquently as Chief Martin said, but basically his point was, through our success we actually have citizens returning to the reservation, and so the people are coming back and now they have the language programs and all the sort of benefits that are accruing from being financially successful through their tribal enterprises. So he's sort of saying, 'How's that destroying my culture when I have all my people coming back?'"

Lance Morgan: background:white"> "Our culture 20 years ago was one of poverty and all the 'isms' you could think of, all the negativisms, alcoholism and all these kinds of things, and our culture's changed. When we first started our corporation we had this discussion, 'Do we really want to be like corporate America?' And we didn't want to. Do we really want a change? But what's really happened is, as the economy has flowered, as people's lives have gotten better, cultures take on a renaissance. Things like the alcoholism and the drug abuse and some of the social issues have begun to die down and people are much more focused on getting back in touch with who they are and taking more pride in themselves and I think that's a pretty critical...that's something I guess I didn't think through, but that's something that's definitely happened in the last 10 years in our community."

Mark St. Pierre: color:#222222;background:white"> "I'm going to change direction a little bit here now, and I think we're talking about exciting things. We're talking about thriving. But in order to get that to happen, you need to create some separation between tribal politics or tribal governmental structures and business enterprises. Could you address some ideal ways where that distance can be structured?"

Kenneth Grant: background:white"> "I think I will start from the global view. I don't think there's one way. I don't think that there's a silver bullet here. I think it's particular to the situation. I have seen some tribes and some tribal enterprises that basically rely on a strong CEO and a good relationship with the council. I've seen other tribal enterprises such as the Yakama Nation Land Enterprise has a board that is essentially a subcommittee of the tribal council and that works for them. In other instances, there are formal boards of directors essentially that stand between the government and the enterprise, and so they're sort of making sure the enterprise is reporting to the council and they're helping the enterprise set strategy."

Lance Morgan: background:white"> "I think the key for us, the real key is -- one of the main keys I think -- is having a political system that is very helpful, it's very stable. We have nine council members and three are elected every year and usually only one or two change over so we never have this huge kind of change in at-the-top strategy level, and the new people that come in, even if they're kind of curious or suspicious about what we're doing, kind of have a time to adjust and they learn, 'Okay, this isn't so bad.' And so that gives us a stable political environment to work in. Within that we have a board of directors -- we have a tribal corporation, we have a board of directors, the council appoints the board, they passed our long-term plan and they approve our annual plan. That's really their only job. They only have three roles. The board has all the other roles and then myself as CEO makes sure the business functions. And so we have clearly defined roles and we stick to them and we occasionally have to pull out the old long-term plan from '94 and dust it off and read it in a council meeting and that's been pretty helpful for us."

Kenneth Grant: background:white"> "Yeah, getting people to stick to their roles is the challenge, 'cause many times I've seen boards have really just become advisory boards and the CEO is reporting to the council because over time people have moved away from the agreement that they originally set down."

Lance Morgan: background:white"> "What we did is -- I mentioned earlier that we had listed all the reasons for our failure and we added an additional part to it. We took an additional step and I think that's been the key. We developed something we now call -- then it was the long-term plan -- but we're a little more sophisticated now, we call it the 'principles governing the interaction between the tribe and the corporation,' and we have this list of rules based on the reasons we failed before. For example, we failed because we had to go to the council for every dollar we got. So we said, 'All right, the tribe is going to give us 20 percent of the casino profits in an account that the board controls so we don't have to go to the council so every investment decision isn't politicized. We failed once before because the tribe would suck out all the money from the corporation just because they had needs to...social needs to spend it on.' But the tribe said, 'All right, for the first five years, you get to keep all of your money, and then now we're giving 10 percent of our profits back gradually up to 20 percent. We have a system in place. We failed because of personnel issues. We created our own personnel system. We failed 'cause of the lack of accounting systems, accounting was in the tribe's. We have our own accounting system. So we figured out up front and established all these rules, and every once in awhile we have to read these things and remind the council of it and everyone gets back onboard and we move forward."

Mark St. Pierre: color:#222222;background:white"> "That leads to another logical question I guess. The Harvard Project and the Native Nations Institute research says that dispute resolution and having a good organ to do that is important."

Kenneth Grant: background:white"> "Well, it gets back to the politicization that we were talking about earlier and creating the unstable environment and what the dispute resolution does is it helps hold that in check. People have a place to go to resolve the dispute and if the mechanism is seen as fair, it helps hold the politics of spoils in check. That makes it easier for the tribal enterprise to attract the human capital and the financial capital that it needs to operate successfully."

Lance Morgan: background:white"> "We don't have a lot of problems on the dispute-resolution side with our individual businesses. Our primary dispute is balancing the separation with the government and the business and we really, since we're owned by them, we really have to figure out ways to get along with them. And so our disputes are played out kind of through negotiation typically, and I think that if we ever really got into a fight with our owner we would probably lose. They could pass laws, they can make motions, they can change the board, so our challenge is to educate people and to get them onboard with our long-term concepts and make them a believer in what we're trying to do."

Mark St. Pierre: color:#222222;background:white"> "And that's the follow up: How do you do that? How do you educate the tribal citizens who are also the tribal politicians eventually in this process?"

Kenneth Grant: background:white"> "I think it speaks to the issue of transparency, and that doesn't mean that every decision that Lance makes is open for review or put up to a vote by the citizens, but it is keeping people aware of what the mission of the operation is, how it's performing, what its financial returns are, what its goals are, and I do think that the political leadership has a role in helping to educate the tribal citizens and the owners of the enterprise."

Lance Morgan: background:white"> "One of the things we do is we have a mechanized system for putting information out to the people and to the government. We have to provide audited financials every year and an annual report and we even had a PR campaign, kind of a sophisticated thing which really was kind of a failure I think. I think what's really helped us is really going out and directly talking to our membership. One on one we've brought in our employees, we've kind of given them a fact sheet about what we do and given them information, they go home, talk to their families and we deal with kind of the little negative issues that emerge in a small community and I think our sophisticated PR strategy and press releases and all that stuff really didn't work until we started talking to our people."

Mark St. Pierre: color:#222222;background:white"> "Sadly, we're running out of time, but I'd like to do one final question for both of you. This is exciting stuff. Where do you see it headed?"

Kenneth Grant: " background:white">I think there's been a tremendous change in the last 20 years, and I think more and more examples of success are breeding more and more success within Indian Country on operating tribal enterprises. I think it's one of the biggest changes we've seen in the last 20 years, and I think the trend is very, very positive."

Mark St. Pierre: color:#222222;background:white"> "Where is Ho-Chunk?"

Lance Morgan: "Our challenge is to continue to transition from these controversial businesses to these businesses that take advantage of being a tribe, and really make a lot of money hopefully and we can take that money and funnel it towards our community in a social kind of side of the equation. I think that what I don't want to get lost in this [is] it's not really, it's never really about the money. We're never going to be Microsoft. We're a company that is focused on making our community better, and I think the more we realize that ourselves, the better off we are. So I think the future for us, drive the business forward, be as great as we can, as competitive as we can, and figure out ways -- challenging and interesting ways -- to spread the wealth in our community so that everybody benefits from it. And I think that in the end is going to be the key to our longevity there, because that's what's going to engender I think good feelings towards the tribe."

Mark St. Pierre: color:#222222;background:white"> "I want to extend a heartfelt thanks to both you guys for traveling here. I'd like to thank Lance Morgan and Kenneth Grant for appearing on today's edition of Native Nation Building, a program of the Native Nations Institute for Leadership, Management and Policy at the University of Arizona. To learn more about Native Nation Building and the issues discussed here today, please visit the Native Nations Institute website at www.nni.arizona.edu/nativetv. Thank you for joining us and please tune in for the next edition of Native Nation Building."

Jerry Smith: Building and Sustaining Nation-Owned Enterprises (2008)

Producer
Native Nations Institute
Year

Laguna Development Corporation President and CEO Jerry Smith discusses the evolution and growth of the Pueblo of Laguna's diversified economy, and the importance of building an infrastructure of laws and rules in ensuring the success of Laguna's nation-owned enterprises.

People
Native Nations
Resource Type
Citation

Smith, Jerry. "Building and Sustaining Nation-Owned Enterprises." Executive Education Seminar. Native Nations Institute for Leadership, Management, and Policy, University of Arizona. Rapid City, South Dakota. September 18, 2008. Presentation.

“Morning everyone. I was afraid that when she was talking about the pig story, she was going to introduce me as the first pig on the panel. I appreciate being here today to speak to you on the experiences of and growth of Laguna Development Corporation, and in general the Pueblo Laguna. As some of you may know, Laguna Pueblo is located in Albuquerque, about forty miles west of Albuquerque on I-40. And what we have done over the years, my career, I’m very impressed with the academic capacities of the folks presenting to you in Native nations. Some of us on the other side are kind of educated in the school of hard knocks, in that we grew up in the tribal end of the entity at first. I worked, probably, about 20 years on the tribal side working as a tribal administrator for the tribe, and more specifically in the areas of trying to develop the economy of the tribe. And then later in the late '90s, I moved over and began to run one of the enterprises of the tribe. So I kind of have the understanding and experience of both sides of the equation.

My first slide basically gives you kind of a view of where our economy has been over the last number of years. Laguna economy pre-'50s is basically an agriculture-based economy, very entrepreneurial, small business (as I like to refer to them) -- individuals who ran farms, cattle, livestock, sheep. So, as we moved into the '50s, fortunately in our situation, uranium was discovered on our tribal lands. And so we went through a period of tremendous economic prosperity in that, we had at its peak production, the world’s largest open-pit uranium mine, and it provided substantial resources to the tribe as well as employment. We were able to live in a great environment. Unfortunately, that resource, as a result of the anti-nuclear type programs in the late '70s, mid-late '70s, we entered into the down crash of the uranium market. The mine ended up closing in the early '80s. So, from the '80s, as you can see, the tribe began to look at what to do. We had a situation of close to 80 percent unemployment. When I interviewed for the tribal administrator’s job in 1982, the question I recall, the most pressing question I recall being asked is, 'What are you going to do to find me a job?' Asked by one of the tribal council members. And just out of business school, I didn’t have a whole lot of answers, except, ‘I’ll do my best.’ And quite honestly, I was not really looking forward to being hired, because I really didn’t have the answers that I thought they were looking for. But surprisingly, I was hired by the tribal council as a tribal administrator to come in and begin work on these situations.

It’s key in that, for Laguna, it was very key in that, a lot of things we were able to do in the '80s were structure-related issues. We worked on a lot of infrastructure, and the reason we could work on infrastructure is we had the wealth of the uranium mine, which funded tribal government operations. So we had a period of time where we could focus on infrastructure development, which meant we had to change philosophically the way the tribe thought, the way they approach things, and began to take a look at how we could do things different in a way that we could grow tribal enterprises, which meant that we had to do a lot of education. And it was really strange for me, fresh out of business school, to be educating people that were very experienced in tribal operations. A lot of our leadership -- and it seems to be the same way today -- a lot of leadership comes from the federal sector. You know, leadership and tribes come out of the BIA [Bureau of Indian Affairs], IHS [Indian Health Service], HUD [Department of Housing and Urban Development] -- you know, those programs. And so when you begin to take a look at educating tribal leadership in this new mentality, you know, definitely training, educational training had to happen. So we began to develop our tribal enterprises.

Our first project was a project called Laguna Industries, where we stepped in and developed a manufacturing company. And at the time, at this time as you recall, the Defense Department was growing very significantly. So we targeted the Defense Department and developed a company that went after defense work. And the created company that, in its peak, employed close to 350 people and is still today, operating and defense contracting. They have, they’ve done not only manufacturing of electro-assembly products, but they also do a lot of on-site support training for the military. We have teams that go out to Korea, who have been out in Iraq, have been out in Germany, you know, supporting the troops in the systems that are built within the company. After learning this experience, then we were caught with the situation of claiming this open pit uranium mine. So, as we began to work with the company that operated that mine, we began to take a look at, 'How we can build a company, instead of using these dollars to go out and just contract a general contractor to come in and do the mining project?' We began to take a look at how we could do this ourselves.

So we created a second company called Laguna Construction Company. And Laguna Construction Company ultimately came on board, they performed the reclamation of the Jackpile mine and then began to develop the capacity in reclamation remediation and began to get defense contracts to begin to do work, not only within the United States, and did a lot of reclamation. This time as you see military base closures were coming online. So there were needs to go in and reclaim those military bases. So they received initially a lot of work doing that; and then they stepped into, then the Iraq situation came on. Right now they’re one of the subcontractors of Halliburton, doing a lot of the reconstruction of Iraq in terms of rebuilding buildings and doing a lot of the reclamation work over there. So it’s significant in terms of their growth and experience.

The third company we created was Laguna Development Corporation and that’s the company I run. In the creation of the first two companies I stayed on the governmental side, and the companies were set up and we brought in management in those arenas. This third company, I kind of wanted a career change, so I kind of moved to the company and we set up this company called the Laguna Development Corporation. Initially, the mission of Laguna Development Corporation was retail development. We ran retail operations. And if any of you have run C-stores, a grocery store, you know how tough that is because your margins are at the bottom line, hopefully, about 3 percent. So as we began to run those operations, it became very important for us to have the proper infrastructure in place in terms of the business itself. Later on we brought in the gaming operations. So our growth has been substantial. We were created in 1998 and our first year, full year of operation in 1999, we had out $6.5 million in sales. In closure of our books in 2007, we closed our books in excess of $250 million in sales, of which over 50 percent is non-gaming revenue. It’s a substantial effort in terms of trying to diversify our corporate portfolio. And one of the things that we learned coming out of the Jackpile Mine was that, as a tribe, you cannot put all your eggs in one basket. You have to take the opportunity and begin to diversify the economic base because if you lose a Jackpile Mine -- and if any of you and I’m sure a lot of you are experienced or have experienced 80 percent unemployment -- it is not pleasant. It creates a whole lot of social/economic issues for you as a tribe, and it’s very important to keep people productive and keep them working and keep their value system in place.

So as we stand here today, we lost close to about 600 jobs in the closure of the Jackpile Mine. Since then, with the enterprises, we’ve been able to create close to 1,600 jobs within the tribal environment. So as I speak here before you -- and I don’t have any statistics to support this -- but I would say Laguna, as a population base, we’re pretty close to full employment, which is saying that anybody that wants a job can get a job. So that’s been an experience. Now we’re working on the quality of the job. Now we’re working on moving people in their career development towards improving the quality of the job and improving their quality of life, improving their capacities.

Tribal government also benefits because I sat on tribal council in the mid-90s and as a tribal councilman, I began to take a look at where our mix of revenues were coming from. And at that point, 80 percent of our revenues were coming from federal sources, 20 percent of our revenues were coming from investment income off the Jackpile uranium operation. As I stand here before you today, 80 percent of our revenue comes from the enterprises, 20 percent of the revenue [of] the tribe comes from federal sources, federal/state sources. And when you look at that equation, you begin to see why these business development efforts are very important for the survival of the tribe, because I think the only way, one of the ways we can exercise our true sovereignty as tribal people is to be fiscally solvent, so that we don’t have to have our hand out to a governmental entity and take all the flow-down conditions that come with those contracts and grants that say, 'You got to do it this way, you got to do it this way, you got to do it this way.' It’s great for the tribe to have that discretionary money, that money that doesn’t come with any strings, to go out and do the things the tribe wants to do, without having to say, 'Mother, may I?' And if, coming from the tribal side, it’s very frustrating to me to always have to talk to a grant, a contract administrator on the federal side that basically gave me permission to do this or do that or do this other thing. And it really, in my opinion, stymied a lot of economic development in tribes, because federal people are not business people. They are not risk-takers. They are not people that have to go out and lead and be the entrepreneurs to go out and take the risk. They are very low-risk tolerant. So a lot of the projects fell on the wayside because I had to go before an administrator who had no experience telling me what I could and couldn’t do. So in that regard, this money that’s discretionary, this money that comes from enterprises that the tribe has full flexibility to decide what they need to do with -- it gives a tremendous opportunity to begin to take a look at getting outside that box.

One of the things we have to do from a tribal side, is teach our tribal leadership how to get outside that box, because these tribal leaders -- and this is no different than my tribe -- many of them grew up in the federal system. Many of them are contract administrators for the BIA. Many of them ran BIA/IHS programs and have since come back and are working for the tribe. So they’re trained. Their whole career is trained in this federal process and it says nothing’s wrong with them -- I’m not saying anything’s wrong with it -- but on this other side there’s this whole different dynamic that we have to work with and that is risk and learning how to manage risk. And fundamentally, in order for you to be successful in an enterprise, is to be able to understand that and take safe calculated risk; but you’ve got to take risk. So from a Laguna story standpoint, I’m learning as I’m going on, talking to people, a lot of tribes, especially gaming tribes, 90 percent plus of their money now come from their enterprises. So we are no longer federally dependent. We are independent from a fiscal management standpoint, but we’ve got to get out of old habits. We’ve got to get out of habits of letting public policy from somebody in Washington (D.C.) tell us how to run our communities and begin to take responsibility for being creative to develop those communities that fit our situation, which leads me to the next slide, and that is understanding the difference between the governmental model and the business model.

What was very difficult for me, in the early '80s, was to educate my tribal leadership that governments are important. Tribal governments are important. Governments have to exist and have to exist and be effective, but you don’t run a business to a governmental model. Governmental models are there to provide governance to the tribe, to the organization. They are not profit motivated. Ask a tribal budget manager as to what their profitability is for this year and they don’t know. They can’t answer the question. Business models work within the governance of the tribe and that’s a very important point. People think you have to choose one or the other; it’s not that way. The governmental infrastructure has to be in place and the governmental rules have to be in place and stable so that the business can flourish within that environment. So they have to work together. So what you have to do is build the governmental infrastructure in place so that the business can survive because business as a fundamental, any start-up business -- what is the statistic? Sixty-five percent fail in their first year of operation. So you’re already dealing with a very dynamic situation in running a business with a high propensity to fail. So if you move the tribal environment on top of it, you create a higher percentage risk of failure if you don’t have the infrastructure in place to support that.

So in that regard, governance is very important, but it also has to be, it has to provide the energies for businesses to succeed. The other thing is that business model is profit motivated. And that’s one thing our tribal leadership have a hard time with because many of us have to be sometimes in position where we have to say, ‘I am not meeting my EBIDA [earnings before interest, depreciation, and amortization] goals.’ And a tribal leader will look at you and say, ‘What? What is that? What is EBIDA?’ You know, that is a measure of business performance. And as you begin to take a look at the language, it’s kind of like, in some cases, speaking French and English because the terminology is not the same. Even the way that you’re audited is different. Governments are audited to what’s called GASB and I think probably a lot of you know what GASB is. Businesses are operated on a FASB process. And so you have to understand that even the formula and even how things work, are different. So when you go to a tribal leader and say I’ve had tremendous EBIDA performance you have to take the time to take them through what EBIDA means, because they do not have the experience and understanding of what EBIDA means.

And so those kind of things are, there are differences in terms of the name of the game and how the game is played. So what we did over our evolution at Laguna was we tried different business models. We tried different business structures. We initially set ourselves up under tribal enterprises. Now one of the benefits, and we talked about lessons learned at Laguna, was prior to trying to put the structures in place, we killed a lot of good businesses. We killed a lot of good businesses because we just could not keep people in their roles. And one of the strongest influences in this environment is political influence. And what you ended up having was you ended up having political leaders making business decisions. And the business decisions normally were not of quality because they were not being made for the necessary reasons, or the proper reasons why that decision should be made. One of the biggest challenges, for example, one of your biggest expenses in the business is labor. And your revenues fluctuate as you operate during the year, and especially if you’re running a seasonal business. So as a business leader, you have to manage labor and you just can’t have people sitting in an office, twiddling their thumbs waiting for the season to pick up. So you have to deal with the issue. You may have to lay people off or you have to lay them off seasonally. So if you don’t make that decision, then you’re going to be impacting your EBIDA line. And EBIDA is Earnings Before Interest, Taxes, Depreciation and Amortization, and that is how businesses are measured. They are not measured on net income. They are not measured performance from an operational standpoint on what your profit is. It’s basically what your EBIDA is, because your EBIDA is what really tells you whether or not you’re operating efficiently or effectively. So the two things you watch for in a business is EBIDA and cash flow. And if you are not functioning in those areas then you better do something.

So in that regard, we started in tribal enterprises. Tribal enterprise worked, but unfortunately we got into the mix of IRS. And I give IRS a lot of credit for this because we would not have gone through the evolution we went through without IRS intervention, because IRS intervention or interest was to tax our profits. And at that time they did not recognize tribal enterprises as an acceptable structure for them and they basically determined at that time, and this is again in the '80s, that our income was taxable. So we went then and went to a state chartered corporation. So we chartered one of these entities under the State of New Mexico and we were able to get away with that for a little while until IRS came down again and told us state charter corporations are taxable. And so then we went to the structure we are now and all three of the entities I showed you on the board are structured under this is a Section 17 federal corporation.

Now one of the things that this did (and you can go to the next slide), one of the things that it did is it helped educate the government to the point where they understood why we need to separate business from government and why they had to release day-to-day control of the business. And it has to do with something called liability. Because when you’re running a business, the fundamental nature of the business is risk and you have to take risk. Why do private people with money, with wealth, set up corporations? It’s because they’re protecting their personal assets. So they set up these corporations where if something happens from a risk decision in that corporation, their nest egg is protected. Fortunately, at Laguna, we had a nest egg that came from the uranium mine. We had a substantial nest egg. So we were able to approach the tribal council to say, ‘Before you go out and start taking risk propositions you need to protect your nest egg. And we need to build this wall between government and the enterprises so that if something happens within the enterprise, your assets are protected. They can sue the corporation only to the extent of the assets of the corporation. They cannot touch tribal assets.' So with the protection mechanism in place it was very, it helped us tremendously in selling the concept. Now we were a tribe without assets and it’s the same fundamental thing. How many of us own private corporations because how many of us have something to risk and lose? So we don’t really think that way. But when you’re a person of wealth, you think that way. It’s a difference in thinking. So if we were to try to do that today, with what’s going on today, we would probably have a very difficult time. For the reason that tribal, and it’s still happening in all governments, the tribal political factors want to get into day-to-day operations. They want to get into day-to-day control of the enterprises. So how did we define this so that we can protect the enterprises from that situation, and how can we protect the tribal council from assets being touched? It’s called penetrating the corporate veil.

If a tribal leader comes down into the corporations and starts hiring and firing employees, that tribal leader has penetrated the corporate veil. So what happens is they put a hole in the corporate veil and if they’re sued back, whoever is filing the claim can go right back through that hole and get the tribal assets. So as you can see, there’s a lot of education that needs to go on. And a lot of these principles aren’t necessarily understood at the beginning, but as you keep educating, educating, you begin to finally hit home with some of these things. One thing that was very important to us was to formalize these relationships, not just gentlemen’s agreement, not just from one council to the next, because councils turn over quite a bit. So the institutional knowledge of the government isn’t always there. So when you go back to this say, ‘You remember ten years ago we talked about it?’ And you look at the people in the room and they’re all different. No one remembers what you talked about ten years ago. So it’s very important to formalize anything that you enter into in terms of relationship with the government. And you’ve got to treat it like a state government, like a federal government. Tribal government, even though they’re your owners, you have to also understand that they’re governments. And so nobody has a problem writing a grant proposal and signing a grant agreement with the state government, with the federal government. That’s a formulation of what the conditions are and what are the terms and what happens in this situation. It’s very important that we be at Laguna, that we begin to formalize this relationship so that we can retain the institutional knowledge of what was agreed to. So we have charters. We have corporate charters. You can go online, because we’re a federal corporation, you can go pull up our charter. You can see what our charter looks like. Bylaws of the corporation; bylaws are what the board of directors manages the corporation by. It’s their internal rules of the corporation. We have very sophisticated reporting relationships. We provide financial statements to the tribe on a monthly basis. We provide them quarterly financial statements. We go before the council twice a year in terms, semi-annual shareholder’s meetings.

Our tribal councilmen wear two hats. They are councilmen from the government side, but they are our shareholder’s representatives and they have to learn how to operate in two different environments. As shareholder’s representatives they are not councilmen, they are not governmental representatives, they represent the shareholders. And they fall within corporate law duties of shareholders and they have to fill their duties to shareholders. And what is their primary duty? Their primary duty is the appointment of the board of directors. I report to a five-member board of directors and that board of directors is delegated authority to run the corporation. And so the major power of the tribe is to make sure they have good, competent people on the board of directors, and experienced people on the board of directors.

We also have a very sophisticated agreement with the tribe on how cash moves from the corporation to the tribe. I’ve worked and I’ve consulted to a number of tribes and it amazes me when I go in to sit down with them and I ask, ‘How does cash transfer?’ And they say, ‘Well, the tribe comes in and gets it every month.’ So then I say to them, ‘Well, how do you take care of capital maintenance, capital development reserves?’ And you can begin to see real quickly in the enterprise why they haven’t replaced, in the gaming property, slot machines; why they haven’t replaced carpet; why they haven’t done, you know from a maintenance standpoint; they haven’t developed a new venture. It’s because the tribe comes in and takes it all out. And so the enterprises really don’t retain the cash because it’s sucked out to the government on a monthly basis.

In our situation, we’ve negotiated a relationship with the tribe where money transfers, but it transfers at year-end after all the audits are done. And so we do transfer like pre-payments monthly, but it’s all reconciled at year-end. And it’s based on a formula so that, like anything else, as the audit kicks in and it’s produced then formulas run. So there’s no dispute. And if they want to come in and look at the books and understand why they got this in their check, it’s all auditable, it’s all transparent. So even those relationships are formalized so that we don’t get into disputes. Many times we get accused of holding all the money in the enterprise, but in reality, we can answer that claim any time; just come in and audit us and we’ll show you exactly where things are.

And so, as it relates to that, we probably at this point within our enterprise, the two things that usually are stress points are the financial end of it and human resources end of it. So from the financial end of it, we’ve been able to take 50 percent of the equation in terms of disputes away. We still fight over human resource issues on a day-to-day basis. But at the same time, we set up a system where I’m the final say on human resource issues. Nothing goes to my board of directors, nothing goes to the tribal council. And so as we deal with day-to-day operations, we’re able to handle those things and I’m able to handle issues that some tribes…and I’ve had people tell me how...tribal councils have come in and you’ve disciplined a brother or nephew or niece and they’ve come in and damaged the organization. We’ve had to deal with those kind of things up front and it’s very, it’s worked effectively today.

We also have had to take investment and tried to help the government infrastructure develop. One of the things that happened at Laguna with the quick growth of the enterprises is what we call the brain drain syndrome. The capacity that used to sit on the tribe transferred to the enterprises for a number of reasons. One was pay; we could pay more on the business side than what they were getting as a tribal employee. So what ended up happening is that we ended up wakening capacity of human resources at the tribe. So we’ve been going back in and helping them develop their capacities: how to read a financial statement; how to read a business financial statement versus a GASB financial statement; and what it is you look for in terms of managing the enterprise. Most of us know, especially those of us who run gaming enterprise, your three big numbers are revenue, marketing expenses, and labor. That’s probably 60-70 percent of the equation. So you can make comment about ‘how come so and so’ or ‘how come somebody got a company car?’ But that’s so minute compared to those big numbers.

So as you begin to educate tribal government, then you begin to help in building this bridge between government and enterprises. One of the things we went into was help develop, for a tribe, a budgeting ordinance where we set up the infrastructure where they come and ask us for forecasts, five-year forecasts for revenue. How many tribes have five-year forecasts in terms of their operational standards? Businesses have to do it all the time. So we took that into that environment and said, ‘You guys need to do a five-year forecast. This is how you get the information from us so that you can begin to start planning your growth; because the money’s going to be coming over and the growth and the revenue of the tribe are substantial, are going to be substantial for the next five years.’ Unless they know that, how can they begin to plan? How can they begin to put their governmental infrastructure in place to be able to do the things that they need to do? What normally happens is they do it on a year-by-year basis.

So we’re involved in developing that capacity on the tribal side by teaching them some of these disciplines and hopefully over the years -- we’re not there yet -- we use Joan’s program a lot to come in and do the same kind of training that’s going on here with tribal leadership. But still yet it’s on a hit-and-miss basis. We hope to, and it’s very difficult, we got to do it with a lot of humility, because we don’t want to be; I mean, we’ve been accused of being the Pueblo of LDC and that’s not what we’re about. But we definitely need to do what we can as a child in this household to be better children and help dad and mom develop their infrastructure.

So we work with the administration, you know, a lot of us, you know, depend on tribal water, so we have to help with the water department. We have to help with all those areas where we draw resources out of the tribe so we can deal with them within a business context. We also have to help in the legal arena; because a lot of the areas, for example, in human resources individuals do have a tribal resolution if they do not agree with my decision, and that decision is in the structure is to take me to tribal court not to tribal council. So if they have a problem with wrongful termination and they believed that as the chief executive officer of the tribe, I mean, the enterprise, that I made a wrong decision then, in Laguna, they have the ability to take me to tribal court. So then we go into an environment where we can deal with things on a very consistent basis. In a tribal council environment, for example, there’s this thing called 'freedom of information,' and unless I get release from that individual to release their personnel file, I’m going to walk into that tribal council with my hands behind my back and they’re going to slap me all over the place and I cannot tell them the true story unless I have that sheet of paper that says I can. And employees who take you to that venue, I have not yet found one that’s willing to sign that piece of paper. So you will always lose in that environment because they have the bullets and the gun. You have the bullets, but you don't have the gun. And so we were able to set up legal environments where now it doesn’t go to tribal council -- council has the ability to raise policy issues/policy questions with us -- but in terms of individual cases, the legal infrastructure of the tribe takes care of those issues for us.

Again, emphasize the appointment of board members. It’s very important that you get the best competency on your board of directors if you want them to be managing a $250 million business; and so board development is also very important and the continued development of board of directors, especially for tribal members who want to get active in this area is very important. So we do the same kind of programs in trying to develop our board of directors. The last thing is, one of the other things that government has to do effectively is properly capitalize the business. A lot of tribes, especially in the gaming industry, don’t capitalize their business adequately. At the Pueblo Laguna, from a $250 million business, the initial investment into us was $250,000. That’s all we got from the tribe. So we had to go out and get the capitalization needs from outside sources; where it has an effect on the tribe, is now we have to pay interest, expense, cost of money that could be going to the tribe. So those are the things you have to deal with in this environment and this is kind of the issues we’re working with. Capitalizing the business effectively, especially in your low-margin businesses, it’s very important; because a lot of these businesses can’t afford the cost of money that we sometimes have to pay, especially in today’s market. Now as Laguna Development Corporation, it’s interesting that if you read the paper right now, the down economy and people always thought gaming was recession proof. Across the country, the gaming industry is beginning to experience their first effect of a down economy and its impact on gaming. Gaming is down 10-20 percent across the country. And why is it that I’m here telling you to look at these things? It’s because at Laguna Development Corporation, Albuquerque in New Mexico is tagged as one of the most competitive Indian gaming markets in the country because we have five significant properties around a little over half a million people population base; very competitive. And in a down economy, you definitely have to take that planning into consideration. Our infrastructure has helped us. It’s helped us retain executive competency. In the gaming industry, turnover is almost annual. General managers are released almost annually. In New Mexico, 1.5 years is the average life of a general manager. My executive team has been with me since they came on board because they understand stability. One of their first questions to me, because a lot of these individuals have come out of Indian gaming, have said not, ‘How’s the business running?’ but ‘How does this thing work between the tribe and the business?’ And so I have not had anyone refuse or pull their application as a result of understanding this structure, and it helps me go after better people. It opens the door for me to go recruit better people [because] they know that their head’s not going to be taken off by tribal government. My head may be taken off, but their heads are going to be protected because of the infrastructure, and it’s helped me tremendously.

The last thing is a discipline issue, is, the other thing is you can have all the rules in place, but if you don’t adhere to the rules they’re not worth the paper they’re written on. So discipline, in terms of teaching people their roles, and ensuring from business side that we operate to our boundaries, on the other side, the governmental side they’re operating in their boundaries, has been very successful for us in that arena.

(Next slide.)

What’s the business’s responsibility? The business’s responsibility is to hire the best executive team it can find. I always remember my 201-business course and I was told, ‘Your key to success is to hire the best you can afford.’ And I’ve taken that principle and I’ve applied very consistently within our operation. So I go hire the best I can afford. Some I can’t even, I can’t afford now but I cannot not afford them. So I go after the best. So I have a senior team that is very -- and I guess I would be bold enough to say -- I’ll put them up against any senior team in the country in terms of their depth, their experience, their knowledge and the industries that we run. We provide and evolve our business systems constantly, our operating systems, our financial systems, our human resource systems. We under our, probably our fifth revision of our HR [human resources] manual because the dynamics of what happens within this industry, you can’t just take a book and adopt the rules and just let it sit. You’ve got to evolve them and you got to keep current.

And so we’re constantly looking at those fundamental processes that we have in place and updating them constantly. We provide adequate reporting to the board and to tribal council. That’s one of the big things that has to happen is that the board needs to fully understand full disclosure, what’s going on. The tribal council needs to understand in full disclosure what’s going on. And so in that regard, the board, you know, we have very confident board members so it’s not difficult for them to come back and say, ‘Okay, what happened here? What happened there? How come you…?’ You know, on the tribal council side we’re still evolving there. How do you read a financial statement? You know. How do you read…? How does an income statement differ from a balance sheet? And how does a balance sheet different from a statement of cash flow? You know, most tribes when tribal leaders look at a financial statement, they stop at the income statement, you know. That’s probably the least effective document in the statement. It’s your balance sheet and statement of cash flow that really tells you what’s going on, you know. And so teaching tribal leadership how to evaluate that balance sheet and really see where their net worth is now. You know, we in this down economy, this 20 percent decline in Las Vegas, 18 percent decline in revenue in Las Vegas; in 2008, we grew our revenue by 26 percent. We’re only two companies in the JP Morgan --which just bought out Lehman Brothers -- we’re one of two companies in the JP Morgan portfolio that had a growth in revenue in this down economy in the gaming industry. And a 26 percent growth in revenue while others, the big boys, MGM -- those big boys are losing 18 percent. So to me, it’s fundamentals, fundamentals, fundamentals.

(Inaudible question from the audience).

Indian gaming. You know, this phenomenon is going on in Indian gaming as well, but in the JP Morgan portfolio, JP Morgan is big investor and they’re where we get our money to do our projects. They basically have a portfolio of all the people they loan money to in their portfolio, they just bought Lehman Brothers, that’s this transaction you read about in the papers, so they’re one of the biggest companies in the, finance companies in the United States. We’re one of two of their gaming companies in their portfolio that had growth in their portfolio, in their revenues. So, and again the other company didn’t have the substantial growth we had at 26 percent. Even in this down economy, where everybody else is losing 10-18 percent of their revenue, and we’re doing it in Albuquerque which only has a half-million population base. So, as I can say, it’s focusing on basics.

(Inaudible question from the audience).

They’re the things I’m talking about here: put an infrastructure in place, put in the relationships, tying them together, teaching people their roles, and education is very critical component to this thing. One of the other thing is we focus on growing and developing the business, we don’t focus on politics. We have tribal elections this year. We have no strategic agenda to be involved in tribal elections. They happen on the election side. We’re here to grow the business. And we don’t make decisions on day-to-day objectives, investment objectives as to who’s going to be the governor and what kind of council we’re going to have next year. We focus on the business and we stay focused on the business and run the business, because at the end of the day, you’re not going to be evaluated based on whether or not you did the right political thing, you’re going to get nailed if you don’t get the EBIDA, you don’t get the revenue over to the tribe, because that’s really what they’re all about, what they need.

(Next: Lessons Learned).

This is my, I think, final slide and it’s what have I learned through all this? I’ve got pretty close to 30-some years in doing this. I’m an old man. Maintaining separation of government and business is a very delicate balance. Like I said, if I was to try to do this at Laguna today, I probably would not be able to succeed, because the tribe was not as desperate today as they were twenty years ago.

I’ve been asked to come into some tribes and help move this model into their operation. I had a situation recently where the tribe came and adopted our structure, almost identical. Tribal leadership changed. The tribal leadership came in and had a socialistic agenda and they wanted to build community projects that had no ROI [Return on Investment]. And they said, ‘I don’t care, we want the money.’ 'Well, I have a project over here that’s going to give you 15 percent return on investment.' ‘I don’t care, we want to build this community program.’ And they just said, ‘I’m sorry. What you have to give us is we don’t need it this time. I need this more importantly.’ So we just said, ‘Okay, that’s fine. You don’t need us then. We can do something else. We don’t need to do this.’ One of the criteria my board of directors have on me, before I can do any projects, I have to show my 15% ROI. And that goes all the way down to entertainment. We have an entertainment venue, and if I’m going to bring in Carlos Mencia, I have to show the board that I can get a 15 percent return on that investment. So that’s what I mean in terms of decision-making. It’s not that…there’s some people that say, ‘How come you don’t bring in country [music]?’ It’s because I can’t get an ROI on country. I have lots of people that like country, but I cannot financially make it work; because it’s not about the entertainer, it’s about its impact on the gaming floor and how much more money I can make that night if I do that. So those are the kind of things we have to work on.

But maintain this separation from tribal government. Probably about 80 percent of my job is in two areas: one is human resources dealing with people; the other one is managing tribal government, constantly being available to tribal government, constantly working with tribal government to try to help them understand so that I can protect my management team. My management teams needs to be able to have the flexibility to do their job and they cannot do it with tribal interference. So the buck stops here both ways. And it’s building that trust through example that your management team develops that trust in you, that you’re able to do that. Doing proper due diligence on the management groups that you bring in especially when it’s staff.

One of the things I see in the gaming industry is that industry grew so fast that the development of executive capacity in the industry did not develop as quick as the industry grew. So a lot of Indian gaming facilities were hiring executives that had no experience. They were an assistant table game manager and they gave them the role of GM [general manager]. And you see that a lot. It’s amazing how much you see that. The guy puts on a suit, looks nice, talks well and they’re sold. But they don’t have the experience because nobody did the due diligence on this person to found out whether they really had the capacity. And that’s why you see this turnover in management because after a year, the person shows he doesn’t know what he’s doing, so then the tribe has to fire him because he just lost money for them or did something that he wasn’t supposed to do. So due diligence on the executive team is very critical.

Setting up the infrastructure’s very critical. I can’t stop reinforcing that area. Government has to be there. The business entity has to be there. The infrastructure for the two -- it’s very important to develop those things. Business needs to hire the best capacity that it can afford. I hired, we opened up 150-room hotel just recently. I hired an individual that ran a thousand-room property, because I wanted his experience that was beyond what I was doing because not only did I want to open that facility with zero problems, but I wanted somebody there that could take me to a thousand-room property. So I hired for five years from now, not just for today. My chief of gaming operations; right now we have 2,100 machines; he ran a facility that had over 5000 machines. So again, it’s to take me to where he’s been. I don’t want to go that path for the first time myself. I want people that have been there, that have been down that trail that know what the pitfalls are. And so every position I have, from food and beverage to retail to the gaming operations and all my administrative staff are people that have been there before. And I’ve made sure from a due diligence standpoint, I verify they’ve been there before, because I definitely don’t want to go where no man has gone before. I want to go with someone that’s gone there before.

The next thing is tribes need to adequately capitalize their business and the last thing is tribes need to look at diversification of economy. Even within our business, we’re on diversification strategies. What happens if gaming goes away, heaven forbid? What happens if it goes away? We know that, because we thought uranium was going to last forever. So again, the strategies are: what are we going to do? What are we going to do to diversify? And we’re looking at those strategies now, right now within our portfolio and that’s within our five-year planning cycle. And so these are the things that I can offer you today. I hope that I, I hope I fit the bill in terms of what you wanted me to do today. But again, these are real experiences and things that I experienced at Laguna. And again, ours is just one story and there’s plenty more stories, successes out there that can help you in your decision-making."

Ho-Chunk, Inc. CEO Receives Award from U.S. Department of Commerce Agency

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Indian Country Today
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Lance Morgan launched the Ho-Chunk, Inc. in 1994 as the economic development corporation of the Winnebago Tribe of Nebraska. Now the president and CEO is receiving the Advocate of the Year Award by the U.S. Department of Commerce’s Minority Business Development Agency (MBDA) at the end of this month. Morgan will be honored during a special ceremony at the 2014 National Minority Enterprise Development (MED) Week happening July 31 to August 1, 2014 in Washington, D.C. The Advocate of the Year Award is given annually to an organization or individual who has shown leadership and commitment in advancing the minority business community. The award pays tribute to minority entrepreneurs who have demonstrated economic impact in a global economy...

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ICTMN Staff. "Ho-Chunk, Inc. CEO Receives Award from U.S. Department of Commerce Agency." Indian Country Today Media Network. July 22, 2014. Article. (https://ictnews.org/archive/ho-chunk-inc-ceo-receives-award-from-us-department-of-commerce-agency, accessed June 1, 2023)