Osoyoos Indian Band

Brian Titus: Nation-Owned Enterprises: Osoyoos Indian Band Development Corporation

Producer
Native Nations Institute
Year

Osoyoos Indian Band Development Corporation (OIBDC) Chief Operating Officer Brian Titus provides an overview of OIBDC and the reasons for its success, notably the great lengths it goes to educate Osoyoos citizens about the corporation's activities and overall health.

People
Native Nations
Resource Type
Citation

Titus, Brian. "Nation-Owned Enterprises: Osoyoos Indian Band Development Corporation." 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.

"This is our motto: ‘Join the people on the move.' We used to have a vision statement called ‘Be self-supporting by 2005' but we've already passed that. We became self-supporting in 2003. What that means is that we generated more revenue from our businesses than we received from the government and we were quite proud of that. A little bit about the Osooyoos Indian Band: we're located in South Okanagan in British Columbia. Right along there's the border. Our reserve is 32,000 acres. We have 450 band members. We're also a major player in the South Okanagan economy. We produce a number of jobs, a lot of jobs. We also produce, 25 percent of wine grapes that are produced in British Columbia are produced on our reserve.

Late last summer, last June we opened up the Desert Center -- it doesn't show up very well on here -- but this is our resort. There's the winery, there's the golf course and down below here we have our campground. This is a little bit better picture. The whole South Okanagan have basically adopted the adobe style in their architecture over the last 15 years or so. This is a poster, a close up of what the Nk'Mip Cellar looks like today. We serve food there. It's aboriginally themed. You can go there, have a few muskocks, bison, moose, deer. Also just to mention again that we're one of the hosts aligned for the 2010 Olympics. We're very proud of that. We're associated with, it said Vincor International but now it is Constellation, which is out of Rochester, New York, who produce, who is the largest wine producer in the world today. This is what the desert center looks like in the back. This is rammed earth. It's one of the biggest pieces of rammed earth in North America. It's what the Great Wall of China is made of. And one of our statues. The golf course that's at the Spirit Ridge area right now, we have actually two golf courses on reserve. This one is a nine-hole executive. This is a picture of the campground. We have a facility there that holds up to 200 people. It has a swimming pool, workout area, things like that. Camping's not even camping anymore. Half of these people that come in they live in half million-dollar RVs. They ask for direct line telephones to their units, TV. You name it, they ask for it and they get it; they get wi-fi. This is a picture of the vineyards. This is the oldest company of all our companies. It was first established in 1968. We produce a number of winning wines throughout the whole region, in the Okanagan. Our winery is actually Nk'Mip Cellar's winery, has won over 350 awards in the last five years. We've won a couple of New World awards. We like when we go to Napa Valley and we beat them, that's what we like. Don't tell people in Napa Valley that though. Our construction company: we do residential, commercial, industrial. They've been around for quite some time also. This is one of our first off-reserve purchases that we did make. We actually moved it on reserve for tax purposes. It's Oliver Readi-Mix. It's finally doing well. It's a tricky business to get into. This is our golf course that's down in the Oliver area. Again, the southwestern look, our store.

This is really the money maker for us is land leases and holdings. We have Vincor International. We actually own our building. Right now we're in the process of doing a $4 million expansion. It'll be 175,000-square-foot building. Right now, it's 125,000, so we're adding 50,000 square feet. Vincor leases that from us at a very good rate. They also lease land from us for agriculture for producing grapes. But we're kicking it to a different level now. We're basically no longer becoming the landlords. We're going to become the owners of a lot of these leases, of a lot of these vineyards. We do management contract. We basically four-fold our return on that. Basically we've got some residential developments, other residential developments. Things like that. Out of this company, this allows us to basically purchase land, go into other business opportunities off reserve, things like that. This is where we make a lot of money. This is one of the projects that we've been working on; I was talking about the vineyards. We're going to be doing about 200 vineyards in the next while. This is also, this one here is the second phase of Spirit Ridge we're going to do. We're starting later this year and it's 130 acres. This here is an industrial park that we're working on. This year we'll be putting in about $1 million worth of infrastructure into the building. We have a... it looks like we're going to be having another anchor come in to, that are willing to do business with us. It's a mobile home manufacturing type of business. We're quite excited about that. Right now, right there, that's where Vincor is. So we're basically have a residential, we're going to actually have a section there for residential for low-cost housing to provide housing for people that are going to be working there. Housing's a big problem in South Okanagan. We're going through a huge economic boom in Alberta and BC. The rest of Canada is not, but the reason why is because the oil and BC is almost seen as Alberta's playground, especially in South Okanagan. This particular project that we have going on here it's also going to be green friendly. This is something that you have to start thinking about in the future because of all the things that have been happening. It'll have geothermal heating, it'll have corridors for animals, it'll have space to have plant life, things like that for the animals to live on.

Basically what makes OIBDC successful? Well, I'd say it's our organizational structure, policies and practices, communication with the membership, perseverance, access to financing, and relationship with neighbors. Our organizational structure, we're actually in the midst of really changing it now. Like Chief [Helen] Ben was talking about, the limited partnership. We're going into that direction as we speak over the last year or so. The main reason why we're doing that is for taxation purposes. So I'll show you what our corporate policy, not corporate policy but our organizational structure looks like. We have the Osoyoos Indian Band general membership, chief and council, policy committee, then we have the band governance, education and we have OIBDC. All report to, the OIDBC board reported to the chief council, the OIBDC report to the board and advisors and then our companies. We have committees on our boards. One is basically we have subcommittees for some of these companies. We also had the finance committee, which is; I would say is probably, I'll talk about that in a little while. This is what our structure looks like, generally how it operates. We have our OIBDC council that's going to change in the next while but we have our human resources, our chief operating officer, which is Chris Gott, who is a very bright individual but not as bright as I am. [Laughter] He's very astute. He's been in the business for close to probably 35 years. He has a number of big projects under his belt. These are the companies that we operate underneath, what I was talking about, and that's myself.

This is the new structure. This is the first time we've shown it. It's in draft form. This is what our limited partnership will look like. Basically we have the membership, we have council, we have each individual company. They're the general partners. Together they'll make a limited partnership. The reason why we did that is because we were becoming so exposed in the media. When you have your chief going and telling the media how much we're paying dividends to community members and things like that, it was just a matter of time for us to become a flagship for somebody in Canada Customs Revenue Agency. We got audited a few years back from the provincial government and it wasn't fun. And after that meeting Clarence [Louie] says, 'I don't want to be paying any more taxes, find a solution.' So this is the solution that came up. It allows each company to be in the limited partnership, the Osoyoos Indian Band is 99.9 percent limited owners of that particular limited partnership. So when revenues come into these companies, say $1 million, okay. Out of that $1 million one tenth of a percent goes back to the company and the 99.9 percent goes into the limited partners. Under the structure of the provincial taxes and the federal taxes these companies, the limited partner is tax exempt on taxation for dividend, for corporate taxes, provincial taxes and we're quite happy about that. And a lot of First Nations are going that direction in Canada right now.

Policies practices, our main practice: If you want to do business with us, be prepared about our due diligence process for practices that we do. Don't be surprised if we'll ask you if you've been sued before or you're being sued or have you broken any environmental bylaws. We'll look at your feasibility studies, we'll look at your environmental screenings, we'll ask for bios on your key players. We'll also ask, we want to see your financial statements for the last five years. Internal controls, we have a number of internal controls. We have policies on internal rate of return, debt to equity. We have a finance committee. Our finance committee is probably the most powerful committee that we have on the whole organization. The finance committee has, basically has pretty much almost the final say. If it takes it to council eventually, council basically, if it goes through and it's vetted through and follows the policies, council will always, nine times out of ten, will say 'yes' to our recommendations. Human resources management practices: we have a human resources committee that we work with. She looks after all the heart aches with the employees. And a business practice: we have a really good reputation right now with a lot of businesses. We deal with some of the biggest companies in the world. We're starting to deal with Jimmy Patterson out of Vancouver, who has businesses throughout Canada, he's everywhere: Constellation, Vincor, Bell Star.

And another success is communications. Basically all I can say communicate, communicate, communicate. You've got to communicate to your membership what you're doing, what you're working on, be accountable, be transparent. These are some examples of past reports that we have done. Basically just the chief talks about what we've done in the past... how results were for the year, what we're doing, what to look for, basically show our past performances statements and we make it really simple. Clarence always calls it 'rez language.' Put it in the rez language and the reason why is 'cause 99 percent of your population are not accountants.

This basically, we also show this to the community. Since we started doing business, you've seen the growth in our revenue and that's all from businesses. We take money from here; we transfer it to there for social programs, things like that, education. Basically this shows our net worth over the last, from 1991 to 2006. And you can see the real growth started when our businesses started happening. And we produce this once a year. This is full-time jobs, full-time jobs on the reserve. Last year was 501. We're doing the numbers, now it's going to be around 600-650 range, I believe. Overall part-time jobs, we include part-time jobs in there, we're looking at roughly around 900 to 1,000 jobs produced each year. Each year we also put out a dividend report to the community. Basically how the company's produced, how they produced the year before, what their contribution, what they contribute to the dividend and basically what this does also is it makes the managers accountable to the community. Sorry I'm rushing through this but I was given five minutes like 10 minutes ago. [Laughter] Perseverance is another one. You've got to have really good workers. Myself, Clarence and Chris, we probably work 60-hour weeks, that's probably what we do. The work is only half of it; they have to have really good work ethics. Sure, we're not perfect; we'll have employees that we'll have problems with. Access to financing, we have a very good relationship with the bank. We actually have two banks we deal with. We receive favorable rates. We receive actually prime minus now. Term loans, the best and we don't need the security actually anymore.

What doesn't work for us is Band politics. It comes in basically three different forms. The problem is we're a small community, 450 community members, 300 roughly on the reserve. It's hard for us to separate that, it is really hard. It comes from us from council, members and employees. For council members, if you've got a council member who's really passionate about one particular business and he basically goes and if something's not working right for him or you do something that he doesn't agree with, he'll often cause problems in the management team. He'll go to the manager, micromanage, try to micromanage, it causes problems there. Members, everybody thinks that they're the perfect businessperson out there often, tell us how we should do it, things like that. We've had members in the past who write letters to the government trying to reverse decisions on non-designation votes, but the thing was it's the government that actually did it and they said that we were the one that was doing it wrong. It's just all about education. Employees: if you have a Band member who's an employee, it's often, sometimes they get political. They always try to take that extra...they ignore the whole process, the organizational chart and jump to the Chief. And the Chief always, he's a politician also, so he has to make sure that he's looking after his members. But that's one of the problems that we really face.

What I'm trying to say is that politics, you can't get away from it. Not with us, we're small. We face it on day-to-day basis, we deal with it like someone was saying this morning, ‘How are we going to deal with this annual report?' We did that not last...a few months ago we threw out our annual report. At the same time the new election was coming through but I was working on this report prior to. And the opposition was saying, ‘Oh, the Band's broke, they don't know what they're doing.' It was really funny. I didn't know about it. The next day I threw out my report and the guy changed his whole strategy on the elections. Just a summary: have an organizational structure that works for you, have sound policies in place, finance and personnel, be accountable and show your transparency through communications, perseverance, access to financing -- and politics is a reality that we have to work with."

 

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."

Traditional Governance: A Case Study of the Osoyoos Indian Band and Application of Okanagan Leadership Principles

Year

There are traditional Okanagan governance and leadership principles and guidelines that have been informed through language terms and traditional stories. These have been interpreted and taught to us by our elders of the Okanagan Nation. Five principles of traditional Okanagan leadership will be discussed; will of the people, leadership training, protection of the land, leading by example and continuously validated authority. These are the principles that will be applied to the leadership of today. The focus of such analysis will be on the application of these traditional principles to current governance systems, including accountability, transparency, consultation, communication and decision making. The Osoyoos Indian Band (OIB) will be the case study used to contextualize this analysis. There are several Western leadership principles that have been accepted and adopted by our leadership, at OIB and other bands and Nations. These are the Western principles that need to be Indigenized so they will benefit our communities. However, I will not stop there, as it is easy to criticize without proposing any real changes. So, following each criticism I will add my own propositions or beginning proposals to change that is needed to re-vitalize our systems of governance in order to rightly incorporate traditional values.

Native Nations
Resource Type
Citation

Baptiste, Ethan. "Traditional Governance: A Case Study of the Osoyoos Indian Band and Application of Okanagan Leadership Principles." Sharing Indigenous Wisdom International Conference. Green Bay, Wisconsin. June 2007. Paper. (https://fngovernance.org/wp-content/uploads/2020/06/Traditional_Governance_Osoyoos.pdf, accessed February 15, 2024)

Journey to Economic Independence: B.C. First Nations' Perspectives

Author
Year

There are two approaches to economic development being pursued by the participant First Nations. One is creation of an economy through support for local entrepreneurs and the development of their individual enterprises (i.e. Westbank First Nation). The other is creation of an economy through development of First Nation community-owned and operated business enterprises that, in turn, provide for the training and capacity building of individual First Nation members (i.e. Osoyoos Indian Band)...

Resource Type
Citation

Williams, Ted. "Journey to Economic Independence: B.C. First Nations’ Perspectives." First Nations Economic Development Project. This report is the result of a collaboration between the First Nations Leadership Council and the Ministry of Economic Development. West Vancouver, BC. February 2008. Paper. 

Best Practices Case Study (Economic Realization): Osoyoos Indian Band

Year

The Osoyoos Indian Band (OIB) is located in the interior of British Columbia. They are a member community of the Okanagan Nation Alliance. The Band was formed in 1877 and is home to about 370 on-reserve band members. The goal of the OIB is to move from dependency to a sustainable economy like that that existed before contact. 

Situated on 32,200 acres in one of Canada's premier agricultural and tourism regions, the land has offered the band opportunities in agriculture, eco-tourism, commercial, industrial, and residential developments. With a focus on supportive education and training, the band operates its own business, health, social, educational and municipal services. The result is virtually no unemployment and financial independence...

Native Nations
Resource Type
Citation

National Centre for First Nations Governance. "Best Practices Case Study (Economic Realization): Osoyoos Indian Band." A Report for the National Centre for First Nations Governance. The National Centre for First Nations Governance. Canada. June 2009. Case study. (https://fngovernance.org/wp-content/uploads/2020/06/ER_Osoyoos.pdf, accessed March 7, 2023)