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Tribal enterprise executives share successful diversification strategies

Key takeaway from the second CICD Policy Webinar: A diverse tribal economy is a healthy tribal economy

July 23, 2021

Author

Rory Taylor Project Manager, Community Development and Engagement

Article Highlights

  • Tribal enterprises provide both jobs and revenue to tribal communities
  • These businesses are local economic multipliers
  • Tribal enterprises are diverse, both in industry and geography

Tribal enterprise executives share successful diversification strategies

A diverse tribal economy is a healthy tribal economy. That was among the main insights tribal enterprise executives expressed during a July 14 Center for Indian Country Development (CICD) webinar titled “Successful Strategies in Tribal Enterprise Diversification”—the second session in a CICD Policy Webinar series focused on the strategic business decisions, challenges, and opportunities tribal enterprises face. The series is one of many CICD efforts to support tribal economic prosperity.

The July 14 session’s panel of presenters included tribal enterprise executives from across the country:

  • Session moderator: Chris James (Eastern Band of Cherokee Indians), President and Chief Executive Officer, National Center for American Indian Enterprise Development;
  • Annette Hamilton (Kickapoo), Chief Operating Officer, Ho-Chunk, Inc.;
  • Chad Klinck, Chief Financial Officer, Creek Indian Enterprise Development Authority; and
  • Joe Nayquonabe (Mille Lacs Band of Ojibwe), Chief Executive Officer, Mille Lacs Corporate Ventures.

The executives shared several key insights into how they grow and diversify their respective portfolios of tribal enterprises. As they described a variety of strategies—including focusing on government contracting, starting diversification efforts early, and maximizing value chains—these executives told unique and intertwined stories about their business efforts and their tribes.

Gaming as a tool, not the answer

All three executives said that their tribes got a start in gaming, but market shifts at different stages created opportunities for tribal enterprise diversification. Hamilton noted that Ho-Chunk, Inc., the economic development arm of the Winnebago Tribe of Nebraska, was created in response to non-tribal competition in the gaming industry. Because of the competition, Ho-Chunk, Inc., and the tribe as a whole developed a long-term approach that focused on areas besides gaming in which tribal nations have comparative advantages, such as government contracting.

This strategy led Ho-Chunk, Inc., to develop a government-contracting enterprise through the U.S. Small Business Administration 8(a) Business Development program. The 8(a) program seeks to “help provide a level playing field for small businesses owned by socially and economically disadvantaged people or entities” by awarding federal contracting dollars each year. Tribal enterprises can take advantage of this program and the privileges it provides because of their connection to tribal nations. This comparative advantage in government contracting has been a boon for tribal enterprises such as Ho-Chunk, Inc. Hamilton remarked, “The U.S. government is the largest procurer of goods and services in the world, and they’re guaranteed to pay.”

The 8(a) program and government-contracting industry also provided diversification opportunities for the Poarch Band of Creek Indians. While Klinck of the Creek Indian Enterprise Development Authority (CIEDA) noted that the tribe’s primary revenue stream has traditionally been gaming and hospitality, its location in southern Alabama and proximity to several U.S. Department of Defense military bases made government contracting a logical fit.

Diversification during COVID-19

While these diversification efforts presented new challenges, they have been vital to the overall health of tribal economies. This was no more evident than during the COVID-19 pandemic. Hamilton noted that Ho-Chunk, Inc.’s diversified set of businesses had both economic and public health benefits during the pandemic. As COVID-19 forced businesses to shut down or reduce hours, a diversified portfolio meant that Ho-Chunk, Inc., could make decisions with both the best economic and public health outcomes in mind. This enabled the enterprise to keep all of its employees working while also, to date, never have had an outbreak of COVID-19 at any of its facilities.

As COVID-19 forced businesses to shut down or reduce hours, a diversified portfolio meant that Ho-Chunk, Inc., could make decisions with both the best economic and public health outcomes in mind.

For the Mille Lacs Band of Ojibwe and Mille Lacs Corporate Ventures, the pandemic offered an opportunity to reassess their diversification efforts and the effectiveness of their enterprises. Nayquonabe noted that Mille Lacs is in the process of executing a long-term plan to match the growth of its portfolio with the growth of the tribe’s population. The COVID-19 shutdown provided an opportunity for the corporation to undergo a company-wide restructuring under the long-term plan that otherwise may have taken years to complete.

At the same time, because of this adaptive response to the pandemic, the tribe was able to address significant long-term issues, such as recruiting and retaining a skilled workforce. Nayquonabe observed, “We were very intentional about zagging when people were zigging. People were laying talent off, and we weren’t… Our executive recruiting went into high gear.” This has paid dividends for the tribe and also reinforced the long-term vision of both a sustainable enterprise and a sustainable community.

Different needs, different challenges in diversification

While noting the importance of tribal enterprise diversification, all three executives agreed that new business ventures often resulted in new, and sometimes unexpected, challenges. For the CIEDA, this meant recognizing the differences in government-contracting work. Whereas its previous revenue streams such as gaming and hospitality had high capital needs, government contracting could be done with fewer financial resources—but a more-intensive time burden. Klinck noted it has taken CIEDA four to five years to grow its government-contracting business to a sustainable level. Similarly, while Ho-Chunk, Inc., has a deep knowledge of government contracts, Hamilton said that maintaining the business still required significant time resources and relationship-building.

New data and research yield new insights

The insights of these tribal enterprise leaders underscore the power of tribal enterprise diversification in furthering the vitality of tribal nations. In support of this work, CICD is developing a database of tribal enterprises across the country. With these data, researchers and practitioners will have a more accurate picture of the scope and economic impact of tribal enterprises. That can inform best practices for economic development in Indian Country, including the growth of 8(a) government contracting among tribal nations. This research has already led to new insights, such as:

  • Most tribal enterprises are located outside of tribal lands;
  • Tribal enterprises proliferated in the 1990s and have continued to grow in numbers since; and
  • Tribes maintain businesses in a breadth of industries, not just gaming.

CICD’s research and data will support the growth of tribal enterprises in a diverse range of industry sectors. This is of critical importance, as economic self-sufficiency is key to enhancing both tribal sovereignty and self-determination across Indian Country.