This story by Kathleen McCoy was previously published in the Anchorage Daily News – Hometown U on Sept. 7, 2013.
For Alaska Native corporations, launched with the 1971 passage of the Alaska Native Claims Settlement Act, the early years were brutal.
The catalyst for their creation was the pressure to unroll an oil pipeline from the North Slope to Valdez across land where Alaska Natives had aboriginal claims. The settlement act allocated 44 million acres of land to Alaska Natives and created 13 regional and more than 200 village corporations. As seed money, the government divided among them a one-time $962 million settlement and essentially said, “Go forth and be profitable.”
Suddenly, subsistence hunters and gatherers were saddled with mastering a Western business framework: cash flow, contracts, shareholders and a need to grow profits.
Confusion among Alaska’s first people was profound, says George Geistauts, a management strategies professor at UAA’s College of Business and Public Policy and longtime advocate for an Alaska Native management curriculum. “You were hard-pressed to find a villager who owned a checkbook much less a credit card.”
Not surprisingly, their path was rocky.
“We spent our first years learning to spell ‘corporation,'” Willie Hensley, a visiting distinguished professor at UAA’s business school, told The Washington Monthly in 2005. He described the early launch of Alaska-friendly but inefficient jobs programs in timber, fisheries and mining. Within a decade, the new corporations were in sweeping decline.
Buoyed by strategic help from the late then-Sen. Ted Stevens to build in global business advantage, and the shock of 9/11, which opened deep wallets for federal defense contracts, they have survived to see a dramatic turnaround in the financial fortunes.
In 2012, Alaska Business Monthly named 20 Native corporations among the “gems” of the North:
“These ANCSA businesses generated $11.89 billion in 2011, up $573 million over 2010. These companies, while representing 41 percent of the Top 49 Alaskan-owned and -operated businesses, took in 73.6 percent of the gross revenues reported and were responsible for 62.4 percent of the Top 49er jobs in Alaska, 83.3 percent of total Top 49er jobs worldwide.”
Surprisingly, throughout this short and mercurial timeline, little attention went into analyzing how very differently Native corporations work, or positioning future leaders to run them better. Missouri Sen. Claire McCaskill’s headline-making investigation into the “8(a) program,” shorthand for federal contracting opportunities for disadvantaged businesses, probably got the most attention.
But Geistauts said he was terribly frustrated by what he didn’t find in a literature search on indigenous organizational and business success. “There is really nothing out there on how to manage these corporations better,” he said.
Now, 42 years after their birth, the state university in Anchorage is crafting a new management curriculum and research commitment aimed at Native corporations. Several years in the making, work starts with undergraduate majors and minors in Alaska Native management but will likely include an MBA concentration, certification programs for new corporate board members, international networking, research and an academic journal. Alaska Native corporations have stepped up with financial support. The program’s development team envisions a “center of excellence” in indigenous organizational management with global reach.
The team is chaired by Sharon Lind, an assistant professor in the business school and a former chairwoman of the Aleut Corp. She takes input from an advisory council of Native corporate CEOs, a Native Studies professor, the ANCSA Regional Association director and others.
Already Lind is teaching an undergraduate class that unpacks the ANCSA corporations, an immediate window into just how different they are. Lind explains: “We look at a typical American corporation, say Coca-Cola. And then we look at a Native corporation.
“What Coca-Cola shareholder expects a job just because he holds stock in that company? None. But, a shareholder in a Native corporation is looking for something — a job, a scholarship, housing assistance, maybe elder care.
“They are for-profit companies with non-profit missions.”
Even so, Lind says, some Alaska Natives regard the corporate model as a form of cultural assimilation that should be resisted. “It’s important that these conflicts get talked about,” she says.
Native corporate stock can’t be sold. Their Securities and Exchange Commission reporting requirements are minimal. Five of the 12 regional corporations have diluted their stock by adding shareholders born after the corporations formed. And built into their charter is the requirement to share profits; 70 percent of all revenues from timber and subsurface resources must be divided among all 12 regional corporations. Outcomes of all these distinctions are worthy of research, Lind says.
Another significant fact? The regional corporations are the only private owners of subsurface resource rights in Alaska; all else is public land. In a resource-extraction state like ours, that’s like sitting on a figurative gold mine.
The success or failure of these corporations will likely color the long-term economic health of the whole state. That’s a big incentive to see that they are as well managed as possible.