Sealaska is a for-profit Native owned corporation with more than 22,000 shareholders. The sale of carbon credits has offered Sealaska opportunities to grow business, invest in its communities and create value and benefits for shareholders. (Flickr Creative Commons Kevin Harbor)
When Anthony Mallott took the reins as CEO of Sealaska on June 28, 2014, the company was under water. In 2013, it lost $35 million and hadn’t broken even on its own operations in 15 years.
The company had a diverse and far-flung set of business holdings, including a plastics company, a stand up guard services company based in Miami with contracts in Peru and Europe, and a logistics company in Georgia. A pair of projects in Hawaii spurred a 2013 loss of roughly $26 million.
After then-CEO Chris McNeil Jr. resigned, Mallott took over. Today, after just four years at the helm, Sealaska is firmly in the black. Earlier this year, the company reported $43.3 million in net income, which Mallott says is only the company’s opening act.
“Our turnaround is just, in our mind, at the beginning,” Mallott said. “We’ve just shown the glimmer of success that we believe we can double down on and really start allowing these concepts and strategies that we’ve built to work and continue to improve the success and performance of Sealaska.”
When Mallott took over as CEO, he was no stranger to the company, having previously served as Sealaska’s Treasurer and Chief Investment Officer from 2006-2014. In that role, he was responsible for setting the direction of the treasury activities and management of corporate investment funds. And having grown up in his hometown of Yakutat, Alaska, combined with his heritage as Tlingit, Eagle, Tsaagweidi (Killerwhale) Clan and Koyukon Athabaskan, Caribou Clan, he was no stranger to the values and industries that made sense for Sealaska, the largest regional Native corporation in Alaska.
Mallott’s vision for the company was built around these Native values, and while he’s getting credit for turning the company around, he sees the company’s successes arising from a strategic plan that allowed them to rebuild by exiting businesses that did not fit, improving the results of businesses that they would continue to operate in, making strategic acquisitions, and achieving greater cost efficiencies.
“When we started, we were faced not only with a large loss in 2013, but a stark reality of the ups and downs of Sealaska’s operating history throughout its entire 40 years,” Mallott said. “Through the process of understanding both Sealaska’s strengths and weaknesses, we wanted to create our strategic plan from that. The strategic plan was half lessons learned from past mistakes, and half building on the strengths that we do have.”
The first questions Mallott and his management team asked was why they were in each specific business, whether it aligned with Sealaska’s values, and whether it made sense to continue.
“At the end of the day, the businesses and the industries that those businesses operate in matter for Sealaska,” he said. “And they matter for all sorts of different reasons. If you don’t care about the industries you’re in or if they don’t tie to you as a people or your purpose, there’s effectively a lack of care.”
Mallott said that part of the conversation they started with was whether their businesses were just entities that were supposed to generate revenue, or if they could achieve some greater purpose. He sees it as a point of strategic strengthening that one of Sealaska’s first steps was to exit businesses that didn’t align with the vision his management team had laid out, which allowed them to invest in businesses that were relevant and meaningful to the people Sealaska serves.
“What we got down to was that to utilize the strength of our people, we need to invest where our people live, and that’s the Pacific Northwest and Alaska. That was a moment of strengthening our strategy,” Mallott said. “To use our values, the strength of the values that our ancestors who lived in our homeland for 10,000 years and created a strong system of perpetual improvement and strengthening and teaching methods that assured the next generation had the resources and the ability to make a strong and good life for themselves, we knew we had to be an industry that could use those values.”
It was easy, Mallott said, to determine some companies were not the right fit for the vision he was trying to achieve.
“Why are we in plastic injection molding facilities that create plastic products all over the place when we’re an oceangoing, environmentally conscious people?” he asked. “That’s an easy one to see it does not fit. The standup guard services was low-income jobs everywhere but our homeland. That’s an easy one to see it does not fit.”
Other companies didn’t meet a financial test for whether Sealaska would continue to be involved.
“One of the lessons learned and one of the greatest financial filters we added to our process was the importance of cash flow,” he said. “We have to fund dividends. 35 percent of our income goes to dividends to our shareholders. If we have a company that’s creating net income but isn’t creating the cash flow to fund their dividend, that’s an issue for us.”
In total, Sealaska exited just shy of 10 businesses.
Mallott says another key to Sealaska’s turnaround is that his management team understood the strengths that they could leverage and built them into Sealaska’s strategic plan.
“The strategic plan we built was based on a real deep dive into our lessons learned, and a deep dive into what our strengths are,” he said. “We have land, we’re land owners, and we have our values, and we have the strength of our people. Those are the strengths we knew we wanted to build on.”
When asked what Native business leaders could take away from his experience, he said it was pretty straightforward.
First, you have to care about your business, he said. That means knowing and understanding everything about it, in addition to its industry, customers, competition, and industry drivers. Second, business leaders should make sure can be open to new information and truly look at their operations honestly and transparently so they can see the improvements that need to be made. Third, businesses should figure out their core strengths and build upon them, which Mallott says is a continual process. Fourth, he says that companies need to develop a discipline to lay out strategies and keep coming back to them. In his case, when Sealaska realized that they didn’t have strategies to grow a business, that was a key indicator that it wasn’t the right business for them. And finally, he says strategic goalmaking is important. Sealaska is continually setting high-level goals and asking if they are making progress. Companies need to focus on incremental progress day-over-day, month-over-month, quarter-over-quarter, and year-over-year.
Finally, while Mallott is getting a lot of the credit for the turnaround, he emphasized that the successes really result from a collaborative and team-oriented approach that relies on strong internal and external partners with specific expertise.
“This is a team driving change,” he said. “It’s a team that knows we need a lot of help to create the progress we want to create.”
At the end of the day, Mallott is happy that the business’ success is translating into real world impact for Sealaska’s 22,000 shareholders.
“Every dollar we make gets invested back in our people,” he said. “There’s no slippage in our mind. We invest back in our people through dividends, through cultural investments, and through development efforts like training, internships, and scholarships. More income means greater and improved investments in our people, and that’s really the tangible evidence that we want to build upon.”
Mallott’s ultimate vision for Sealaska is one in which the end result isn’t just having a business that’s profitable for profit’s sake – it’s the real-world effects of how it gives back.