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Critique: Grandview Electric Case Study
At the Blanchard family’s New Year’s Eve party, Al Blanchard talks for the first time
about retiring as president of Grandview Industries. Al, 67, is standing on the back porch of his
rambling Southern California home, sharing brandy and cigars with his younger brother, Morris,
with whom he has worked for 27 years. “I only want to do this for one more year, Morris,” he
confides. “I’ve had enough.” Then he asks, “Do you want to run the company, or should we turn
it over to one of the kids?” Morris has been asking himself the same question for several
months. It has
not been easy being in his older brother’s shadow for so many years. However, Morris
suffered a heart attack in 1989, and he, too, is looking forward to more lei-sure, and devoting
more time to the small travel business in which he is an inves-tor. Always a realist, Morris
knows it is too late for him to take over a $200 million company with 2,000 employees. “I would
be willing to manage things for a short time if you want to leave right away,” Morris tells his
older brother. “But I think we need to turn things over to one of the boys.” Al and Morris’s
father, George Blanchard, founded Grandview Industries with a
partner in 1934. The original company, called Grandview Electric, made small motors for
windshield wipers and other automobile components. Under Al’s leader-ship, the company has
grown into a diversified manufacturer of a variety of electri-cal systems for vehicles and small
aircraft, with five divisions in California as well as distribution outlets abroad. George Blanchard
and his wife, Molly, had five children—including two daugh-ters, Sarah and Germaine, and a
third son, Arnold—but only Al and Morris have had careers in the business. Al joined
Grandview before his brother and was quickly viewed as his father’s natural successor. A hefty,
former high school football player, he was not as dynamic as his father, but he was solid and
hard-working, with a certain inner toughness and affability. Morris, five years youn-ger, was a
wiry bundle of energy, always filled with new ideas and schemes for reorganizing divisions,
creating alliances with suppliers, and taking Grandview Industries into new markets. Morris
never got along with his father and that may be one reason his career took him to the far reaches
of the company. He lived abroad for years, developing new customers in Europe. Privately,
Morris often expressed impatience and frustration with Al’s conservative leadership, but never
publicly. Fortunately—or perhaps by George Blanchard’s design—their separate responsibilities
kept them apart.
In more recent years, the two brothers had developed a greater appreciation of each
other’s contributions and roles; they had drawn closer. Morris is now at head-quarters, as vice
president of marketing, and he and Al meet almost every day to discuss company policy.
Although Al respects his brother’s opinions, he remains the undisputed leader. His fraternal
affection for Morris does not mean he believes in shared decision making. Their New Year’s
Eve conversation has stirred up a lot of buried feelings.
George Blanchard died at age 73, a year after his wife, Molly. The founder left equal
amounts of Grandview stock to their five offspring. By then, Al was already running the
company. Besides Morris, the only other family member with a posi-tion in the business was
Sam Chafee, Sarah’s husband. A staunch Methodist family, the Blanchards were a model of
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togetherness andpublic respectability. Sister Sarah, a voluble personality, now 61, was for a
time a local talk show host. But by and large the family kept a low profile in the affluent
community. The only real threat to family harmony occurred in 1977 when Sarah’s hus-
band, Sam Chafee, angrily left the company. An accountant by training, Sam was the
company
controller, but he had larger ambitions and claimed that Al and Morris were sidetracking
his career.
Al used his contacts to help Sam get another job, and tried to smooth over Sarah’s ruffled
feelings, but the incident strained her relationship with her brothers. Al saw himself as the
custodian of the family’s wealth. He wanted to keep stockholders committed to the family
legacy, but at a distance from operations—a delicate balancing act. George Blanchard gave his
oldest son one piece of advice that he has never forgotten: “You will keep the family happy,” he
said, “if you keep putting dividends in their pockets. As long as you support their lifestyles, you
will be the best executive in the world. Begin to lose money, and you will become an ignoramus
overnight.” Grandview’s gradual expansion reflected Al’s determination to protect divi-dends.
Nevertheless, the company grew steadily, tripling total sales during the 1960s and 1970s. Al had
brought four outsiders onto the board, which originally consisted of all five siblings and the
company’s primary banker, now retired.
In the early 1980s, he restructured the company, taking it public but keeping family
control by creating classes of stock and a holding company. The strategy was a financial
success, fueling further expansion while continuing to provide a good income to family
members. Each of the five siblings retained equal voting control of the holding company, in
keeping with the wishes of the parents. Family stock-holders were comfortable and had few
complaints. No one raised questions about what would happen if Al were no longer around.
Meanwhile, the family was growing rapidly, with many early marriages in the
third generation and already eight children in the fourth. By the nineties, there were six third-
generation members in the business. Al and Morris each have two sons in management.
Germaine and Arnold each have one, but both are young and in junior roles. Sam and Sarah’s
two sons and daughter have made careers elsewhere, as their parents urged them to do after
Sam’s bitter experience. At a subsequent engagement party for Sarah’s daughter, Al announces
his deci-sion to retire to the family, gathered on the patio of the Chaffees' beachfront home.
There are expressions of good wishes and a little kidding about Al’s age. But Al’s brief
remarks have stirred up anxieties about the future. His brother Arnold argues that Al should stay
on as CEO for another 8 or 10 years, since things at the com-pany are going so well. Germaine
jokes about calling her lawyer and selling her stock before morning. The following weeks are
filled with anxious phone conversations between fam-ily members. If Al has had any kind of
plan for succession in mind, he has never divulged it to other family members, including Morris.
Al reflects on his relationships with each of his siblings, and how he has man-aged this complex
family over the years. He asks Morris whether he thinks they should have a family meeting or
form a family council. Morris feels the two of them should manage the succession choice
themselves. “We don’t want a lot of extraneous factors brought in,” he says. “There are only a
few people who might be chosen anyway. Why open it up to the fantasies of our sisters about
