I recently was referred to a blog post on Fred Wilson's Musings of a VC in NYC. Fred suggests that keeping a founder around post his replacement - moving "up" as he calls it - is an important positive development. I think Fred may not realize that while it may have positive implications for the right personality founder, it may pose some significant issues for the hired gun CEO who steps into a position which perhaps may have been previously filled by a "legend." Forcing a newly hired gun CEO to operate in the shadow of a large personality who has accomplished the impossible of starting and building a substantial company from scratch, while someone remains to look over his shoulder, can be an undue burden that hinders rather than helps the company. The fact that many founders return to their old jobs years later may not be as good a prescription as Fred leaves us to believe.
Good CEO's are not puppets. Moving the founder "up" to become the puppeteer to manipulate his strings (unfortunately what it appears happens with some founders who stick around), is likely not what you hired his successor for. When change is required (which often is the reason for replacing the founder to begin with) keeping the old guard around and still "in charge" as Chairman, can be a sea anchor on the successor's ability to implement change. It is a unique founder for sure who does not try to perpetuate their own ideas even when moved out of the CEO role.
Witness what may go down in history as one of the best performed transitions (albeit not of a founder, but the analogy certainly still holds) with Jack Welch giving way to Jeff Immelt. Jack carefully picked his successor after years of scrutiny (may be a big lesson there too on the care taken to select the successor - See my posting on Try Before you Buy) and then left the company entirely, in order to enable Immelt to do the right thing and not be encumbered by Jack's legacy. Jack clearly was quite a successful CEO. By all rights he could have stuck around and "helped" Jeff transition the company into its next stage. Instead, Jack felt it necessary to get out of the way. In fact, Immelt undid many of the well worn strategies that made GE successful during the Jack Welch era. But Jack was smart enough to realize that change was necessary and chose a capable successor, gave him the keys and waved him goodbye.
Is Jack available if Jeff needs him? Sure! But he is careful not to have his shadow restrict the vision that Immelt requires to take the company to the next level.