Choosing the right person to lead your company in the future is one of the most important decisions you will make. Many a business has been destroyed or severely hurt by the poor choice of a successor. (Hewlett Packard, anyone?)

Bill Gates’ announcement this morning that Satya Nadella, head of Microsoft's cloud and enterprise division, would replace Steve Ballmer as Microsoft CEO, offers key lessons on how business owners can better choose their successor:

1. Avoid choosing someone just like yourself. A common mistake business owners make is thinking the next leader of their company should have the same skill set and personality as they do. After all, if you were a strong­­ leader, someone like you should be too, right? Not so fast. Different times call for different leadership styles and new skills. Nadella’s technical expertise and experience overseeing Microsoft’s Cloud and Enterprise Group could well serve the company as it tries to keep pace with changes in the technology, particularly with the fast growth of cloud computing. He has the knowledge and experience Microsoft needs right now and in coming years. 

2. Find someone who truly understands and appreciates your business and company culture. Many analysts were hoping Gates would bring in somebody from outside—such as Ford Motors’ CEO Alan Mulally—to reenergize the company and offer fresh perspective. However, Nadella’s 22 years working for Microsoft means he’s intimately familiar with the business and its culture and has established strong relationships with key Microsoft managers that should make his transition to CEO less jarring.

3. Think long-term. The next leader of your company could be around for a very long time. You need to think beyond the next five or 10 years and really consider: Is the person a visionary who can spot opportunities in the market and adapt to change? Does she or he possess the leadership skills and personality to manage the company in both good times and bad? How much is he or she willing to innovate? Nadella helped launch several key Microsoft projects in recent years including BizTalk, Microsoft’s Commerce Server, and Microsoft’s Office Small Business products. He is best known for having overseen Microsoft’s online endeavors and transforming Windows Live Search into the Bing search engine. This track record shows that Nadella can think outside the box and embraces innovation and change—something Microsoft greatly needs today and tomorrow.

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