Internationalisation requires leaders to adapt their mental models

Assistant Professor Aleksi Niittymies from Aalto University School of Business has spent the past decade studying how leaders make decisions in international contexts. His research is based largely on interviews with Finnish SME (small- and medium-sized enterprises) leaders and management teams, collected since 2015.

While strategy and decision-making are widely studied, Niittymies points out that surprisingly little attention is paid to how fragmented and heterogeneous the real operating environment is – and what that means for leaders making decisions.

“Decision-making is often analysed as if it happened in a single, uniform context. In reality, many leaders are running operations in 20 different countries, each with its own unique environment. The challenges that creates for decision-making aren’t fully acknowledged in mainstream research,” Niittymies says.

One of the biggest challenges in internationalisation is that decisions often rely heavily on past experience. But those lessons are usually tied to a specific context. What works in Finland doesn’t necessarily work in new markets.

“Some lessons carry over, but others definitely don’t. And because so many of them are subconscious, it can be hard for leaders to tell which ones still apply,” Niittymies explains.

Familiar practices are hard to abandon — especially when they’ve brought success in the past. Even when leaders know the environment is different, reshaping deeply rooted perceptions or habits can be difficult.

Failures as drivers of change

When a certain way of working brings success and positive feedback, the emotions tied to that reinforce the pattern in the brain. Breaking that pattern usually requires the opposite experience — a situation where your mental model no longer fits reality. This clash, known as cognitive dissonance, can trigger the need for change.

“The human brain is an economical device — it doesn’t update itself unless it has to. That’s why changing mental frameworks requires a trigger, often an emotional one, that makes leaders realise something needs to change. Failures or shocks can push them to adapt more effectively to new environments,” Niittymies says.

These failures can be major: opening a branch in a new country without considering local laws or workplace culture will likely end in disaster. Moments like that often provoke such strong emotional reactions that they change how leaders think.

“Failures shouldn’t be demonised or swept under the rug. On the contrary, they’re opportunities to learn — and even to be welcomed in the sense that they open the door to new ways of thinking,” Niittymies argues.

Experience needs a wake-up call

Experience remains a critical factor in good decision-making, but it isn’t enough on its own. It has to be transformed into a form that is usable in the current situation – new or updated mental models, or other structural decision-making tools.

“The broader a person’s experience, the easier it is for them to build new ways of operating. On the other hand, you can rack up years of experience without it ever translating into practice – unless something forces you to stop and rethink your assumptions,” Niittymies says.

Not every failure sparks change. Even seasoned leaders may cling to familiar methods that once worked well, even when it’s obvious they don’t fit a different environment.

“For internationalisation to succeed, leaders need to stay open to negative feelings and subtle warning signs, rather than waiting for a complete collapse after they’ve ignored all the earlier signals. In our research, we’ve found that weak signals rarely give leaders enough direction or motivation for change,” Niittymies reflects.