Innovation Flow in Energy Transition: Designing for the Decade of Dual Operating Models

• The Structural Condition Unique to Energy
• Why Energy Transition Stresses All Three Stages Continuously
• What the Research Surfaced
• The Operations Engineering Innovation Capital
• The KPI Architecture Problem in Energy
• The Nordic Dimension
• Five Diagnostic Questions for Energy Innovation Flow
• Designing Energy Innovation Flow Architecture
• From Project Portfolio to Innovation Architecture
• Continue with the Bridgium Framework
• References

Why energy companies face a structural challenge other industries do not — running legacy and transition operating models in parallel for a decade or more — and what the Bridgium research with 28 innovation leaders reveals about the innovation flow architecture the dual model actually requires.

The Structural Condition Unique to Energy

Global energy investment is set to exceed three trillion US dollars for the first time in 2024, according to the International Energy Agency’s World Energy Investment 2024 report. Two trillion of that figure is now flowing to clean energy technologies and infrastructure, against one trillion to fossil fuel supply. The IEA’s key findings note that the ratio between clean energy and fossil fuel spending has shifted from approximately one-to-one in 2018 to two-to-one in 2024, with grids and battery storage emerging as the binding operational constraint on faster deployment. The IEA’s World Energy Outlook 2024 projects that by the mid-2030s, ninety-five percent of total energy investment will need to be in clean energy if announced net zero pathways are to be met.

For incumbent energy companies, the operational implication of these aggregate figures is more specific than the public discussion typically registers. The structural challenge is not principally that clean energy is replacing fossil energy. It is that, for a defined and extended period now underway, both operating models must continue to run in parallel inside the same enterprise. Legacy generation, transmission, distribution, and retail businesses continue to serve substantial customer load and continue to generate the cash flows that fund the transition. New renewables, grid storage, hydrogen, electrification, and demand-side flexibility businesses are scaling alongside them under different physical conditions, different commercial models, different regulatory frameworks, and different time horizons. Most incumbent energy enterprises will operate in this dual condition through the 2030s at minimum, and likely longer.

The Bridgium research with 28 innovation leaders across Nordic and European enterprises (September to December 2025) finds that the dual operating model produces innovation flow stress with a particular structural shape. The three stages of innovation flow — Externalization, Objectivation, Internalization — are not stressed sequentially as in ordinary transformation, nor simultaneously as in M&A integration. They are stressed continuously and asymmetrically across two operating environments that have different KPI architectures, different absorptive capacities, and different definitions of what counts as legitimate operational practice. This is a structural challenge with no precise analogue in non-energy industries currently undergoing transformation, and the Bridgium framework treats it as a distinct architectural design problem.

“Innovation is often seen as extra work. People don’t really have time to think.”
— Director · Energy & Utilities · Finland

This observation, recorded in one of the Bridgium interviews with an energy sector leader, names the operational condition under which energy innovation flow is occurring. The pressure to deliver under the legacy operating model is sustained at full intensity while the transition operating model is being built alongside it. The Innovation Capital that the dual model requires is not available as discretionary effort on top of operational delivery; it has to be produced as a structural by-product of the working environment itself, and the current architecture in most energy enterprises is not designed to produce it that way.

Why Energy Transition Stresses All Three Stages Continuously

The Bridgium framework identifies three systemic conditions on which innovation flow depends — Legitimacy, Predictability, Connectivity — and three stages at which the flow can break: Externalization (making ideas speakable), Objectivation (making ideas shared), and Internalization (embedding ideas in operational practice). In ordinary industrial environments these stages are stressed sequentially. In energy transition they are stressed continuously, because the same physical system is being asked to operate at full reliability under one paradigm while being modified to operate under another. James March’s 1991 distinction between exploration and exploitation identifies the underlying tension at the most general level; in energy specifically, exploitation has unusually high safety and reliability costs of failure, and exploration has unusually high capital intensity and long time horizons. The two modes do not coexist easily by default.

The Stage 1 problem in energy is shaped by the safety-critical character of operations. Energy operations engineers carry deep tacit understanding of physical systems whose failure modes have substantial consequences. The Legitimacy condition for articulating concerns or observations about those systems is high under ordinary operating conditions: safety reporting cultures explicitly invite the voicing of risk-related observations. The Legitimacy condition for articulating innovation observations — particularly those that question existing operational practice in service of transition — is structurally different. Under the dual operating model, the same engineer who is expected to maintain legacy reliability is being asked to surface ideas that may eventually displace that reliability’s economic foundation. Berger and Luckmann’s sociology of knowledge (1966) anticipates the response: under unstable institutional norms, articulation contracts. The Silence Tax in energy operations during transition is concentrated specifically on innovation contributions that would, if articulated, expose the eventual obsolescence of work the contributor currently performs.

The Stage 2 problem in energy is shaped by the cross-domain sensemaking the transition requires. Ronald Burt’s structural-holes framework (1992) specifies that the most valuable information in organisations travels through weak ties across functional boundaries. Energy transition requires those boundaries to span unusually distant domains: physical engineering and digital systems, grid stability and market design, geological reservoir management and electrochemistry, generation and demand-side flexibility. Wesley Cohen and Daniel Levinthal’s absorptive capacity research (1990) identifies the condition that determines whether such cross-domain ideas become shared concepts: prior related knowledge in the receiving function. The Fragmentation Tax in energy is unusually high because the receiving function in transition discussions frequently has limited prior related knowledge, and the structural mechanism that would build that knowledge is the same weak-tie network that the dual operating model is straining.

The Stage 3 problem in energy is shaped by the KPI architecture of the legacy business. Steven Kerr’s 1975 observation applies directly: the legacy KPI system was calibrated, often over decades, to optimise the performance characteristics of the operating model that is now being transitioned. Renewable integration, grid storage, hydrogen, electrification, and demand-side flexibility pilots produce outputs that the legacy KPI architecture cannot register as value, and consume operational attention that the legacy KPI architecture explicitly penalises. Clayton Christensen’s framework on the Innovator’s Dilemma (1997) applies at full intensity to energy incumbents: the KPI architecture that made the legacy business successful is precisely the architecture that makes the transition business structurally incompatible with it.

What the Research Surfaced

Energy sector leaders were unusually well-represented in the Bridgium interview sample. Across the 28 interviews, energy-related contexts were the most frequently discussed industry, with four leaders speaking from energy and utilities, energy and industrial systems, and energy infrastructure roles. The patterns they described were consistent and reinforced each other across the four conversations.

“Then it goes back to the business units… and that’s usually where things slow down.”
— Innovation Partnerships Lead · Energy · Finland

This observation describes the operational moment at which the Stage 3 problem becomes visible in energy. The transition pilot completes; the receiving business unit acknowledges the result; the integration into operational practice stalls. The Bridgium framework identifies the cause as structural: the receiving business unit is operating under the legacy KPI architecture, and that architecture has no mechanism to register the transition pilot’s value or to accommodate the operational change the pilot proposes. The integration does not fail through operational resistance; it fails through structural incompatibility between the pilot’s value model and the receiving environment’s measurement model.

The Operations Engineering Innovation Capital

Energy operations engineering produces a particularly dense form of Innovation Capital that the Bridgium framework treats as structurally distinct. Michael Polanyi’s distinction between tacit and explicit knowledge (1966) identifies the underlying property: the most valuable knowledge in operations engineering is held in skill, judgement, and embodied practice rather than in documentation. An experienced grid control engineer, refinery process engineer, or wind farm operations specialist holds tacit understanding of system behaviour under combinations of conditions that no documentation set fully captures. Ikujiro Nonaka and Hirotaka Takeuchi’s SECI model (1995) specifies how this tacit dimension travels: through Socialisation — extended joint practice — rather than through written transfer. Energy transition relies on this Innovation Capital twice over: first to maintain legacy reliability through the transition period, and second to inform the design of transition operations under conditions that have no precise prior analogue.

“Most ideas don’t die. They just disappear.”
— Director, Growth & Development · Energy & Industrial Systems · Netherlands

This observation, recorded in one of the energy-sector Bridgium interviews, describes the typical fate of operations-engineering innovation contributions in enterprises that have not built explicit architecture to receive them. The engineer surfaces an observation in conversation, in a routine review, or in an informal note. The observation does not enter the formal pipeline because no formal pipeline exists for observations of that kind. The idea does not fail; it simply stops being present. The structural cause is not the operations engineer’s reluctance to contribute, but the absence of an architectural mechanism for receiving the contribution. The Innovation Capital exists; the Innovation Flow infrastructure to convert it into adopted practice does not.

The KPI Architecture Problem in Energy

The Bridgium research consistently identifies the legacy KPI architecture as the highest-leverage structural variable in energy transition. The KPI system that calibrates the legacy operating model was developed, often over decades, to optimise reliability, safety, cost efficiency, and regulated returns on operational assets with known characteristics. The transition operating model produces outputs that this architecture cannot register as value and consumes operational attention that the architecture explicitly penalises.

The structural response, drawing on the broader Bridgium framework, is the KPI bridge: a transitional measurement architecture that maintains legacy KPIs as the primary measurement frame while adding transition-specific metrics with declared weighting for a defined period, and gradually rebalances the weighting as the transition operations move from pilot to scaled deployment. MIT Sloan research on corporate transformation converges on the same architectural principle from a non-energy direction: organisations that sequence KPI rebalancing with explicit transition periods achieve substantially higher sustained adoption rates than those that attempt direct substitution.

“Sometimes you end up with innovation departments that people quite often ignore… because it’s like, “those are the flaky guys with interesting ideas”.”
— Director, Growth & Development · Energy & Industrial Systems · Finland & Global

This observation, recorded in one of the energy-sector Bridgium interviews, describes the typical organisational standing of innovation functions in incumbent energy enterprises operating under unchanged legacy KPIs. The innovation function continues to exist on the organisational chart. The transition pilots continue to be authorised. The operational standing of the function in relation to the legacy business has thinned, because the legacy business measures itself by indicators the innovation function cannot improve, while the indicators the innovation function does affect — Articulation Rate, Stabilisation Rate, Handover Rate, Integration Rate on transition pilots — are not visible in the legacy KPI architecture. The structural correction is the KPI bridge; without it, the innovation function’s legitimacy declines in proportion to its actual contribution.

The Nordic Dimension

Nordic energy enterprises occupy a particular position in the global energy transition pattern. Nordic governments have set transition pathways that are unusually ambitious relative to other large-economy peers; public expectations of energy company transition performance are correspondingly high; and the Nordic regulatory environment has historically been faster to formalise transition obligations than most comparators. Nordic energy enterprises operate, as a consequence, with a particularly compressed dual-operating-model period: the transition has higher salience, more regulatory pressure, and shorter timelines than equivalent enterprises in less aggressive transition jurisdictions.

The cultural strengths of Nordic working life — luottamus, samförstånd, dugnad, low formal hierarchy, peer-to-peer translation across functions — operate as structural advantages for the cross-domain sensemaking that energy transition requires. Nordic energy enterprises tend to have unusually dense cross-functional networks between operations and engineering, between engineering and commercial functions, and between commercial functions and regulatory affairs. These networks are part of what allows Nordic energy enterprises to operate at the transition pace they do.

The same cultural strengths produce a particular vulnerability when the dual operating model is sustained beyond the period the existing relational density was built to support. Cross-functional networks that operate effectively for one or two transition cycles can thin under sustained dual-model stress, and the resulting weak-tie atrophy is invisible to standard organisational health measurement until specific transitions expose it. Nordic energy enterprises that name the dual-operating-model condition explicitly and design KPI bridges, Innovation Memory retention architecture, and explicit cross-functional contact infrastructure are structurally better positioned than those that rely on the existing cultural fluency to carry the additional load indefinitely.

Five Diagnostic Questions for Energy Innovation Flow

The Bridgium framework approaches energy innovation flow as a design problem with specific, testable conditions. The questions below test whether the architecture of the dual operating model is structurally aligned with the innovation work it is meant to produce.

Three or more warning signals in this diagnostic indicate that the dual operating model is being sustained on cultural and individual effort rather than on structural design. The deficit will typically become visible only when a specific transition exposes it — a senior operations engineer departing without replacement, a transition pilot stalling at integration, a regulatory review surfacing slower-than-required transition progress. By the time these signals appear, the structural conditions have been operating for some time, and the corrective architecture has to be built under more urgent conditions than would have been required earlier.

Designing Energy Innovation Flow Architecture

The Bridgium framework treats the energy dual operating model as a structural design problem with four architectural responses. The responses describe what the Bridgium sample energy enterprises with the strongest innovation flow under transition pressure had actually built. None of the responses requires a separate innovation programme; each requires that the existing innovation activity be structurally aligned with the dual-model condition.

1. Operate the KPI bridge explicitly. The transition period is not a single moment of substitution but a defined multi-year window per asset category. The KPI architecture during this window maintains legacy measurement with full weight while adding transition-specific metrics with declared weighting, and rebalances at explicit milestones. The bridge is co-owned by the legacy business unit, the transition function, and the board oversight committee. Without explicit ownership the bridge defaults to one party or another and ceases to function as architectural infrastructure.
2. Name and protect Operations Engineering Innovation Capital. The operations engineers who carry tacit understanding of legacy system behaviour are identified explicitly. Retention conditions are designed to the carrying function rather than to the role title; paired transition periods between outgoing and incoming engineers are calendared; boundary translation work is recognised distinctly from technical or commercial work. SHRM data on the cost of employee replacement captures only the visible portion of the loss when an operations engineer departs without paired transition; the tacit Innovation Capital component is structurally invisible to standard retention metrics.
3. Build explicit Stage 1 channels for operations-grounded contributions. The structural alternative to the Silence Tax in energy operations is not increased managerial encouragement to contribute. It is the existence of explicit articulation channels through which operations-grounded innovation observations can travel into the formal pipeline, with recognition signals flowing back to contributors visibly enough that the Legitimacy condition for further contribution is reinforced. The signal must be operational rather than ceremonial: contributions are read, considered, and acted upon, with feedback to the contributor regardless of outcome.
4. Map absorptive capacity by receiving function and build it where it is thin. The cross-domain sensemaking that energy transition requires is structurally easier in functions with prior related knowledge and structurally harder in functions without it. Cohen and Levinthal’s research specifies that absorptive capacity is itself an investment, not an assumption. The architectural response is to map the absorptive capacity profile across the enterprise and to build deliberate cross-functional contact architecture where the capacity is thin — through structured rotations, paired assignments, joint working groups, and protected time for cross-domain sensemaking. McKinsey research on organisational design converges on the same operational implication from a different angle: enterprises that succeed in extended transformation are those that build the cross-functional infrastructure deliberately rather than relying on emergence.

From Project Portfolio to Innovation Architecture

The conventional response to energy transition in incumbent enterprises is portfolio management: a list of transition projects, milestones, capital commitments, and output metrics, reviewed at quarterly cadence and reported through the established innovation function. The Bridgium research suggests that portfolio management, by itself, is structurally insufficient for the dual operating model. The portfolio measures the projects that are visible. The innovation flow architecture determines whether the conditions exist for the next portfolio to surface, for the current portfolio to integrate, and for the Innovation Capital that produces both to remain present in the enterprise.

The four architectural responses described above are not additional programmes. They are structural recalibrations of the existing innovation activity to the dual-model condition the enterprise actually operates under. The KPI bridge is constructible. The Operations Engineering Innovation Capital is identifiable by name. The Stage 1 channel is designable. The absorptive capacity profile is mappable. None of this requires a new innovation function, a new transformation programme, or a new strategic narrative. Each requires that the existing architecture be explicitly aligned with the structural condition the energy sector is actually navigating.

For energy company innovation leaders, transformation directors, and senior operations leadership, the practical implication is direct. The transition period is not a single moment of change to be managed and then concluded. It is an extended structural condition that will define the operating environment of the enterprise for the next decade or longer. The architecture that allows innovation flow to function under that condition is the architecture the enterprise needs now. Enterprises that build it find that transition projects integrate more reliably, operations engineers remain engaged with transition work, and Innovation Capital accumulates rather than dissipates. Enterprises that defer building it discover, several transition cycles later, that the structural conditions have been operating against them, and the architecture has to be reconstructed under more urgent conditions than would otherwise have been required.

Continue with the Bridgium Framework

→ Full Bridgium Report, 28 interviews and complete framework:
bridgium-research.eu/innovation-report-2026/
→ Self-evaluation checklist mapping current innovation flow architecture:
bridgium-research.eu/innovation-checklist-2026/
→ The Innovation Flow newsletter, bi-weekly:
The Innovation Flow on LinkedIn

References

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3. Christensen, C. M. (1997). The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail. Harvard Business School Press.
4. Cohen, W. M., & Levinthal, D. A. (1990). Absorptive Capacity: A New Perspective on Learning and Innovation. Administrative Science Quarterly, 35(1), 128–152.
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12. McKinsey & Company (2023). The State of Organizations 2023: Ten Shifts Transforming Organizations. McKinsey Global Institute.
13. MIT Sloan Management Review (Reeves, M., Fæste, L., Whitaker, K., & Hassan, F.). The Truth About Corporate Transformation. MIT Sloan.
14. Nonaka, I., & Takeuchi, H. (1995). The Knowledge-Creating Company: How Japanese Companies Create the Dynamics of Innovation. Oxford University Press.
15. Polanyi, M. (1966). The Tacit Dimension. University of Chicago Press.
16. Society for Human Resource Management (SHRM). The Myth of Replaceability: Preparing for the Loss of Key Employees. SHRM Executive Network.
17. Bridgium (2026). How Innovation Happens — Research Report with 28 Innovation Leaders Across Nordic and European Enterprises. Albi Marketing Oy.