This article explains how an inservice teacher education organisation in New Zealand embarked on a cultural innovation to challenge and build bicultural pedagogies, policies and practices. To understand the process and the impact of a three-year cultural innovation both intended and unintended changes need to be explored. Using a framework of second generation cultural historical activity theory, the article examines the individual and institutional changes, exposing both tensions and learning. Key successful factors included establishing a clearly recognized purpose, widening individual and group involvement, and creating flexibility to build a strong platform to support the innovation. However, tensions were created when externally imposed factors such as changes in government policy and re-prioritization of funding were introduced. The external tensions challenged the internal organisational structures and stability, which in turn affected the cultural innovation and destabilised the change process.