The objective of this study is to identify cultural production innovations and explore the related innovation necessary for further development in creative sectors. From our exploratory case study, we find that many innovations in the creative industries are not captured in terms of technological innovation alone, nor are the product/process distinction a sufficient basis for proceeding. Innovative puppetry firms develop cultural production innovations based on a unique combination of three sets of interrelated management development practices: new organizational development, new client interface and optional technology application. This paper proposes insights that contribute to theoretical and practical discussions on how firms build competitiveness through industrial innovations. Specifically, we propose a conceptual framework that offers a wider perspective on innovation within the creative industry. The conclusions suggest that policymakers might vary the degree of strength with which they relate to either market orientation or historical identity.