This paper argues that dialogical action research (AR), recently proposed to the IS community by Mårtensson & Lee (2004), provides a novel approach to address the perennial call for more relevant and rigorous collaboration between academics and practitioners. The work is presented in the context of a case study of APC-MGE Ireland, a subsidiary of the critical power and cooling services division of the Schneider Electric Corporation. The research proposes to make a contribution by presenting a study of using dialogical AR as an impetus for the process of change involved in the re-orientation of a subsidiary to an innovative organisation. Furthermore, the work builds on Ciborra’s challenge to return to the “origins of phenomenology” and argues that the philosophical hermeneutics of Hans-Georg Gadamer can provide a solid underpinning for dialogical AR. The paper now proceeds as follows. Firstly a literature review is provided on innovation and organisational change building on the work of Zaltman et al.(1973) and using the taxonomy of innovation theories developed by Slappendel (1996). The paper then addresses the thematic aspects of ALOIS by discussing the Hermeneutics of Hans-Georg Gadamer with his emphasis on engagement with practice and the importance of language. Following this, the background and context of the case study is presented. Next the research approach is outlined and the scope of the research question and data collection are described. Subsequently, the case is examined in light of models of organisational change and of the innovation theory presented earlier in the paper. Finally the conclusions of the study are presented and suggestions made for future work.