This paper is a case study of the Philippines’ Third Elementary Education Project (TEEP), a loan-funded project once considered to be the biggest social laboratory on education reform in the history of the Department of Education (DepEd) and was also hailed a success. A decade after the project closed, it is instructive to revisit the TEEP story and investigate how different it was from previous reform projects. It is worth noting that the winning strategy of using school-based management (SBM) as an integrative and developmental management framework fostered innovations in critical aspects of the project, thus contributing to long-term governance reforms in the basic education sector. This paper is broadly a literature-based study with primary sources culled mainly from project reports, evaluation studies and policy issuances generated during and after TEEP implementation. Findings were further enriched by interviews with consultants and experts who were involved in the project. The analysis is anchored on two discourses: a) innovative leadership roles and b) employee-driven innovation, with the main focus on the role of teachers and school heads (the Department of Education’s employees on the ground) in fostering innovations in the public education system. Findings suggest that TEEP’s success was a confluence of factors but SBM is recognized as the key lever. By fostering transparency, enhancing collaborative practices and ensuring stakeholders’ participation in almost all levels of decision-making, SBM cultivated the culture of innovation in DepEd schools.