This dissertation aims to present an emerging theory of leadership for active learning organizations in higher education by clarifying factors leaders should integrate to facilitate adaptability. The emergent theory is grounded in multi-year mixed methods action research exploring the role of design, delivery, and leadership of a reflective action learning team model on innovation in a higher education setting. Four research methods were employed including document analysis, interviews, observations, and surveys. Data were analyzed using content analysis, process analysis, coding, frequency analysis, descriptive statistics, Cronbach’s alpha, and Wilcoxon signed-rank test. A grounded theory approach permeated all analyses. Research was guided by theories of experiential learning, action learning, and organizational learning, as well as change theory and design thinking. Results revealed that leaders of active learning organization can improve innovation by facilitating reflective action learning teams that are inclusive, empowering, and iterative. Additionally, teams that display more frequent and consistent welcoming, ideating, synthesizing, and mentor seeking behaviors have more innovative outcomes than teams displaying these behaviors less often and inconsistently. This research indicates that employees who participated in these teams gained the skills and knowledge needed to develop innovative proposals for the organization and increased individual innovative abilities at a statistically significant level. This study adds to the existing literature by offering a theory for leadership to promote effective team learning and innovation.