This paper examines the process of a management innovation in complex products and systems (CoPS). Prior literature offers limited theoretical and empirical insights into how an inter-organizational relationship delivers CoPS by moving towards ‘integrated project teams’ over time. The research is based on an in-depth, longitudinal case study, drawing on 34 semi-structured interviews and secondary data from following a client-contractor relationship in the UK water industry over time. The study draws out the various management innovation development phases. It also provides detailed insights in the developments and benefits of setting up integrated project teams. The study contributes to extant literature and practice by linking previously separate research streams of organizational design and management innovation with the management of CoPS.