This article explores design innovation approaches in the creative economy in the Northern Isles of Scotland, specifically, the Shetland archipelago, focusing on the textiles sector. Shetland has a rich history of craft work, including Fair Isle knitting and lace making. We contend that the value of cultural assets in contributing to the creative economy is underexamined and that there is a paucity of understanding of the innovative potential of craft and creative practitioners in the region. The insights presented are derived from Innovation from Tradition workshops, which aimed to reframe the creative economy within an island context, elicit knowledge surrounding local cultural assets and explore the innovative capabilities of creative practitioners. We reflect on how a design innovation approach allowed us to garner the collective wisdom held in communities and foreground the focal themes of practice, place and people.