Higher education institutions can be key agents of innovation and regional development. Nevertheless, they are in a transition period: good, tried, and tested practices no longer work or do not work as well as they used to, while new, fully developed, and widely applied solutions are yet to emerge. In this paper, we investigate to what extent action learning can offer remedies to the challenges of higher education. Firstly, we discuss the main transformational pressures, such as massification and digitalization, followed by action learning as a pedagogical practice. The paper presents action learning as an inductive, competency-based tool, being an alternative to traditional, deductive pedagogical methods, but also highlights that the inductive, competency-based characteristics of action learning have certain limitations that may hinder its wider application.