The institutional paralysis of Continental European social policy has become common wisdom in comparative welfare state research. The article seeks to challenge the all too simplistic picture of an inherently immovable and inflexible ‘conservative’ world of welfare capitalism. In confronting ‘path dependence’ theory with the concept of ‘path creation’, it is argued that there are – typically inconspicuous or even hidden – paths out of ‘path dependence’ precisely in those welfare states that most obviously embody the institutional heritage of what may be called the ‘European Social Model’. The fundamental ambivalence of Continental European welfare state institutions opens a permanent window of opportunity for ‘institutional entrepreneurs’ pursuing welfare state change. A short account of the recent transformation of social insurance institutions in Germany is presented as a first illustration of this thesis.