Cities operate through intricate webs of relationships in which physical systems, institutions, technologies, and communities continually shape one another. Recognising these interactions requires an ecosystem perspective that reveals patterns, interdependencies, and cross-sector effects often hidden in day-to-day operations. Such awareness enables municipal actors to understand where coordinated action can have the greatest systemic impact. Building on this foundation, ecosystem innovation arises when diverse stakeholders co-design solutions that enhance the system as a whole. Municipalities are uniquely positioned for this work, given their proximity to lived experience and their capacity to convene partners. Tools such as Local Digital Twins make systemic dynamics visible, allowing teams to test scenarios, align decisions, and strengthen collaborative governance. This learning unit introduces ecosystem thinking and design for municipal innovation. Through concepts such as feedback loops, interdependencies, and learning ecosystems, learners develop the capability to map, analyse, and collaboratively shape urban systems using tools like LDTs.