When innovation is understood as an organisational capacity rather than an isolated initiative, municipalities are better positioned to uphold public values, engage diverse partners, and integrate new technologies in ways that strengthen service delivery and democratic accountability. This perspective frames innovation as a sustained practice embedded across teams, processes, and decision cycles. To build such capacity, it’s necessary to consider how innovation cultures take shape in the public sector, drawing on lessons from agile, user-centred approaches while adapting them to the goals of equity, transparency, and public trust. Structured frameworks like the OECD Innovation Portfolio and practical toolkits help municipalities link creativity with execution, experiment safely, and scale what works, supported by technologies such as Local Digital Twins. This learning unit guides municipalities in cultivating an innovation culture through strategy, collaboration, and applied tools. It prepares public servants to engage in systemic, purposeful, and sustainable transformation for future-ready governance.