The term “innovation” is often applied to products emerging from the private sector. When innovation is discussed in the context of government, commentators generally concentrate on achievements at the federal level. The popular press rarely devotes attention to innovation in local government, or examines innovation as a process, rather than an output. Yet cities and counties have the capacity to engage and impact wide sectors of the public through innovative policies, practices and programs; many are already doing just that. In order to encourage the spread of new approaches to address existing community need, local government staffers, elected officials, third parties that serve them, and researchers must have a deeper understanding of how innovation is perceived and pursued in cities and counties. Drawing on original survey and interview data, this report examines why and how city and county administrators in California adopt new approaches, and the processes through which they learn about potential solutions for problems in their communities. The report highlights the important role of knowledge sharing in the diffusion of innovations from one locale to another, and identifies personal connections as a significant source of information when it comes to innovation. In addition, it shows the obstacles faced by local government leaders who hope to pursue new approaches.