Democratic innovation in local government has become a focal point of political reform in Indonesia, especially as the country faces the challenge of democratic decline at both national and local levels. This research explores the problems and opportunities for democratic innovation in the context of Indonesian local governments, focusing on the intricate balance between governance-driven democratisation and democracy-driven governance. Governance-driven democratisation emphasises the role of institutional reforms and administrative processes in promoting democracy, whereas democracy-driven governance prioritises citizen participation and grassroots empowerment as central to effective governance. This study identifies the key obstacles hindering democratic innovation in Indonesia's local governance, including bureaucratic inertia, lack of civic engagement, and power imbalances between local authorities and civil society. Furthermore, it highlights the potential pathways to overcome these challenges, such as enhancing institutional transparency, fostering active citizen participation, and rethinking the role of technology in facilitating inclusive governance. By critically examining these dual approaches, the research provides insights into how local governments can innovate democratically, aiming to bridge the gap between top-down governance reforms and bottom-up democratic engagement, ultimately leading to a more resilient and participatory local democratic system in Indonesia. We offer analysis of two cases; Kediri and Samarinda.